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photo: 123 RF
Due to the continuous Red Sea tensions.
A report released by the Department of Foreign Affairs and Trade said global shipping rates have almost doubled since the end of April, but are still well below their peak during the COVID-19 pandemic.
“The main reason is the current chaos in the Red Sea, which has led to tight global shipping capacity and the need for more ships to serve the European and Asian routes.
“Since December, shipping volumes through the Suez Canal have fallen by 50%, while voyages around the less direct Cape of Good Hope have increased by 70%,” the report said.
Houthi rebels Start attacking ships Clashes broke out in the Red Sea region after the war between Israel and Hamas broke out in October last year.
New Zealand Export Institute executive director Joshua Tan said the rising costs created a lot of uncertainty for exporters as not all costs could be passed on.
“They have to make the difficult decisions themselves, they’re able to pass on the costs, but at the same time, you know, we recognize that demand is weakening.
“Households are also tightening their budgets. They face the same issues as exporters, which is high interest rates, increased costs, so businesses have to think twice before passing on these inflated shipping costs.”
Mr Chen said exporters were worried because it was unclear how long the Red Sea problem would last.
“There is a sense of nervousness, but exporters have become much more resilient during the pandemic because they have had to find solutions, so I am sure they will use that resilience to solve the problems they are facing now.”
“Profits are falling”
At the same time, New Zealand’s primary industry exporters are also affected. Sarah McCormack, chief executive of fresh fruit exporter Te Mata Exports, said it was becoming difficult to ship apples to Europe because of longer shipping times.
“We have to go around Africa to get it to Europe, which means the apples take a very long time to ship and are more expensive, so it’s a bit challenging.”
Meat Industry Association chief executive Sirma Karapeeva said meat companies were being hit hard by the increase in transport costs.
“I think the geopolitical uncertainty around some of the shipping lanes, as well as the uncertainty and disruptions that have occurred in places like the Suez Canal, the Panama Canal, have added additional complexity and cost to getting our products to market.
“So it’s not something we can control directly, but businesses are certainly very concerned about it, and it’s eating into profits.”
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