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Sep 14 2021

Supply Chain Delays Mean It’s Time to Start Planning Now

Avoid Lack of Supply and Price Increases!

Freight and supply chain disruptions are some of the biggest challenges Australian and New Zealand businesses are facing now.

For organisations hit by the wave of recent lockdowns caused by the COVID-19 Delta variant, the ability for them to upgrade their technology or get their employees set up to work from home productively is being hampered by a lack of technology (among other items) getting into the country.

If you were planning to upgrade your organisation’s technology for 2022 or if the latest lockdowns have created an increased clamour for flexible working from home conditions from your employees, it is time to start planning this now. Starting earlier will give you the best opportunity of ensuring you receive what you want, when you need it and avoid any price increases that are being forecasted due to the increase in freight costs.

The below is a condensed summary from a recent New Zealand Trade and Enterprise blog on sea and air freight routes, where organisations were encouraged to:

  • allow sufficient lead times and provide forecasted volumes of at least eight weeks in advance.
  • work closely with freight forwarders to secure bookings.
  • get clear communication around possible supply chain disruptions to adjust plans accordingly.

Sea freight routes

The global demand for shipping services is far outstripping the available capacity for vessels and port infrastructure. This continues to lead to delays in shipping, cancelled sailings and rising sea freight rates.

Vessels are taking longer to complete each rotation of their port calls and therefore calling at each port less frequently. As a result, shipping lines are becoming more selective with both freight bookings and the commitments they will make. The impacts include:

  • sea freight schedule reliability is at an all-time low – 35%, according to Sea Intelligence.
  • sea freight cost increases are typically three to four times greater than pre-COVID-19 levels, according to Business Desk.

These shipping disruptions have translated into unpredictable and 'bunched' ship arrivals, and congestion at several ports which is reducing available capacity.

Trans-Tasman trade has recently become more difficult. It is believed this is due to strong demand and the loss of capacity because of congestion, Australian port strikes and port omissions at both Australian and New Zealand ports.

Air freight routes

Pre-COVID-19, air freight was often carried in the belly hold of passenger aircraft, using passenger travel to subsidise freight costs.

However, as global passenger travel remains restricted, with no indication it will return to pre-COVID-19 levels anytime soon, this has meant that capacity remains constrained at 9.7% below pre-COVID-19 levels (compared to May 2019), according to Shipping Gazette.

Some freight forwarders are supplementing their supply chains with air capacity, but the recent border closures of the Trans-Tasman bubble have highlighted the fragility of international air freight. But despite the pause on quarantine-free travel between New Zealand Australia and the cancellation of many passenger flights, scheduled commercial flights are still operating, enabling air freight services to continue.

While we can’t help with supply chain issues, we do have relationships with many of the major suppliers of technology. This offers you direct lines of communication which will allow you to more effectively plan your technology roll out across your business, clearly communicate possible supply chain disruptions to internal stakeholders, or help you adjust plans more accurately. To learn more about how to do this, get in touch with our leasing experts today.