SEA freight rates are coming down on the back of inflation and the reduced consumer spending that accompanies it but fewer shipping schedules are now starting to play havoc with beef exports.
While prices to the major routes from China are now very close to pre-COVID levels, many of the routes Australian beef utilises remain historically high, although back on what they were in the peak of the pandemic.
Beef exporters say the container shortage could probably now be declared over.
However, what has emerged is a consolidation of stock on sub branch routes such that importers are receiving more than one consignment on a ship.
That means that even if ordered and shipped two weeks apart, they are receiving product in one go, upsetting their logistics and cash flow.
ALSO IN BEEF:
Advantages
While it may be a bad sign for the global economy, falling container rates have big advantages for Australian agriculture, not just in making exports more competitive but in reducing the costs of inputs like machinery parts, Episode 3 analyst Andrew Whitelaw said.
It was a case of the old adage of high prices being the cure for high prices, he said.
"The freight rates of the past two years were unsustainable, but shipping companies are still making big money at current levels," he said.
Queensland beef exporter Terry Nolan, Nolan Meats at Gympie, said at the height of the pandemic, the container situation was bedlam.
"It was a scenario of stand in line, cross your fingers, order in advance and just hope you'd get a container," he said.
"In the past three to five months that has steadily improved but what we've found is shipping companies have dramatically changed the routes they take."
Nolan Meats exports only 30 per cent of its production and as such targets smaller importers.
Those overseas businesses required space between orders and simply could not accommodate receiving two orders on the one day, Mr Nolan explained.
There was now a desperate need for clearer shipping timetables and improved schedules, he said.
Australia is, of course, shipping far less beef than it has in many years.
In Queensland, for example, the weekly kill rate currently sits between 42,000 and 46,000 head, compared to around 80,000 three years ago.
Finite resource
International meat market analyst Brett Stuart, chief executive officer at Global AgriTrends, said shipping rates into the United States had decreased by as much as 45pc in recent months.
"What we have to keep in mind, however, is the refrigerated container base is a finite asset," he said.
"In 2020, China imported four million tonnes of pork (when African swine fever wiped out its pig herd). That took a huge amount of containers.
"Chinese hog prices are up 115pc since March. China is again gearing up to turn to imports.
"If we see that, there will take a big pull on global refrigerated containers.
"The problem could be exacerbated next year with the expected drop in US beef production - we are expecting a 7pc production decline.
"We have a strong US dollar. There is big potential for more Aussie beef to be shipped to the US."
Shan Goodwin
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
Shan Goodwin steers ACM’s national coverage of the beef industry. Shan has worked as a journalist for 30 years, the majority of that with agricultural publications. She spent many years as The Land’s North Coast reporter and has visited beef properties and stations throughout the country and overseas. She treats all breeds equally. Contact 0427686187. E: s.goodwin@austcommunitymedia.com.au
