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A last-minute rush for export cargo space isn’t going to work in a market where empty containers are scarce and shipping lines call the shots on supply and pricing.


Middle East unrest has not been disrupting shipping for New Zealanders but increasing Somali piracy is lifting freight rates, says Geoff Popham, Burnard International freight forwarders business development manager.

“But who knows what’s around the corner? If there’s a problem with the Suez [canal], ships would go a different route from New Zealand to Europe — for example, via Panama — and there might be a surcharge. But it’s never happened.”

What is happening is increasing oil prices, causing shipping lines to raise the BAF (bunker adjustment factor), or fuel surcharge.

On top of that a shortage of cargo capacity is adding to freight rate increases.

Space is difficult to find, especially to Asia — and in particular China — where there is up to two months’ wait to some destinations on some lines.

“Exporters should be making sure relationships with their service provider – whether that’s a shipping line or freight forwarder – are open.

“Tell them what you are doing well in advance. Give them forecasts; don’t wait till your cargo is in the warehouse and you need a container ‘right now’ to pack for Shanghai,” Popham says.

And lines are still slow steaming, adding time to the round voyage to save fuel.

Some lines offer slower and cheaper services; some operate in consortiums with others, sharing space by all putting a ship on the trade route, and charging separately. “It’s a fluid, cyclic situation,” says Popham.

Everyone interviewed for this article echoed his comments.

The chief executive of GoGroup NZ, that includes GoReefers freight forwarders, Murray Painter, says the upcoming peak season for New Zealand apples and other produce and meat was threatened with a peakseason surcharge from some lines, especially trans-tasman.


On this route, too, bunker charges are getting ridiculously high, he says.

Painter says as foreign-owned companies, shipping lines can add peak-season surcharges, or “pretty much anything they like”.

Finding space to ship general cargo, such as wine, is difficult because it’s getting bumped off to make space for higher value seasonal goods.

“For a general exporter it’s tough, but there’s little we can do about that.”

Painter recommends exporters talk to their shipping partners as soon as they get an export order.

“Shippers nationwide need to get together to have some [negotiating] clout. That’s how New Zealand has to work, and it can be done.”


Wielding influence at the negotiating table is not impossible for the New Zealand Shippers Council and its 14 large exporter members.

The biggest issue for them, says council chairman Greg Steed, is the continued lack of container slots: if you miss a firm booking you could be waiting up to six weeks to get a load away because all following ships are full too.

“We need more capacity, whatever size ships, but we need the right ships, with New Zealand’s cargo being reefer heavy.”

Container supply is also tight, but not at crisis point.

He says shippers are paying for slow steaming, especially of perishables, but he thinks fuel surcharges could go down because big lines are making good profits.

“Surcharges are not going to go away but because we are big shippers we have the ability to negotiate them away or reduce them. Smaller shippers might not fare so well,” Steed says.

Even before Canterbury’s earthquakes, the region was struggling to have goods shipped, says Export New Zealand executive director Catherine Beard.

“The lines tell us exporters need to enter contracts and not rely on the ‘spot market’, as it were. Weigh up the pros and cons of paying a bit more but having certainty.

“Smaller exporters are at the bottom of the food chain for lines. Talk to your freight forwarder and try to co-ordinate with other smaller exporters; think strategically.

“And get the issues on the agenda of your local ExportNZ committee!”


New Zealand must keep in mind that in shipping terms, it is a minnow, says Peter Carr, owner of I P C and Associates transport consultancy.

It’s rare for one line to operate alone on a service from A to B – they have formulas for carrying each other’s cargo and charge their own prices. Small exporters should consider dealing with the port directly on port charges. If cargo owners know the costs within shipping companies’ charges they can shop around.

The only shipping company to return calls for this article, Swire Shipping, is building eight new ships to be at sea by 2013 in expectation of an economic recovery, but is still not able to sustain loss-making services long-term.

Randy Selvaratnam, general manager of Swire Shipping New Zealand, says in order to manage space requirements, exporters need to book well in advance, ensure bookings are realistic and that the cargo shows up on the wharf.

“It is one of the most frustrating issues for carriers when bookings get cancelled at the last minute when there is no chance of replacing the cargo, leading to wasted space and a loss in revenue.”

He disagrees that smaller exporters are disadvantaged. “They may require more niche services, for which there are carriers like us, who have always tried to tailor our services to meet the demands of both large and small exporters.

“Also, having a flexible shipping strategy helps small exporters, and maybe spreading shipments over a number of carriers depending on each carrier’s strength.

“Also, smaller exporters could still enter into contracts with clearly defined clauses that should in the long term benefit both the shipper and carrier.”

And what about the near future? He does not anticipate major changes to services. But trade with Asia is expected to expand at the expense of markets such as Europe and America. [END]


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