Slow shipping & other catastrophes

by | Apr 15, 2021

Slow shipping & other catastrophes

Supply chain interruptions and irregularities are sweeping the retail hardware sector. From shipping delays to materials shortages.

Supply chain interruptions and irregularities are sweeping the retail hardware sector. From shipping delays to materials shortages in the wake of bushfires, floods, and an overheated building boom, there are plenty of factors contributing to the problem, writes John Power.

For many hardware wholesalers and retailers in Australia and New Zealand, there is a simple logic behind current supply chain interruptions: COVID-19 shut down or slowed worldwide manufacturing and freight services, which led to inadequate levels of supply today. The reality is far more complex.

Wooden politics

Nowhere is this complexity more apparent than in the timber sector, which is subject to a huge range of political, social and environmental vulnerabilities.

High-quality wood used for construction and hardware-relevant applications should be readily available locally; domestic plantations, for example, service approximately 80 per cent of Australia’s building-grade softwood market. Despite this high level of local production, there are widespread timber shortages in the building sector. Many builders face project delays or postponements because of difficulties accessing framing and structural timbers. How can this be? Surely ‘slow ships’ cannot be blamed for shortfalls in a domestically supplied commodity!

Forces far more powerful than COVID-19 have affected this product sector, resulting in the widespread closure of mills throughout the Asia-Pacific region. A perennial emphasis on log production, mostly destined for export markets such as China, has shifted focus away from sawn timber processing and secondary production industries, and towards unprocessed log harvesting. 

In 2007, for instance, New Zealand exported 1.2 million cubic metres of logs and poles to China, along with 245,000 cubic metres of sawn timber, which represents a ratio of almost 5:1 (logs: sawn timber). 

In 2017, by contrast, New Zealand exported nearly 14.3 million cubic metres of logs and poles to China, along with 450,000 cubic metres of sawn wood, i.e. a ratio of 31:1 (logs: sawn wood).1

Clearly, plantation owners have favoured the simplicity of basic log exports, sweetened further by strategic Chinese price distortions prioritising imports of primary products over value-added goods. This trend means that local timber industries have effectively become ‘raw materials’ hubs rather than powerhouses of processed timber products. The situation in Australia is virtually identical. The upshot is that local processed timber supplies, which are dependent on local mills, are becoming scarcer and more expensive domestically. Sadly, the skills and expertise associated with advanced timber milling are being lost, and, once gone, are hard to revive.

But there are other reasons for domestic shortfalls in timber supplies, which relate squarely to government policy and prevailing economic conditions. In Australia, the existing HomeBuilder grants program, which provides handouts of tens of thousands of dollars to people who build new homes or undertake substantial renovations of existing dwellings, has led to a massive spike in demand for building products and services. This government initiative, which is rendered all the more frenzied by a six-month deadline from contract signing to building commencement, has placed additional pressure on an already struggling timber sector. 

Other factors contributing to timber supply shortages include record low interest rates, which further stimulate building and renovation works, as well as the popularity of townhouses and detached dwellings (both of which have heavy timber requirements compared to larger apartment complexes or high-rise structures). Of course, savage wildfires in early 2020 throughout Australia’s eastern seaboard wiped out substantial areas of plantations, exacerbating a long-term decline in the creation of new plantations and undermining confidence in future investment. Some 130,000ha of plantation forests were destroyed in the fires, leaving many plantation owners wondering whether natural disasters and disease were long-term threats that might be indefensible.

All at sea

So, it would be unfair to blame slow shipping for local timber shortages. Nevertheless, freight service interruptions continue to play a role in supply shortages within other hardware sectors. The problem, counterintuitively, is not slow or delayed incoming vessels; in fact the opposite is true: there are too many ships arriving at ports in Australia and New Zealand, which not only causes congestion at our end but also contributes to an imbalance of loaded and empty containers available to the world’s markets. Last December, the volume of containers entering Port Botany, Sydney, and Port Melbourne was 14-15 per cent higher than the previous December2

Similar problems have been reported in New Zealand, where port congestion in Auckland has caused distribution delays of up to a fortnight and forced some ships to seek alternative ports like Tauranga. Port authorities throughout the Asia-Pacific are now struggling with logistical challenges to send empty containers en masse back to Northern Hemisphere suppliers.

If imbalances are not rectified shortly, then the supply problem will reverse: suppliers, particularly in manufacturing centres like China, will be stuck with stockpiles of goods while empty containers are sourced from consumers in Europe, Asia, US and the Asia-Pacific. This scenario is unlikely, as the current international hunger for imported goods (to make up for lost time during the worst of COVID-19’s effects) will wane as economies stabilise and return to more normal conditions. That prospect is good news for net importers like Australia and New Zealand, whose dependence on international freight networks has been highlighted over the past year.

The way forward

An overwhelming dependence on foreign manufactured goods and accompanying freight services has motivated a fair degree of soul-searching among Asia-Pacific companies involved in hardware and home renovation products.

If we return to the example of the timber trade, it is noteworthy that the value of all timber products exported from New Zealand to China, for instance, rose almost six fold in the decade between 2007 and 2017 (from $483 million in 2007 to almost $2.8 billion in 2017); whereas the volume of timber products exported to China over the same period jumped fifteenfold3. Evidently, there has been a ‘value reduction’ in the context of volumetric sales, and the ‘apparent’ generous windfalls derived from raw primary production sales will only continue to lose attractiveness as the ever-increasing costs of imported processed goods inflate national account deficits.

A side effect of the pandemic has been openness to the idea of more domestic production, directly aimed at thwarting the uncertainties of complex international supply chains. Rather than relying on the political and economic stability, regulatory compliance, and goodwill of a foreign supplier or manufacturing facility, growing numbers of companies across the world are investigating ways to minimise their exposure to the choppy waters of international logistics. A good example is Stanley Black & Decker, which closed its Chinese manufacturing operations in November.

Powerful demographic changes in countries like Australia and New Zealand are certainly making domestic manufacturing more realistic. The most notable of these changes is a population surge into regional centres, which are the most logical sites for affordable manufacturing. As regional towns and cities attract more permanent residents, especially young families seeking lower-priced housing, manufacturers can make the most of stable workforces. This trend is already evident in regional industrial parks throughout the Asia-Pacific region, enhanced by excellent road and rail infrastructure. 

Another advantage of regional manufacturing is that companies can locate businesses according to geographical relevance rather than big-city exclusivity. A factory midway between Auckland and Wellington, for example, or between Melbourne and Adelaide, can target two major markets instead of one while also servicing a broad catchment of small towns.

Commercial considerations relating to freight costs are also spooking Australasian wholesalers and retailers in the hardware sector. In light of the pandemic, there have been reports of transportation and warehousing costs escalating by as much 400 per cent, rapidly eroding the expected savings of offshore manufacturing and adding great uncertainty to order lead times and delivery schedules. As retailers understand so well, a lost trading weekend or season is hard to make up – customers either go elsewhere, often changing their buying routines permanently, or they abandon projects altogether.

Reliable and consistent supply chains based on local networks, therefore, are gaining a level of respect that might have been missing in pre-pandemic years. 

Future supply channels, one suspects, will be characterised by greater domestic manufacturing capabilities, a reduced dependence on monopoly suppliers and a preference for multiple trading partners, greater warehousing options and ‘stepping stone’ bases with additional storage options, as well as tighter links between politically and culturally sympathetic nations like Australia and New Zealand. Our two countries already share the same flagship retail hardware infrastructure, so the next step may well be closer manufacturing ties in order to create a secure supply chain bubble.


  1. Visit
  2. ‘Consumers Waiting Months for Deliveries After Pandemic Shopping Spree’, Sydney Morning Herald, 14 February 2021, by Caitlin Fitzsimmons.
  3. Visit