It is a difficult situation at the moment dealing with importing and exporting goods around the world, unfortunately, the situation is not improving. The COVID virus continues to impact on global trade, freight rates are continuing to increase on a fortnightly basis and equipment and space shortages continue to hamper the movement of freight.
The latest layer to add to this is the Chinese government’s policy of having a zero case Covid strategy of the new delta strain. As a result, they have shut down part of Ningbo port due to one worker testing positive almost a fortnight ago. This adds to the existing supply chain issues and further threatens the supply of timber, steel and consumer goods being shipped to Australia. Ningbo is the world’s third largest port; the partial closure will worsen congestion off China’s coast and tie up thousands of containers needed to move freight around the world. The fact that Ningbo port is one of the world’s largest container terminals, the shutdown will have a flow on effect, causing backlogs at other major Chinese ports. This latest closure comes on the back of the closure of Yantian port in June, the impact of which is still being felt around the globe. Add to this the closure of the Shanghai airport terminal due to COVID cases, this will put more pressure on freight movement and create backlogs at Shanghai airport. This means shippers will be looking at alternative arrangements via Seafreight, adding to the existing pressure on the Seafreight sector.
The other issue that is directly affecting Australian importers is the situation whereby shipping lines are prioritising container movements to the USA and Europe. US companies are paying up to four times the normal rates for containers ex China, this is an extremely profitable option for shipping lines if you compare the freight rates to Australia. Currently a 40’ container to Australia fetches around USD8000, the same container to the US fetches upwards of USD20000. There are reports of Australian timber merchants having shipments abandoned part-way through shipping and left at ports in Shanghai and Singapore by shipping companies who are redirecting vessels to take containers to the USA.
It is important to understand that the supply chain issues affecting Australia will not subside in the near future, we are about the commence the traditional peak season and the possibility of further COVID outbreaks pose a real threat to supply chains around the world.
PAUL CANTARELLA
Trade Consultant and Compliance Specialist
Gold Sponsors
