Shipping Dynamics Affecting Bottomline

Whilst south bound ocean freight rates are softening from the northern hemisphere the same cannot be said firstly for New Zealand. NZ carriers have set rates for Q2 at record highs, with some rates far exceeding USD 2000/FEU and the inclusion of a Bunker Adjustment Factor increase of USD 150/40’ container ex NZ effective March. Not to mention simply cancelling bookings for what is considered a low peak season paying commodity which is likely to last until May. Secondly, from Australia, imports are well down, meaning fewer boxes are available for export and lines are vigorously repositioning empties back into Asia. Consequently, this will create a shortage from April with the commencement of the cotton season from the east coast at the same time. 

The flow on from this will inevitably be higher ocean freight rates from Australia to balance out the import/export ocean freight rates at a time when the weak US dollar has reduced necessary profit and cash flow for many exporters. This may improve from Q3, however it is going to be difficult months ahead, but at least recovered paper prices have held up and hopefully may offset ocean freight increases.