Business

Confidence logistics and supply chains to operate smoothly during level 3

Freight companies are confident trade logistics and supply chains will operate effectively and efficiently once the Covid-19 alert drops to level 3 next week.

Level 3 takes effect at 11.59pm on Monday, 27 April and will allow for the resumption of all freight movements and the restart of logging exports and other major exports that were not deemed as essential.

One note of caution is around a possible shortage of shipping containers.

Cargo and freight being exported use the empty containers from goods that come into the country.

With a drop in imports containers may become scarce.

Port of Tauranga chief executive Mark Cairns said the port was keeping a close eye on the situation.

''There was a looming shortage for all of those non-essential containers being locked into terminals, but I think that has been resolved of late. I think we are just keeping a weather eye on the amount of imports that are coming into New Zealand in the future months.''

He said if there was a shortage, the cost of trade would go up.

''So they would have to import containers into the country to have available there to export their goods.''

Cairns said while the forestry trade dropped off overnight when the lockdown came in, the port was heavily involved at this time of year in the export of kiwifruit for Zespri and milk products for Fonterra.

The Road Transport Forum is expecting less freight being moved around the country.

CEO Nick Leggett said this would take sometime to become apparent.

''Obviously a lot of the freight that is yet to be delivered now was ordered months ago. It's going to take 2-3 months I think for that really to present itself clearly but it will mirror the wider patterns that are occurring in the economy and the wider reverberations of the Covid situation worldwide.''

Leggett said transport companies would take a real knock.

''Activity, staffing levels, profitability will mirror all businesses in the economy and unfortunately that looks that will be a downward trend for some time to come.''

One of the country's largest freight and logistics firm Mainfreight has been operating through the lockdown, delivering essential supplies.

Group managing director Don Braid said the cost of shifting international freight had shot up.

''Airfreight rates have climbed dramatically as passenger aircraft have come off routes and replaced by freighters, certainly to and from China for PPE gear the rates have increased dramatically upwards of 5-600 percent.''

Braid said businesses were beginning to re-think air freight versus sea freight.

He is advising them to re-think their supply chain.

''Do we really need it as quickly as we think we do," he said. "Do we actually need to be holding it in our warehouses when if we are a non-essential business whereas we could put it into a transport warehouse or a logistics warehouse like Mainfreight has, which is then deemed an essential supplier and would have given those customers access to the freight sooner than perhaps the others.'

''It has become a negotiation of being able to establish enough freight both in and outbound for air-charter work.''

Braid said freight volumes had naturally declined.

''It has been a tough time being able to keep our drivers rotated through the delivery period required but our teams have been magnificent.''

KiwiRail has seen its revenue halve since the lockdown took effect.

Only two of its three ferries are running and then only one return crossing each day.

Its trains carrying imports and exports have halved from 960 to 450 per week.

Group CEO Greg Miller said Fonterra exports and meat and fish exports had kept the business alive.

He said once level 3 was in place things would be up-and-running quickly.

''Because we have had a rostered shift work in the field we have actually maintained our services and equipment, pending the comeback and a 4-week slow down is not that long a period for a business like ours. So a comeback for us is a little bit of planning and a roster adjustment, but it is days rather than months.''

Greg Miller said coal, forestry and pulp and paper export freight would start to resume for KiwiRail from next week.

However, the tourism component of KiwiRail's business is a non-starter for the foreseeable future.

Miller said between the ferries and the tourist trains, such as the TranzAlpine they normally took up to 1 million tourist passengers a year.

About 800,000 of these use the trains and ferries, and 350,000 use just the trains.

Of this number the split between domestic and international travellers is 70-30 in favour of those from overseas.

Don Baird from Mainfreight said lower fuel prices were a bonus and this was being reflected in rate structures for customers.

This article was originally published on RNZ and re-published with permission.

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