Chilled meat exports take a chop in favour of frozen product in shipping crunch

Exporting chilled meat has become “high risk” with container shipping lines hitting just 20 per cent of their New Zealand schedules, says major exporter Affco as the $9.4 billion export meat sector heads into its peak season.

The Talley’s Group-owned company had reduced its proportion of chilled exports in favour of more frozen product as it became more and more strategic in its export decisions, said general manager sales and marketing Mark de Lautour.

“Shipping chilled product is now high risk. We’ve pulled it back to being strategic withclients.”

Chilled meat is a higher value export earner than frozen product. In 2019/2020 16 per cent of all New Zealand meat exports were chilled, compared to 6 per cent in 1990, according to the Meat Industry Association.

De Lautour said Talley’s was continuing to take “a leadership position” in the sector by signing up for two more chartered break-bulk vessels, into which frozen meat can be loaded by crane and which don’t need to be unloaded at container terminals.

Affco was already chartering two such vessels – hard to find with the current scarcity of spare vessels and costing “a hell of a lot of money”.

It had invited the Silver Fern Farms and Anzco meat companies to share the space on the chartered ships.

“That is not a cost play, it’s to make sure New Zealand products flow,” said de Lautour.

Affco exports more than 150,000 tonnes of meat to 80 countries a year.

Silver Fern Farms is already a partner with dairy export heavyweight Fonterra in New Zealand’s biggest supply chain collaboration, Kotahi, which has long-term agreements with container shipping line Maersk and the country’s biggest export gateway, Port of Tauranga.

The peak meat export season runs from now until April, de Lautour said.

Primary export sector players expect the next 12-18 months to continue to be logistically tough for shipping any kind of product that requires refrigeration.

De Lautour said it wasn’t that New Zealand’s shipping space crunch had got particularly worse. It just continued to be difficult – the result of the pandemic causing pent up spending by locked down populations and creating a consumer goods boom. But the issue for primary exporters was amplified in peak season, he said.

The problem of shipping congestion and refrigerated container stockpiles at the ports of Auckland and Tauranga “have been completely overplayed” given the global nature of the shipping issue, he said.

“New Zealand consumers have been doing up their kitchens and bringing in big screen TVs. Consumer spending is at a record. It takes three to four years to build a ship and it takes a long time to build containers. Every container … is either on board a ship or at a port.”

New Zealand’s port issues paled in comparison to those at Los Angeles, which was the worst, and in China where up to three major ports could be overloaded at any one time.
As soon as a Covid case cropped up, they were locked down, de Lautour said.

“In the US there are simply not enough trucks to clear freight. Biden has brought in the army to drive trucks.

“Certainly no one in Wellington can help with this. We’re starting to get innovative in terms of shipping.”

Asked if meat processing sites could be forced to respond by restricting the number of animals they can accept from farmers, de Lautour said it was possible – but not because of shipping issues.

“The labour shortage is at higher risk of triggering that. Seasonal labour shortage is the bigger challenge.”

Meanwhile, major seafood exporters Talley’s, Sanford and Sealord dismissed anecdotal talk that product was not getting shipped on time.

There has also been talk Maersk is having new schedule issues and a shortage of refrigerated containers is biting South Island exporters hard.

But all three seafood companies said the issues they were dealing with were no worse than usual in the shipping crisis.

A Sanford spokesperson said nothing was different at this time, and that Maersk had added a service. The listed exporter was grateful to have recently signed a deal with Kotahi.

Talley’s sales and marketing manager Greg Stewart: “For us it hasn’t got any the worse, we predominantly use MSC.”

He said issues were more around particular shipping lines and not product specific. Nelson was particularly badly affected, he said.

Maritime Union secretary Craig Harrison said he’d heard that Nelson and some provincial ports were having problems with ship call schedules.

Maersk’s New Zealand market manager Nick Street said changes made to its services, including the addition of a 7th vessel to the Southern Star service, had significantly improved the company’s reliability performance.

However reefer (refrigerated) container availability was being impacted.

“When the turn time for our containers increase we are not able to reuse the container as fast as before the pandemic – this is the main reason customers perceive a shortage of containers.

“We continue to experience high demand for perishable export products and as a result of the current supply chain disruption, we do not have the buffer stock of reefer containers that customers experienced in seasons prior to the pandemic. Our current supply of empty containers remains impacted by the supply chain disruption and increased container turn times.

“This is one of the primary reasons as to why we deployed the Sirius Star to assist in catering for the export demand from Nelson and Timaru, as well as positioning empty containers out of Ports of Auckland.

“We expect that the supply of reefer containers for the 2022 export season will remain tight, in particularly 20ft reefers and we encourage customers to consider to pack in 40ft containers as the supply of these containers is less restricted.”

Meanwhile, talk that vessels are “slow steaming” are supported by logistics sector sources – but it’s not the shipping lines saving money as fuel costs rise.

As the Maritime Union’s Harrison puts it “there’s no need to race across oceans just to sit at anchor because ports are so congested”.

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