As a small island nation, New Zealand’s economy is primarily based on importing goods. The exceptions are milk, sheep and beef products, wood, and butter which make up the vast majority of NZ exports.
New Zealand’s reliance on imports is currently growing every year. As an example, a recent report has shown that the gap between our imports and exports of car and truck parts has widened to 648%. Over the same period, trailer and semi-trailer imports outstripped exports by 461%.
Our reliance on imports leaves New Zealand businesses vulnerable to supply chain issues, beginning with shipping.
Rachel Madden, First Global Logistics New Zealand manager, has said that shipping reliability to New Zealand is at a low point.
Shipping was causing signifiant issues for SME importers and exporters, Madden said.
Shipping reliability across New Zealand ports was running at 70% in August last year. It is now between 30% and 40%. This has led to First Global Logistics increasing its estimate of goods arriving from China by over 50%.
“The supply chain is still at crisis point. It is extremely difficult for SME importers and exporters at the moment. Through no fault of their own they are incurring multiple extra costs,” Madden said.
One business with operations in both New Zealand and Australia is experiencing arrival differences of four months, with products landing in Australia from China within 3 weeks. The New Zealand shipment is still to arrive.
In fact, a report has warned that New Zealand has been dropped off the global supply chain by many construction material suppliers.
All of this is having a significant effect on New Zealand’s manufacturing and construction industries.
Rider Levett Bucknall’s (RLB) 2nd Quarter 2021 International Report says, labour shortages coupled with global supply chain disruptions continue to put pressure on construction costs.
“…over the last few months there has been significant supply chain issues since the lockdown causing delays, uncertainty, and increased cost.” Stephen Gracey, managing director of RLB New Zealand
Even New Zealand’s transport industry has been effected, further increasing delays. Fuel costs are soaring in New Zealand, Ad Blue is in short supply, and sourcing truck parts in Auckland has been a challenge.
The burden of these delays and price increases often falls to the consumer. Building a home has become more expensive and is taking longer. And inflation is soaring.
“The consumers price index increased 6.9 percent in the March 2022 quarter compared with the March 2021 quarter, the largest movement since a 7.6 percent annual increase in the year to the June 1990 quarter” Stats NZ
The largest driver for the inflation was the housing and household utilities group, influenced by rising prices for construction and rentals for housing. The next largest contribution to the annual inflation was from the transport group, influenced by higher prices for petrol and second-hand cars.
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