Omicron adds to 'very fraught' scenario

Shipping Gazette March 19,2022 - Chris Edwards CBAFF President

"Right now, it's about answering the loudest one." That was just one of the comments that has resounded with me in talking to our members about how Omicron is affecting their businesses.

We all see the media headlines and social media commentary about rising food costs and empty shelves in supermarkets and other stores.

In workplaces and home offices across the regions, freight forwarders and transport companies are working tirelessly to minimise those impacts of the Omicron outbreak as best they can.

Global  logistics  challenges have been well documented  but, in  brief, the past two years has seen a massive increase in purchasing and volume of freight arriving here. There is a global shortage of containers and hugely increased demand for container space.

Cargo often sits in transhipment ports for weeks and shipping times have doubled. Freight costs have increased by up to 1000% and port congestion intensified to the point that international vessels now often skip some NZ ports they would usually call at; or they omit the country altogether.

And now Omicron has arrived into this very fraught scenario, already beset with delays and additional costs.

Freight forwarders were as prepared as they could be.  Like other businesses, many have split their teams to be in the workplace at different times or working from home. Ports have been splitting shifts and have straddle carriers working in 'bubbles'.

There is no blame to apportion, everyone is doing their best but every link is affected.

In the North Island, particularly Auckland, the domestic supply chain is now painfully stretched. To quote one Auckland member, "It starts at Ports of Auckland (PoA) where they have been 5% down due to staff sick or isolating, which has made congestion worse.  Some ships are diverting to Northport. "That means longer journeys for trucking companies, who also have staff down so can't put all their vehicles on the road.

The major transport businesses are providing regular updates to freight forwarders and they are all expect delays . "There aren't enough people in depots and warehouses to load and unload the usual volume of goods. Even when we pay extra to get stuff from Auckland to Wellington overnight, it is still taking three days but I guess that's better than five."

Consolidated, less than a container load (LCL), freight that arrives in New Zealand goes to unpacking facilities, to be sorted and sent on the next leg of its journey. Inevitably, these are also affected by Omicron and some have had to operate at reduced hours. All this adds to costs of goods, including food items. 

To  quote another member, "It's  just  getting harder and harder. Every time a shipping line decides to discharge at a different port, it costs more. The longer freight sits and the longer it takes to deliver, the higher the costs. Importers have to pass those costs on to clients, who ultimately pass it on to consumers."

At the time of writing, the South Island had not been impacted as badly as the North. The general feeling is that everything is taking longer but none of our members have reported significant port issues.However, as one Southern member put it: " We are on tenterhooks, waiting to see if we get hit the same way". Another commented: "Once we get higher  (COVID)  numbers like Auckland is seeing, we would anticipate issues with staffing levels in warehouses and truck drivers areas where we already struggle for staff numbers. Once the daily numbers really get up there, we will see more delays in the supply chain."

Inevitably, this is putting significantly more strain on a freight forwarding workforce already under incredible pressure and leading to concerns about experienced people leaving the industry.

Most members say that, after two years of challenges, most customers are now realistic about the delays. However, not all have changed their expectations.

"We do need everyone to be aware that you can't call today and expect something to be delivered the next day, or even for some days," another told me. "Everything is so much more difficult. There are so many more interactions, sometimes just to find where things are, let alone move them. The expectation of the norm around the supply chain needs to alter for everyone. Once the peak of Omicron has subsided, we can take stock but 'normal' is not coming back any time soon."