Retail prices will rise due to Covid-19 shipping problems

South Canterbury customers have been warned to expect to pay more for imported goods in the coming weeks and months.

Shipping delays caused by the Covid-19 pandemic, especially from China, and shortages of containers have led to increased freight costs which will be passed on to consumers.

“The price of shipping has risen sharply. It’s forced on us by importing goods,’’ Timaru businessman Andrew Milliken, of Milliken’s Furniture and Beds, said.

“We’ve had to add a couple of months to most things (orders).

“I’m quoting for six months ahead, and then we’ve got Chinese New Year. Things are going to get worse.

“It’s a pain but there’s not much we can do about it.

“I think we’re a little naive about how stuffed the world is. Other parts of the world are having the worst of it. We’ve just been so damn lucky.’’

The extra costs, he said, would have to be passed on to customers.

When Covid-19 struck in 2020 shipping lines cancelled hundreds of trips and empty containers were not returned. When Western demand for Asian goods quickly rebounded there was a scramble to grab what containers were available. With the shortage, costs soared.

In Timaru, Aorangi Customs and Freight manager Adrian Gray said they specialised in helping importers and exporters and that shipping companies had many challenges to deal with.

“It’s a logistical nightmare. You can’t just put your finger on one problem. It’s a multitude of problems.

“Very few containers are arriving (in Timaru) on the expected date. Some have to wait an extra three to four weeks, others only three to four days.’’

Retail NZ chief executive Greg Harford said there was a bottleneck at Ports of Auckland in which goods were not being processed “anywhere fast enough” for distribution around the country to add to the shipping delays from overseas.

“The combination of that is making it much longer and costly to import products with costs 30 to 40 per cent higher than a year ago.’’

Asked if the bigger retailers like The Warehouse, Mitre 10 and Rebel Sport would be impacted he said he couldn’t speak for particular retailers, but expected to see “upward pressure on pricing”.

“The smaller owner-operators have the same issues.

‘’There has been strong domestic consumption and spending and those who are customer focussed are doing OK. Hopefully that will continue, but it’s a big challenge.’’

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Meanwhile, a Ministry of Business Innovation and Employment (MBIE) spokesman said the Government had been actively monitoring both the air and sea freight disruptions impacting New Zealand’s supply chains.

“Congestion issues and the related cost pressures with sea freight have now become a key concern for the Government as over 99 per cent of our goods imports and exports by volume move by sea.

“The majority of the disruption results from international factors beyond New Zealand’s control and the containerised freight element of supply chains is led by competitive, large scale and often internationally-based operators that government has limited influence over.

“An Inter-agency Supply Chain Group has been established to monitor developments and work with the market to respond to supply chain issues as they arise.”

The MBIE spokesman said exporters sending high-value perishable goods to China for the Chinese New Year could continue using the International Air Freight Capacity scheme which operated until March.

‘’The key concern for primary sector exporters relates to port congestion, costs, delays, freight and handling charges, and interrupted scheduling.

‘’Despite the disruption, New Zealand’s international sea-freight capacity is tracking in line with previous years, albeit at slightly lower levels.

‘’And while some imports and exports have been delayed, goods are still flowing.’’