Source: Radio New Zealand
File photo Unsplash / Aron Yigin
Thousands of shipping containers filled with New Zealand exports bound for international markets are caught up in the Midd le East conflict.
New Zealand has a free-trade deal with the Gulf Cooperation Council which includes countries like Saudi Arabia, UAE and Oman.
New Zealand exported $3.1 billion worth of product there in the year to June last year – mostly dairy, red meat and horticulture products.
Shipping firm Kotahi, which was set up by Fonterra and Silver Fern Farms, said it’s working with its carrier partners and customers to identify contingency plans and alternative routes for cargo destined for the Middle East or scheduled to transit through the region.
Chief executive Emma Parsons said all shipping lines have suspended services through the Strait of Hormuz due to the Middle East conflict, Kotahi currently has 4000 TEU (equivalent 20-foot containers) of cargo in transit on this trade lane.
“Kotahi is closely monitoring developments in the Middle East and is well positioned to respond quickly to support New Zealand exporters in this evolving situation.”
The Meat Industry Association said nearly all our exports to the Gulf Co-operation Council, which were worth $298 million last year, go through Hormuz.
“While there are other ports outside the Gulf for some of the GCC countries, such as Jeddah for Saudi Arabia and Soha for Oman, these are likely to face significant congestion and delays if the ports inside the Gulf can’t be accessed,” a spokesperson said.
“If Hormuz is closed, congestion and delays will primarily impact chilled exports to the Middle East, which were worth $166 million last year.”
The association said disruption in the straight won’t affect exports to the United Kingdom and Europe as New Zealand red-meat products are shipped via the Red Sea or around Africa.
Dairy giant Fonterra said it’s monitoring the situation closely, “It’s too early to say what the impact will be.”
“The Middle East is an important and complex region and we are well versed at trading through geopolitical and trade volatility along with supply chain disruptions.
“However, the situation remains highly unpredictable, with a variety of scenarios that could play out over time.”
Export New Zealand executive director Joshua Tan said it’s important exporters monitor developments.
“I think at this stage there are probably more questions than answers, given that it’s all happened over the last 48 hours.
“I think overall, there are probably three key issues for global supply chains at this point. That’s the closure of the Strait of Hormuz and how that affects shipping lanes, but then also the global oil supply, the closure of major airports in the region, and then the anticipated resumption of attacks on shipping in the Red Sea.”
Tan said exporters have product on the water heading towards affected ports.
“Exporters need to work with their logistics providers early on about what to do. It’s about keeping your customers and your clients informed about what potential delays there might be and what you’re doing to mitigate those.”
Tan understands the Ministry of Foreign Affairs and Trade is organising a briefing for exporters.
“Companies learnt some really valuable lessons about resilience during Covid – certainly the need to increase communications up and down the supply chain. improving relationships with customers and also those logistics providers, but then also the need to consider a just-in-case inventory model in markets and holding higher stock levels overseas.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
