Fruit and vege exporters on edge over shipping woes
Saturday, 20 January 2024
Fruit and vegetable exporters are fretting over the risk of months of disrupted shipping exports to Europe and the US east coast due to the Red Sea conflict and continued restrictions on traffic passing through the Panama Canal.
The Panama Canal Authority has planned to further restrict traffic on the canal from the start of next month due to the ongoing impact of a lack of rainfall during its rainy season last year, which saw it experience its driest October in at least 73 years.
Shipping giant Maersk announced this week that it would offload freight from New Zealand and Australia that normally went through the canal, and transport it by rail across an 80 kilometre land bridge before re-loading it onto ships for its onward journey.
A Zespri spokesperson said its exports of kiwifruit to Europe normally all went through the Panama Canal.
“We work closely with our long-standing shipping partners to deliver our fruit using a mix of charter and container vessels.
“We will continue to monitor the global shipping environment closely including the potential impact on other routes as we prepare for our first fruit to depart for Europe in mid-March.'
But she said Zespri was encouraged by some recent rainfall in Panama that had seen an increase in the number of ships transiting daily.
“We use one of the world’s major shipping lines, CMA-CGM, and they are transiting successfully through the Panama Canal at the moment.”
The low water level in the Panama Canal is being blamed by some on global warming.
The canal operator needs about 200 million litres of fresh water to move each vessel through its locks, sourcing that from a reservoir that is normally replenished during its rainy season, which ended in November.
At the same time, shipping companies have been routing ships that normally travel through the Red Sea and the Suez Canal around the west coast of Africa because of missile and drone attacks on shipping by the Houthi group in Yemen.
That is adding about two to three weeks to transit times and extra costs for exporters including Fonterra.
Building Industry Federation chief executive Julien Leys said on Tuesday that its members were factoring-in the possibility shipping delays could last for several months.
Horticulture Exporters Association chief executive Simon Hegarty said apple, kiwifruit and onion exporters were New Zealand’s three largest users of containerised sea freight.
Shipping problems could have knock-on effects and be magnified by issues such as a lack of containers, he said.
“We saw that supply-chain disruption through Covid. If the problems facing global shipping remained unresolved for a long period, that would be quite disruptive.”
Onions NZ chief executive James Kuperus said onion growers exported between 70,000 and 80,000 tonnes of onions to Europe each year, and there were concerns among its members about the implications of shipping delays.
But he said they were more nervous about the risk that the Government might not ratify its latest free-trade agreement with the European Union in time to benefit this year’s harvest.
Onions were the “first cab off the rank” during the harvest season, he said.
“We are starting to harvest now, but the tariff is paid on arrival, so we have six to eight weeks’ leeway.”
The European Union ratified the free-trade agreement in November, Kuperus said.
“We want to see the Government prioritise passing legislation.
“If it comes in by March or April, then we will benefit from the tariff reduction, but if it's later than that, unfortunately, we will miss out on the season and — for us — that's a bigger consequence than the potential shipping delays.”