A shipping plan to resolve the supply chain crisis

Ori­gin­ally pub­lished in nzherald.co.nz 10 Janu­ary 2022

By Craig Har­ris­on

The ongo­ing ship­ping and sup­ply chain crisis needs a clear plan and imme­di­ate action.

We see daily reports about sup­ply chain con­ges­tion. Cov­id-19 was the trig­ger that exposed the under­ly­ing weak­ness of the glob­al sup­ply­chain. New Zeal­and’s over­re­li­ance on glob­al ship­ping has placed us in a dif­fi­cult pos­i­tion.

We have heard a lot about these prob­lems. The glob­al forces driv­ing the situ­ation are not going away. What New Zea­l­and can do is adapt and modi­fy our approach to ship­ping.

We’re in a trans­ition between two approaches to the sup­ply chain. For the past 30 plus years, the pre­vail­ing mind­set was the mar­ket would provide, there was no role for plan­ning, and there was no need for New Zea­l­and ship­ping. This idea has been revealed as a bad mis­take.

Where to now? Industry play­ers admit there is a sig­ni­fic­ant prob­lem. Recent Gov­ern­ment reports con­firm what the issues are, but only dis­cuss under­writ­ing, not sig­ni­fic­ant invest­ment. The glob­al out­look for sup­ply chain per­form­ance will not improve in the short to medi­um term.

Ships are being delayed around the world, and when they get to New Zea­l­and, they are already behind on their sail­ing sched­ule. New Zea­l­and ports need to ensure that ships are ser­viced on time. Until the prob­lems are resolved at the Ports of Auck­land, and it returns to the through­put achieved pri­or to the auto­ma­tion pro­ject, loc­al con­ges­tion will con­tin­ue to impact on the New Zea­l­and freight move­ment.

Issues around the avail­ab­il­ity of labour are cer­tain. But there are solu­tions like ros­ter­ing and employ­ment secur­ity. These would reduce staff turnover and encour­age work­ers to see a career rather than an unat­tract­ive and exhaust­ing future of irreg­u­lar hours and in some cases poor pay and con­di­tions. Work­ers can no longer be seen as a cost to be reduced but as an invest­ment in suc­cess.

Export cargo needs to be in front of the major ship­ping lines at major ports so there is no require­ment for big ships to trans­it around New Zea­l­and. A New Zea­l­and-flagged coastal ship­ping ser­vice would move the volumes needed around the coun­try in a timely man­ner. There is now no guar­an­tee that for­eign ves­sels will even stop at a sched­uled port.

An effect­ive New Zea­l­and coastal ship­ping ser­vice needs to be sup­por­ted by New Zea­l­and ports, and in return ensure con­sist­ent berth times and sup­ply of port ser­vices.

Con­ges­tion is the under­ly­ing issue with ports as freight needs to move both on and off a port in a timely man­ner. If it is delayed or in some cases not even picked up or dropped off by ship­ping com­pan­ies, this adds to the prob­lem.

A coastal ser­vice util­ising three to four ships and giv­en reg­u­lar berth space in ports would?help smooth out sup­ply chain con­ges­tion. Ports could also bet­ter plan when freight would be moved through the port and have con­fid­ence it would hap­pen.

Maybe the solu­tion is a con­sor­ti­um of New Zea­l­and ports and freight oper­at­ors devel­op­ing a joint ven­ture, which answers the needs of all play­ers. In a small mar­ket like New Zea­l­and, we have the abil­ity to move quickly and find innov­at­ive solu­tions.

Ports could coordin­ate a ship­ping ser­vice that meets their own needs and provide options to cus­tom­ers who have recently seen their options evap­or­at­ing.

Port com­pan­ies around the coun­try devel­op off-port con­tain­er stor­age and truck­ing facil­it­ies, and ports have worked with rail devel­op­ing fixed daily ser­vices between Taur­anga and Auck­land. Some ports are involved in joint ven­tures such as tug oper­a­tions and at times pro­cure­ment ven­tures.

KiwiRail could be a pos­sible part­ner with its ship­ping oper­a­tion, as it has the capa­city, with dir­ec­tion and sup­port from the Gov­ern­ment.

Every­one knows we have a prob­lem, and all say coastal ship­ping is one of the answers, but unfor­tu­nately no clear, sys­tem­ic solu­tion has been developed. The Gov­ern­ment needs to take the lead and facil­it­ate dis­cus­sions between ports and freight oper­at­ors to get New Zea­l­and coastal ship­ping back in play.

We need a nation­al ports strategy that links in with a coastal ship­ping strategy, and we need to get this up and run­ning now.

• Craig Har­ris­on is nation­al sec­ret­ary of the Mari­time Uni­on of New Zea­l­and.