Government may need to step in to overcome shipping problems costing New Zealand exporters billions, economist warns

Government may need to step in to overcome shipping problems costing New Zealand exporters billions, economist warns
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The government may need to get involved to help overcome shipping problems which stand to cost New Zealand exporters $10 billion in lost earnings this year, according to an economist.

Export earnings in August were up 25 percent from the same time last year, having bounced from a soft spot at the start of the year.

Economist Benje Patterson said shipping challenges were however denting earnings by adding costs, and that had exporters questioning whether it was worth trading and trying to sell overseas.

"When you add up all those, you can quite easily get costs in the ballpark of $10 billion to our exporters next year if we can't get these logistical challenges sorted."

He said ships were calling into fewer ports and cancellations were common, particularly into regional ports.

"The upshot is that many exporters are struggling to get the volumes out of the country in a cost efficient manner. These problems aren't going away anytime soon as global shipping bottlenecks are huge, and New Zealand is an infinitesimally small consideration for global shipping behemoths," Patterson said.

"Our biggest companies like Fonterra seem to be finding a way through, but the challenges for small players are huge, especially out of South Island ports."

He believed government intervention may be needed to combat the shipping issues.

"There is an urgent need for government to consider the case for intervention to ensure our exporters' access to shipping - which could even at one extreme involve chartering of vessels. This may seem crazy, but bear in mind that the government is already approaching $1 billion in cheques to airlines to keep airfreight moving."

"Airfreight on an annual basis accounts for less than $10 billion of total export receipts, while exports moved by sea freight account for closer to $55 billion of total exports across a typical year," he said.

RNZ