Aussie/NZ ocean spot rates head south as demand softens
Long-term freight rates to Australia and New Zealand have reached “new highs”, but spot rates ...
The long-term freight rate outlook has turned “positive” for Australia’s agricultural sector, but biosecurity delays caused by a “hopelessly outdated” system are adding to short-term supply chain costs.
According to a new report by agribusiness specialist Rabobank, while container shipping costs will continue to decline over the next year, they are unlikely to return to pre-pandemic levels due to “broader structural factors”.
For example, it said “geographical uncertainties” were creating risks for container shipping, and that there are “growing operational costs for the sector from higher energy costs and sustainability regulations”.
Therefore, Rabobank noted, container rates may “never” return to the pre-pandemic levels of about $3,000 per container, but would still decline from the current $7,000-$8,000 mark in the year ahead.
Stefan Vogel, RaboResearch general manager for Australia and New Zealand, noted that Australia’s agricultural sector was heavily reliant on container shipping, including for imported goods such as plant protection and machinery, and also for exporting meat, fruit and vegetables to international markets.
He said: “While we are not expecting ocean freight to return to normal for the sector [in Australia] before 2024, we think it is going to get better for us.
“It will be one or two years of ocean container freight rates tending to move slowly lower, while simultaneously reliability will improve – step-by-step – up to something closer to normal.”
However, Australia’s importers are currently dealing with delays and extra costs because of cumbersome biosecurity measures, according to the Freight & Trade Alliance (F&TA).
Director Paul Zalai explained: “The department of agriculture, fisheries and forestry use labour intensive processes, with biosecurity officers physically assessing import documentation and selecting consignments on a set criterion for inspection.
“It is a broken and hopelessly outdated system unable to keep pace with increases and changing patterns of international trade – despite the best efforts of officers, the department cannot keep up and industry is paying the price.”
For example, he said the the issuing of import permits can take “weeks” to complete.
“This is causing significant delays for importers to gain access to cargo, adding to storage costs and generating significant container detention fees administered by and payable to foreign-owned shipping lines.
“Shipping lines don’t care why there is a delay in returning empty containers, yet insist they are returned within prescribed timeframes to add to their stockpile congesting our port precincts,” Mr Zalai added.