Red Sea disruption: What might be hard to get in New Zealand?

Tuesday, 16 January 2024

Conflict in the Red Sea could cause stock shortages in New Zealand shops, it has been warned.

Shipping firms have been diverting their vessels from the coast of Yemen in recent weeks as the conflict in Gaza continues.

Last week, the Houthis launched their largest-ever barrage of 18 one-way attack drones, anti-ship cruise missiles and an anti-ship ballistic missile at a host of international commercial vessels and warships in the Red Sea. A US-led coalition returned fire on Friday.

The conflict is having an impact on global ship movements, and has doubled the cost of shipping freight in recent weeks. The new routes mean return trips take longer and containers may not end up where they are most needed.

Here are the products that might be affected in New Zealand.

Easter Eggs

Bad news, chocolate lovers – Retail NZ has warned that re-routing of ships could mean a delay in arrivals of products from Europe and Great Britain, including Easter products.

Infometrics chief executive Brad Olsen said this highlighted that the affected products would often be things that New Zealand did not need all the time but then had a surge in demand for.

“If they’re not already in the country, previously there was enough time to move them from wherever they were to New Zealand but now maybe there’s not enough time.”

Cars

Olsen noted that the flow of new cars could be disrupted. Both Tesla and Volvo have paused some of their European production because of the shipping problems.

Electronics

Olsen said large electronic items could also be affected. “Particularly TVs and those sort of items.” He said it was those sorts of consumer goods that would be affected more than things such as fuel and grain at this stage.

Prices

Olsen said he had not put a number on how much the conflict could add to New Zealand’s inflation because it was unclear how long the disruption would last or how much further it might spread.

“At the moment my starting position would be I wouldn’t necessarily add on an additional number to inflation but it might well make it harder to keep pushing down as quickly.”

He said while costs had doubled, that was not back to the levels seen during the peak of the pandemic when shipping costs were up by 10 times.

Internationally, clothing retailer Next has warned that the disruption could delay deliveries of its products by a couple of weeks, British media reported. There have also been concerns reported about the movement of New Zealand wine to offshore markets.

Satish Ranchhod, senior economist at Westpac, said the issue for this country was how interconnected supply chains were.

“Even if we are not getting out food products from the affected regions there will be downstream impacts. More protracted disruption adds to those shipping costs. New Zealand could feel it through the middle part of the year even if it’s not felt immediately.”

But he said the heat was coming out of inflation and New Zealanders were more reluctant to make purchases. The impact would be more limited because households were already winding back their spending, he said.