In the third quarter of 2021, forecasting Personal Protective Equipment (PPE) availability is still a major challenge, due to the ongoing global shipping issues that are also affecting many other industries within New Zealand. From placing an order with manufacturers, to the delivery of product to NZ warehouses, post-Covid lead times have, in some cases, increased by two months. Lead times for PPE manufacturing orders are now taking up to 6+ months to get to New Zealand. What exactly is causing these dynamic delays?
Shipping Container Shortage
The global shortage of shipping containers is exacerbated by containers in the wrong location. More than 4 million containers are now in the wrong areas globally (e.g container parks) resulting in some brands now paying up to 10 times more to import the same goods post-Covid. CMA CGM in New Zealand, for example, is refusing to take any more empty containers in its Auckland depot as it has too many of them. These containers need to be back in key export regions, such as Asia. However, there are limited “ghost ships” returning these empty containers and often, more profit is made in exporting products rather than returning empty containers.
Prioritising Trade Lanes
Carriers are also prioritising trade lanes and equipment over others for profit. As an example, an Asia-USA shipping lane could fetch up to $20,000 per container, compared to $8,000 for an Asia-Oceania shipping lane. Carriers are reporting current profits in Q1 that are more than the 10 previous years of Q1 profit combined.
Some Carriers are now no longer accepting cargo to Auckland, instead shipping to smaller ports Tauranga and Lyttelton. Shipping schedule reliability across all of NZ ports was running at 70% in August 2020, but by April this year fell to 5.56%. (SunLive, 2021). Maersk, the world's largest container shipping line, cited delays for berthing of 10-11 days for the withdrawal of 50% of its Auckland port service.
What Does It Mean for The Consumer?
There is a lack of understanding of just how dynamic the current market and procurement of PPE actually is. PPE supply is improving as supply constraints eases, but not at pre-Covid availability. Experts are now saying it will be at least the first quarter of 2022, following Chinese New Year (CNY), before shipping lead times will start stabilising.
It would be prudent not to wait until stock levels are low before re-ordering. With Christmas only four months away, we are advising a minimum stock holding of three months to cover the various possibilities over the Christmas and CNY periods.