Critical capacity issues at ports around New Zealand are making retailers worried that they won’t be able to import stock ahead of the Christmas rush. Alex Braae reports. 

Traffic jams of container ships are building up around Auckland’s port, and retailers are concerned they won’t get imported stock in time to sell it for Christmas. 

The issues causing the delay are a perfect storm, including Covid-19, an automation project that had to be halted partway through due to lockdown, and a massive backlog in demand which shows no signs of abating. Many retailers held off on ordering new stock during lockdown because of uncertain conditions, but then retail boomed immediately after the restrictions were lifted. 

Simon Sheterline, the director of mattress retailer Winkl, said getting space on shipping lines out of China is at a premium right now, pushing prices up. But the congestion at the ports is also making him worried that his mattresses won’t arrive in time for “the most important part of the year” for sales. 

“Boats are currently sitting off Whangapāraoa with containers on them, waiting to get through Auckland Port.” Sheterline said there are rumours currently circulating in the furniture import industry that boats might get turned back to China, “because the boats need to be utilised, and can’t be sitting in New Zealand waters for a long period of time.” 

There’s no clear way for stock to be redirected, said Sheterline. “All of our stock is currently tied up on those boats sitting off Whangapāraoa, so we’re just fingers crossed that the boat doesn’t decide to go back to China because it can’t unload.” 

“But at the same time we’re being told there’s no way to redirect our stock through any other ports around the country, because Tauranga and Christchurch are refusing to take bookings on ships direct to those ports until after Christmas, because they’re also congested. 

“So it’s really leaving us in a position where if that stock does go back to China, we won’t be able to book another boat to bring it back, and we won’t be able to airfreight it, because there’s no space on airfreight at the moment.” 

Ports of Auckland head of communications Matt Ball poured cold water on the idea that ships would be turned around, but conceded that many vessels are sitting at anchor for much longer at the moment than they normally would be. 

“We have had ships that have been at anchor for up to six days, maybe in a couple of days longer than that, but no, not turning back to China, I haven’t heard that.” He said that length of time was “highly unusual”, but other ports were also seeing ships sitting and waiting offshore. 

Ports of Auckland was part of the way through rolling out an automation process when Covid hit, and work on it had to stop. The development had been planned to coincide with the quietest part of the year, but that fell right in the middle of lockdown. The terminal is now split in half, with one half running automated systems, and the other manual.

“We had deliberately chosen the quietest time of year to do that switch, so we could really test things out, so that if something went wrong we could use the manual part of the terminal,” said Ball.  

“By the time we got everything going again, levels of imports had picked up again, and we were under the hammer. So that meant we’re actually going to be running with a split terminal for much longer than we initially hoped.” 

The two-terminal setup is just one of the issues slowing down the port right now. New processes around staff safety relating to Covid have also cut into work hours. The port is currently looking to hire dozens of new stevedores to increase capacity. 

And shipping is more generally an industry that is always subject to forced changes in plans. That can be as simple as the weather playing havoc with schedules. Ball estimated that in a normal year, about half of all ships would arrive in port late, but this year various factors in the global supply chain meant it was more like 70%. 

In terms of New Zealand’s overall capacity, Auckland doesn’t currently have the ability to manage delayed schedules like it normally would. 

“In past years, ships have come in here, dropped everything that they’re meant to be taking to Lyttelton for example, then leave it here for another ship to pick up, and they’d be able to leave early and catch up on their schedule. This year they haven’t been able to do it.”  

Rosemarie Dawson, CEO of the Customs Brokers and Freight Forwarders Federation, said the problems are global, and that limitations would be at a critical level for the rest of the year.

“There has been a worldwide surge in consumer demand. Shipping companies did not anticipate this and significantly restricted capacity due to the fall in demand when China effectively shut down due to Covid-19. Lines are now at capacity, so it is very difficult to get space on ships coming out of China.”

Simon Sheterline said he understands how difficult and disrupted the situation is right now, and that the ports have ended up under the pump. “But the communication is not there. The only communication you get as a business owner is that your shipment has been delayed, and then the ports will give you a time for its release, and then they’re pushing that out again.” 

“There’s not a lot of information coming out, when I’d think they would have seen this coming, and what information that is coming out is very unreliable, which makes it very difficult from a business perspective.” 

Ball said daily updates are being provided to all stakeholders about the progress of cargo, noting that it’s important that the port is honest with importers about how tough things are right now.

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Seriously, you need to order your Christmas books right now

Prime Minister Jacinda Ardern today addressed the business community in her first policy speech since last month’s election. Here’s what she had to say.

What’s all this then?

Speaking amid the din of the US election and new lockdowns across Europe, Jacinda Ardern today outlined her government’s economic plans to New Zealand’s business community. Referencing the fraught situations overseas and growing global fear and division, Ardern did not mince words when she said there was still an immensely difficult economic period ahead for the country, despite the relative absence of Covid-19.

It was in the spirit of trial and challenge that Ardern, flanked by her senior business ministers, announced her government’s immediate priorities and visions for the economy.

Small business and job creation

While there was a lot laid out on the table, the most significant announcements were a new flexi-wage version of the wage subsidy programme and improvements to the small business loan scheme.

The flexi-wage will assist employers to hire people who are at risk of long-term unemployment and receiving a benefit. The subsidy is targeted and flexible, and will be allocated according to the type of business or the needs of the person being employed. Ardern said it would be deployed with this last quarter’s labour market statistics in mind.

“Māori, Pasifika and women have been disproportionately impacted by job losses to date. My hope is the expanded flexi-wage scheme will play an important role in helping people from these groups to get quickly back into work.”

Ardern said $311m of additional funding will be put toward the subsidy, which should enable up to an additional 40,000 unemployed people to take advantage of the programme.

As for the small business loan scheme, which has been active since May and allows businesses to access $10,000 per employee loan of up to $100,000, Ardern said cabinet is proposing extending the scheme for three years and the current interest-free period from one year to two years. She said work was being done on establishing a micro-finance company for small businesses or expanding the mandate of the crown-backed Venture Investment Fund.

The latter policy was subsequently criticised by the Act Party, which called the proposal to take a stake in private companies “communism by stealth”.

“Labour is using a public health crisis to expand the size of the government,” it said. “Why is Labour proposing for the government to take a stake in private companies? Because compliance costs and red tape built up under various governments have thrown sand in the gears of the economy.”

How about the RMA?

A massive bone of contention with the business community during Labour’s last term, the RMA is frequently touted as the biggest obstruction to business investment and activity in New Zealand. Ardern announced that her government would continue to fast track infrastructure projects and that wider reform on the RMA would continue.

“David Parker is progressing this work and we intend to make this a priority for the first half of 2021,” she said.

However, she also outlined her commitment to carbon neutrality, saying there would be work on a business case to shift to 100% renewable electricity and a hydrogen road map with a focus on domestic freight and export markets.

“All of this creates efficiencies for us, addresses our international obligations, but also creates an opportunity to trade on our clean, green status with authenticity,” she said.

“Our climate status has the potential to be an economic golden ticket for our products, if we get it right.”

The digital economy

One of Labour’s often-pitched paths to economic recovery, investment in the digital economy was touted by Ardern as a massive money maker and one that would help New Zealand respond to Covid-19.

“The total global e-commerce market was estimated to be worth US$7.7 trillion in 2018, including both the retail and business to business market,” she said.

“Already our technology sector is New Zealand’s third largest exporter, with ICT alone representing $6.7 billion worth of revenue in 2019, and Covid has shown the role it can play in our recovery and in working in a more remote fashion.”

To expand this sector, the newly spawned minister for the digital economy and communications, David Clark, would create a Digital Ministers Group that would focus on connectivity, economic benefits of digitalisation and e-commerce, data, digital skills and inclusion.

Are there still plans to change sick leave?

Yes. During the election Labour promised to shake up the sick leave entitlement by increasing it from five to 10 days, and it looks like the new government’s sticking to it.

“Making sure that workers are well supported to stay home when they are unwell is an important part of our Covid-19 response, and in our view, the current provision of five days is not sufficient,” Ardern said.

What about the all-important border?

With recent cases of Covid-19 still slipping through the border, Ardern said the existing border settings would be maintained but there would be changes depending on how the Covid-19 landscape develops.

“We want to find a balance here between bringing in more workers essential to our economic recovery and ensuring there is space for New Zealanders wanting to return home to do so – and I should note that as you can imagine, demand is high and at some points, at capacity in the lead-up to Christmas. Kiwis understandably want to come home.”

Ardern said New Zealand had advance vaccination purchases with Pfizer and BioNTech and she’d asked the Ministry of Foreign Affairs and Trade for advice around leading a delegation into several key markets, including Europe and the UK, where we have already begun negotiations on critical free trade agreements, as well as China and the US.

Finally, what about foreign trade?

New Zealand would still pursue the major free trade agreement, the Regional Comprehensive Economic Partnership (RCEP) between Asia-Pacific countries, which would be the largest in the world. Ardern said this would be worth over $2b, and would “support New Zealand’s Covid recovery, especially since East Asia is forecast to recover more quickly than Europe and America”.

“RCEP demonstrates that while getting our borders open again will be important, we can continue to further our interests in the current environment. And we will.”

What was the reception?

All in all, it was a fairly warm reception from the BusinessNZ audience. While some of Ardern’s policies – such as sick leave – would invariably pile more more costs on businesses that are already grappling with minimum wage increases, there were no audible complaints from audience members. Grant Robertson was personally praised for his handling of the wage subsidy, and during question time the most pointed questions were about the RMA, which, in typical Ardern fashion, were answered or deflected with aplomb.

The Act Party may be accusing Labour of using the pandemic to infiltrate the private sector, but there was little obvious sentiment of suspicion or contempt from the country’s business leaders as the prime minister declared her position today. In fact, there seemed to be a subtle appreciation of the stability Ardern’s presence engendered – especially against the tumultuous backdrop of the unfolding absurdity in the United States.