COSTS HIGHER BUT FOR CONTAINERS

Press, 11 May 1979, Page 9

COSTS HIGHER BUT FOR CONTAINERS

Mr A. C. Wright, of Dunsandel. recently retired from the Meat Board after representing producers on it for 12 years and a half. During this period he served as chairman of its grades, finance and shipping committees. At the time of his retirement he was still chairman of the shipping committee, which he headed for about seven years, and also chairman of the Meat and Wool Board’s Economic Service, a position he also occupied for a number of years. He agrees that New Zealand is one of the most vulnerable countries in the world to the effects of the oil price increases in recent years, with the long haul it faces to its principal markets.

In the early 1970 s when oil producers first increased their prices, throwing the western world into a major crisis, he recalls that a bunker surcharge formula was worked out under which the board and the shipping lines reviewed costs monthly and where they rose by more than 2 per cent over that period these were added to the freight rates, very much on the lines of a currency adjustment.

He has seen the introduction of container

shipping and does not agree that this type of shipping has not come up to expectations.

In fact, he maintains that but for the entry of container vessels into the trade freight costs would be a lot higher today. He says that they have evidence from the United Kingdom and European trade, with some conventional vessels still being used for comparison with container vessels, and also from the west coast of North America trade before it became fully containerised, that costs of running conventional vessels are considerably higher than for container vessels, and recent information on the United Kingdom and European services has shown lines making a slight profit on container vessel operations but a loss with conventional vessels.

Mr Wright does not blame harbour boards in New Zealand for not being fully geared up for the entry of big container vessels into the trade following the earlier cancellation bv the lines of three out of four container vessels that they had ordered. He understands the consequent reticence of boards to committing themselves to all the ex-

penses involved in preparing for the trade. Nor does he blame wharf workers or the unions for all of the poor performance of handling containers at New Zealand ports. Back in 1973 he says that a rate of 19 or 20 movements of containers per hour had been achieved; this had then fallen off and only last year had it recovered again to the 1973 levels. He says that an improvement in the rate of handling of containers followed all three meetings that had been organised by the board between all the parties involved. Quite a lot of the blame, he believes, can be put down to a lack of communication. But he agrees that a maximum rate of turnround of containers is vital to keeping down freight costs, although he says that with the sort of inflation that has been faced in New Zealand it is quite impossible to hold freight rates down.

However, he is pleased to report that last year the board, in its negotiations on freight rates on services to various parts of the world, was able to settle for rates that overall involved the spending of S2OM less than the lines originally asked for.

But whereas in the past with conventional vessels it was possible for the board to regulate shipping to market requirements for lamb in the United Kingdom, he said that with the speed of container ships now this was no longer possible. With the extent that this trade is now carried by container vessels he sees it as being

necessary for the board and the Meat Exporters’ Council to work out a system under which a proportion of the meat provided by all exporters goes into bond or cold store to even out the supply. To try to regulate container ships involving holding them back would defeat the whole purpose of the introduction of

these vessels, he said, when it was realised that it cost about £50,000 sterling per day for a large container vessel when it was tied up in port, about £28,000 for a medium size vessel and £lB,OOO for a small one.

Mr Wright says that while his work with shipping lines has been demanding and challenging, he has found it the most interesting part of his work with the board, and through it he has met many people and made many friends. Not long before he became a member of the board he was a member of a committee under the leadership of Mr P. W. Smallfield, a former Director-General of Agriculture, which travelled the world, and it was a result of the investigations of that committee that a new grade known as Omega was introduced into the New Zealand meat grading system. It was for the lamb carcase with a leggy hindquarter and at that time also with a fatty shelly back with fat cover being too great and too small an eye of meat. At the time he believes that it was marring the whole of the lamb kill. Previous to that time he said that it had been possible to work in the few lambs of this type with other lambs, but the stage had been reached where there were too many of them.

At the time he said that schedule payments for Down type lambs in the North Island were running 2d per lb ahead of rates for crossbred lambs in the North and all prime lambs in the South Island and his aim was to see one schedule for primes throughout the country. The Omega type lamb, he said, was discounted in the United Kingdom and had been discounted in his view excessively, but the fact remained that it was still discounted.

At one stage to try and raise the prices for these lambs he said that it had been insisted that they be cut in New Zealand or before sale overseas, but the extra costs involved in cutting them meant that the disadvantage still remained the same as where they were sold in carcase form.

When the tips and tails of these legs were removed he said that they looked like any other leg,

but exporters said that they had paid for the part that was being removed. Mr Wright sees the day when much more cutting will be done in New Zealand but he says it will not happen overnight and must await the stage where prices compensate for the extra costs involved.

The day could come as with beef where very few works could now load out quarter beef. Supermarkets in Britain, he said, were selling an increasing proportion of lamb and they would want it in cut form and cut in New Zealand, but while the British butcher continued to sell a great deal of it and handle it very well he said that he believed that conformation and eye appeal of the carcase remained important in spite of what a lot of scientists said. With the inevitable development of cutting Mr Wright sees specialised packing houses having a very important role in the industry with their smaller work forces. Mr Wright said that New Zealand wanted to maintain the weight of its lamb carcases and perhaps increase it, which demanded that fat cover should also be held at an acceptable level, but he said that this was not easy with the sheep breeds that they were working with, and he added that when wool formed such an important element in sheep farmers’ returns it had to be accepted that they could not have the best of all worlds in meat and wool production. He agreed that there was some scope for production of a percentage of heavier lambs, again with the right sort of fat cover, but certainly not for the production of 24M or 25M heavy lambs, for in fact the demand in most markets around the world was still for the light weight lamb. Mr Wright sees a place for both cattle and sheep in New Zealand farming, and while he regrets the extent to which people have gone out of cattle in recent years, he says that he would not like to see beef cattle numbers increased again at the expense of sheep numbers. He is also hopeful the beef producers around the world have learnt the lesson of the past and will not increase productidn again to the point of oversupply.