Connector Series - New Zealand
New Zealand
Since the beginning of the global supply chain crisis New Zealand has been hit hard with substantial disruptions of the operations along the coast. These disruptions are ongoing and one of the main reasons for extreme pressure on exports from and imports to New Zealand is a lack of capacity calling Aotearoa. Across the various deep-sea carriers, the average shortfall of capacity sits at around 30%, or, to put this into other words: While a service was planned to call New Zealand 52 times in 2022, the number of sailings will be only around 40 by the end of this year.
The reduced number of calls results in a dramatic shortage of container capacity available to shippers. This shortage gets even worse in peak seasons for heavy produce and refrigerated cargo when vessels reach their deadweight capacity limits earlier than maxing out on their container slots.
The capacity shortage is a result of many factors. Above all, port congestion leads to long waiting times of the vessels outside New Zealand ports. These add up and make a trip along the New Zealand coast unsustainably long. In some examples, vessels have spent almost a month to service what is, literally, only a handful of ports on a relatively short coastline and in normal times would be serviced in 7 – 8 days. Or for exports to Australia, which after all is only a few days sailing across the Tasman Sea, some vessels spend three weeks in New Zealand to load the cargo. Port omissions, rotation changes or complete blank sailings for a whole service rotation calling New Zealand, are results of these delays deriving from congestion. And when vessels arrive off-schedule or change their rotations at short notice, it impacts port labour planning, which in turn has a negative effect on productivities and as a result makes an already challenging operational situation even more difficult to manage.
The ongoing shortage of available tonnage leads, on the one hand, to services facing a lack of supply with the required number of vessels or smaller vessels than needed. On the other hand, vessels cascade through services and change owners a lot, which leads to a constant exchange of vessels. The latter requires specific times and dates to be met to hand over tonnage mostly in Asian ports, which sees vessels that are being phased out to cut and run, omit ports, or not call New Zealand at all to avoid the risk of being caught in a congested port. And vessels that are being phased in are at risk to face delays for example when they have to wait for a required hull cleaning before entering New Zealand waters in order to be MPI compliant.
One of the many ripple-on effect of reduced capacity in the New Zealand market are also re-occurring supply issues of empty equipment, which can add another layer of complexity to operations. At times the already depleted vessels in a service calling New Zealand arrive in a bundle so close to each other and in times of equipment shortage that the first vessel arriving might carry the empty equipment needed for laden exports booked on the second vessel. But the time to discharge, supply, pack, and gate in is extremely tight or can be too short to load on the second vessel, which calls shortly after the first. As a result, the cargo has to be rolled and wait for the next available vessel which might be weeks away, subject to further delays or at risk to not be available at all for the above-mentioned reasons.
Finally, in the current winter months New Zealand ports also have to deal with weather events that can have a substantial impact on operations. High swells, draught restrictions, heavy rain, or high winds that slow down operations considerably or affect the safety of operating cranes to such an extent that operations have to come to a stand-still, all increase the risk of further delays of vessels as well as cargo operations and as a result add more complexity to schedule integrity.
For the ports of New Zealand in particular worth to mention is the Port of Auckland (POAL). Being the major first port of discharge for import cargo arriving into New Zealand and as such playing an integral part for the schedule planning of the shipping lines, POAL has put a lot of work and resources into their endeavour to automate terminal operations with the goal to increase efficiency and productivity. This automation project and the challenge to test automation parallel to manual operations in a live environment, has in part led to significant delays in operating ships. The project itself was delayed over and over again and strong work safety challenges as well as the impact of COVID-19 and deriving labour shortages added to the complexity. As a result, operations were disrupted, ships delayed, and operations consequently affected in all other ports in New Zealand. On 8 June 2022 POAL finally announced the abandonment of the automation project at Fergusson Container Terminal “[…] in the best interests of the company, its stakeholders, and the New Zealand supply chain […]” and will convert the terminal area which had been dedicated to that back to manual operations.
As unfortunate as the outcome in general is, this decision will eventually have a positive effect on the POAL operations and as a result take pressure off the other New Zealand ports as well. The challenge POAL has to overcome now is to retrofit the machinery, for example straddle carriers designed for driverless operations, with cabins for workers to operate them, and then to recruit those workers as soon as possible. New Zealand’s low unemployment rate of currently 3.2% will be hampering these efforts, however the current re-opening of the borders and ability for companies to start recruiting overseas’ staff again will likely increase POAL’s options.