COVID-19 impact on trade and exports in the Pacific

Around the Pacific, nations are endeavouring to respond to the outbreak of the COVID-19 or at best are committed to keeping the virus out of their country.

Even though the infection remains low compared to the rest of the world, Pacific Island Countries (PICs) undertook substantial measures to fight the virus which has led to a heavy impact on their respective economies.

Most of the countries have closed or put extensive restrictions on their borders, while international travel is prohibited unless essential, shutting down the tourism industry.

This is critical as many PICs economies rely on tourism directly or indirectly – with no more tourists on the islands and business restrictions, the demand has dropped.

Many small factories have consequently reduced their activity and staff, and some were forced to close.

A few other organisations have implemented innovative production alternatives or found other commercial outlets (through online selling and export) to adapt to the situation, allowing them to operate almost as usual.

As international trade remains globally open, PICs businesses are still able to export their goods to New Zealand, but they face some difficulties.

Firstly, border restrictions in their own countries compounded by the importation restrictions by importing countries are impacting on export volumes.

Secondly, the cost of sea and air freight has increased mainly due to a lower availability of vessels, and aircraft in particular.

Ports of Auckland and Air New Zealand Cargo recently declared freight prices will most probably continue to increase in the coming months; however, it is difficult to plan the extent of the rise.

At present there is a three-fold rise in airfreight costs and the lower number of ships servicing the PICs due to on-going maintenance and break-downs is affecting the export ability of products to New Zealand.

With New Zealand now in alert level three (since April 28), non-essential goods containers will be unpacked again, easing the distribution even though some delays are still expected.

The shipping sector is experiencing a decrease of the demand for the coming period, meaning the New Zealand market is more likely to soften.

Logistics experts in New Zealand are observing consumer behaviour is changing, asking for higher quality and lower volumes, while online shopping has accelerated and will continue to grow speedily and impact the supply chain.

The lower volumes expected in New Zealand will have an impact on the schedules leading to a lower vessels’ routing and an increase of turnaround time for ships.

More flight connections are expected as Air New Zealand Cargo has announced there should be more regular flights starting in May.

To optimise their exports, PICs businesses should contact their clients well in advance to schedule their upcoming orders, while keeping close relationships with their freight forwarding agents in New Zealand to keep updated about the situation.

Pacific Trade Invest (PTI) New Zealand can help you to deal with the current COVID-19 pandemic by:

• Providing information and/or answering questions you may have in relation to your current situation
• Offering to contact anyone in New Zealand on your behalf to make things easier for you
• Providing advice and information, conducting email introductions and referrals to anyone in the New Zealand market who may be helpful to you and your business, for example freight and customs bar coding.

For assistance or more information, contact our trade team:

Trade Development Manager Ian Furlong – ian.f@pacifictradeinvest.co.nz

Trade Development Manager Aude Douyere – aude.e.douyere@pacifictradeinvest.co.nz

Trade Development Officer Riley Birtwistle – riley.b@pacifictradeinvest.co.nz.