The annual ASEAN (Association of Southeast Asian Nations) Forum was hosted by the ASEAN Business Council in New Zealand. Held virtually on September 2, 2021, Ethan Jones, from Asia-New Zealand, explains how we will build international partnerships through logistics.
The Forum covered a wide range of areas ranging from environmental, social and corporate (ESG) governance and climate-friendly buildings in Singapore, to the resumption of international education, and even to the high vaccination rates achieved in several ASEAN member countries. For example, 91 percent of the adult population in Cambodia has already received at least one vaccination.
The first opening speech was given by the Honorable Phil Twyford, Minister of State for Trade and Export Growth, who highlighted the the importance of the ASEAN region to New Zealand. ASEAN is our fourth largest trading partner, as a whole, and accounts for about 10% of our merchandise exports. “Building The return of Covid-19 is going to require strong and lasting international partnerships and ASEAN for New Zealand is clearly one of them. We so often agree, with ASEAN, on key regional and generational challenges, ” Twyford said.
One of the challenges the Minister of State alluded to is the disruption of international shipping and supply chains that are now affecting international trade. It is important for New Zealand. We are a small trading nation, with more than half of our economic activity based on trade. Therefore, our economic well-being as a country depends on our ability to bring products to market.
To understand the scale of the challenge facing New Zealand exporters, we heard from both Blair Hamil, Commercial Director of Ports of Tauranga, and James Kuperus, CEO of Onion New Zealand Inc.
Like many others, I had heard anecdotes about price increases in shipping, but had yet to realize the scale of the challenges our exporters face. This is the perfect storm for global shipping: from increasing global demand for goods to pandemic port closures and a global container shortage, ships are late (and everyone has to pay for it). that).
In New Zealand, direct shipping costs have increased approximately 4 to 5 times compared to a year ago. Unfortunately, this is only one of the problems. As a small country at the end of the world, and often at the end of sea lanes, it is too easy for shipping companies to leave New Zealand off their regular sea lanes to make up for lost time.
The reliability of shipping times in New Zealand has gone from around 80% before Covid-19 to between 30 and 40% now. As a result, overall inventory policies shift from a JIT (just in time) policy to a policy of maintaining excess inventory.. This will only increase the pressure on global logistics in the short to medium term. Moral of this story? Buy your Christmas presents early this year.
This is not ideal for any trading country, but for New Zealand where primary products (e.g. dairy products, lamb, beef, fruits and vegetables) are a key part of our exports, delays and inconsistency that invariably accompany such low reliability are concerning.
In the case of onions, where in 2019 New Zealand exported around $ 172 million (and last year we exported almost $ 50 million worth of onions to ASEAN alone), a plus key is our counter-seasonal supply. However, this year delays caused by reliable shipments caused some of these most valuable counter-seasonal windows to be missed. This has caused inconsistent supply issues in the markets.
In one of the worst examples, Kuperus onion NNew Zealand Inc shared a story: After be unable to get stocks on ships that had abandoned New Zealand of their schedules, they or they finally the product has been loaded to a boat to Timaru – only to have it unloaded by an exporter in Lyttleton. This was done for to make room for something else. The company then had To send trucks to collect their product at Lyttleton, had to reorganize this to ride yet another ship, incurred a further awayr two week deadline.
New Zealand’s logistics recovery will ultimately depend on global logistics recovery. This does not mean that we should sit on our laurels and wait for the world to fix itself. We have a critical role to play in guiding the global recovery. AJ Smith, CEO and Founder of Trade Window, spoke about the importance of global cooperation and government-to-government initiatives to spur progress in reducing logistical barriers. This includes interoperability of systems and consistent data standards, to enable the main pillars of global trade (government, finance, trade and logistics) to communicate.
Agreements such as DEPA (Digital Economy Partnership Agreement), ratified by the governments of New Zealand and Singapore, is now leading the way in facilitating this greater connectivity by creating a role model for the world to follow.
More generally, Covid-19 has offered the world a chance to shift to more digitally connected operating models. If governments and industry do this, this digital shift could reduce the 1.5 million export documents generated each year in the Asia-Pacific region alone and facilitate smoother regional trade.
Just as the future of logistics is increasingly digital, these logistics challenges remind New Zealand to consider the rise of technology across Asia as well. From gaming to fintech, the digital economy offers New Zealand new weightless opportunities in ASEAN and beyond. We just need to make sure we don’t miss the boat.
– Asia Media Center