NZ Freight Sector Reality & Cargo Transport Outlook 2020

4-minute read

The ‘new normal’ is a phrase we are now hearing a lot throughout the freight sector and the economy in general — but when will it arrive and what will it mean for your business?

In terms of the regulatory space, things have settled down. If you look back four to six weeks, Customs Brokers and Freight Forwarders Federation of New Zealand (CBAFF) was continuing to put out several news updates a day to keep the members abreast of the rapidly-changing requirements.

Without doubt, the government agencies still have many ongoing ‘fires to fight’ in terms of supporting and enhancing the flow of trade — but our sector now has a clear picture of everything that is currently required of us to fulfil our roles.

‘The new normal’ means working around the heavy constraints of air freight, which will inevitably be long term. Another current challenge is some constraints on sea freight, due to the reduced volume of cargo coming in and out of New Zealand.

Understandably, with less cargo to go round, shipping companies are reducing their offering. We are seeing a lot of cargo ships not calling here and ‘blanking’ has become a phrase our clients are having to get used to.

In the breakbulk and roll-on roll-off (RoRo) services, Höegh Autoliners and Wallenius Wilhelmsen have significantly reduced their offerings, meaning available options have halved.

Queensland’s rule re quarantine of vessels that have been at sea for fewer than 14 days means many shipping companies that would normally journey via Brisbane are re-adjusting their schedules and that has a flow-on effect to New Zealand.

Anecdotally, I hear many forwarding companies are down by 20 to 30% in terms of the volume of cargo that is moving — but we still have to move what is around, and the constraints of air and sea means we are having to work ever harder to find solutions for our clients.

However, that is what we do — and the expertise and network of international contacts in our sector has never been more evident and more valuable to the supply chain for NZ Inc.

Sadly, some of that expertise and experience is being lost. During the past year, we have written frequently in this column about the difficulty of recruiting sufficient high-quality applicants to the sector and the measures CBAFF, together with industry partners, have been putting in place to address that.

In the current climate, many businesses have had to make redundancies and the sector is now in a situation where there are more candidates than there are jobs.

This is a very difficult decision for any employer to make. But the industry is strongly committed to continuing to develop our people and to be ready to provide opportunities once the tide turns.

In the absence of an Australian and Asian bubble, passenger flights and therefore belly space for cargo will continue to be heavily constrained.

Importers will continue to pay more than they used to and that is likely to have a flow-on effect in terms of costs to consumers.

New Zealand exports are currently reduced. Challenges around exports are very much a moving feast and can change by the day.

It depends on the commodity but, at the time of writing, many food products, such as seafood into China are required to be tested for COVID-19.

A week or so ago, it was Norwegian salmon sparked by an unsubstantiated rumour in the Chinese marketplace! There have been concerns this requirement could spread to all packaged goods.

New Zealand Government agencies are working tirelessly to address these issues.

The ‘bump’ in New Zealand consumer spending and strong sales that followed the move to Alert Level Two has abated.

Consumers are waiting to see what the economic situation is before they spend, and retailers are waiting to see what demand might be before they place orders.

The next quarter, from July to September, is likely to be the most challenging. The hope is that once we get through that period, and see what the Christmas quarter brings, then signs of recovery might start to emerge.

Of course, another aspect of living with the ‘new normal’ is that it is now very hard to forecast with any certainty what might be around the next corner.

Domestically and globally, the resurgence of the pandemic in parts of China, its continued growth globally and the impact of that on logistics and NZ Inc will continue to test us for some time to come.

SOURCE: Chris Edwards, president, Customs Brokers and Freight Forwarders Federation of New Zealand (CBAFF).

P.S. Easy Freight Ltd helps New Zealand importers & exporters to save money on international freight and reduce mistakes by guiding how to comply with Customs and biosecurity rules. 

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