The waiting game: exporters, builders face months of shipping hassles

Thursday, 1 July 2021

Waiting times for some building supplies are now up to eight months, as importers struggle with global shipping problems.

Builders are waiting up to eight months for some goods, and smaller exporters are now “acutely” feeling the pain, as the number of ship calls to New Zealand drops significantly.

An ANZ research note says in the last quarter of 2020, there were only 430 container ship visits to New Zealand ports, a fall of 34 per cent.

On the importing side, Building Industry Federation chief executive Julien Leys said the waiting time for many building materials had extended dramatically.

“The 'new norm' is 6 to 8 months, instead of the previous of 4 weeks, when purchasing any materials or components from structural timber to door handles to vanity tops,” he said.

Shipping companies are charging more to get goods into and around the country due to delays at the log-jammed Ports of Auckland.

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Prices had hiked accordingly. Some steel products were up between 15 per cent and 21 per cent, concrete and cement products were up 7 per cent, and prices for decking, timber, and plywood were up between 6 and 20 per cent.

Stockpiling was now common among builders, and while domestic timber manufacturing was largely back to full capacity, it was not meeting demand.

“The group home builders are planning [months] ahead just to make sure they have the materials, it’s ballooned out.”

Smaller exporters of lamb and other chilled products are reporting multiple problems getting their goods to market.

ANZ said many exporters were also struggling, particularly producers of chilled goods or low-volume exporters wholly reliant on finding small spaces on ships.

Davmet, a niche exporter of chilled lamb in the Hawkes Bay, said frequent changes in shipping schedules, container shortages and enormous freight hikes had made this year very tough.

“It’s extremely difficult to schedule production for chilled product when you have vessel schedules continually changing,” a spokesman said.

ANZ’s Susan Kilsby says shipping difficulties now seem certain to extend well into next year.

Fortunately, the company had some long-standing relationships with carriers. But products were still sometimes spending days stuck in transit and it had become almost impossible to provide UK and European customers with an arrival date.

“If you produce it too early, it impacts on the shelf life of the product, and if the product gets to the market and it’s only got less than 10 days shelf life left, you end up with some very unhappy customers,’’ the spokesman said.

The delays and skyrocketing shipping costs are likely to continue to be an issue well into next year, ANZ said.

Larger exporters were generally having fewer issues because they had long-term contracts and enough volumes to make it worthwhile for ships to call at their ports.

But chilled food exporters might have to freeze more product and accept a lower margin because of the delays to market.

“The companies that are really struggling to get their goods to market in a timely manner are our smaller exporters,” the bank’s agricultural economist Susan Kilsby said.

Overseas customers were also changing their ways. They were holding larger inventories, switching from the old “just in time” to a “just in case” mentality, which was creating extra demand for New Zealand exports.

“This factor is one of the reasons why we are seeing commodity prices at record levels,” Kilsby said.

However, at some point suppliers would have enough stock on hand and the demand would ease. It was difficult to tell whether goods were being consumed or simply stored.

Kiwi consumers would eventually pay, with ANZ's Business Outlook survey showing that the number of companies planning to raise prices was at record highs “by quite some margin”.

For a return to normal, vaccinations at ports would have to be stepped up and some of the global consumer demand would have to wane, Kilsby said.

Consumer demand was likely to drop as travel opened up again or if economies became more prudent, and the latter could hurt our top-end exporters.

“So exporters should cross fingers, rather, for the former.”