Retailers hit as strike action bites

The cost of on-going strike action by the Maritime Union (MUNZ) is set to be passed on to consumers as retailers make alternative arrangements to have their stock transported.

The clothing sector is expected to be hardest hit with the onset of winter stocking.

New Zealand Retailers Asociation chief executive John Albertson, told NBR Online the strike action has put pressure on the whole retail supply chain, resulting in additional costs for trans-shipment by rail.

This delay in the supply chain could see supermarket shelves drying up soon.

“My understanding is that so far, most retailers, be it food or clothing, have been able to keep the shelves stocked. They are running thin on some lines at the major distribution centres.

Imports which would have gone through Auckland have been diverted to Tauranga and Whangarei; having to transport these goods will incur additional costs. Alternate ports may be providing the service, but this service comes at a price,” Mr Albertson said.

These additional costs will inevitably be passed down the supply chain line to the consumer.

“The one retail sector which will be hardest hit is the clothing sector, where winter stock is starting to flow in. It’s quite a short time frame of sale before the new season stock comes in and retailers need to make sure that demand is met,” Mr Albertson said.

National Road Carriers Association chairman Chris Carr, agrees, saying it is “not appreciated” how much of the product sold in New Zealand is imported.

“All of these delays have a cost factor. If your product can’t sell when you want it to, you have to sell it for less, or miss the sale. The worst part of it is that consumers may try brand B because your brand is not available. In the long run this may change purchasing patterns,” Mr Carr said.

He said that while the strike action had not immediately affected logistics companies, it would down the line.

“Instead of having a truck going out with 100 percent capacity filled, it may go out with 70 percent. Which means with every three loads, you may find you need to do one fourth one extra, these are additional costs all the way through, these costs will definitely filter down to the consumer. Where you find you might have paid $5 for a jar of Vegemite, you may have to pay $5.50. In addition, you won’t lose that 50 cents when it stabilises and it takes a long time for that cost to drop off,” Mr Carr said.

He said that while there may be concerns over imports, the negative impact on New Zealand’s reputation would have a longer lasting effect for exporters.

“Exporters have to work so hard to build up market, if their product misses the ship, even if it gets there next week, they still might not get to sell it, especially if the delay doesn’t meet the original terms of sale,” he said, “Everybody’s tolerant for the short term but not for the long term. If you go down to your supermarket and they don’t have your preferred brand, you may put up with it once, or maybe twice, but after that you wouldn’t go back and I imagine the same could apply to overseas companies buying New Zealand products,” Mr Carr said.

Business New Zealand’s Kim Campbell earlier said business in New Zealand supported the Port and  despite “muddling through” to cope with the strike action were equally supportive of a competitive port.