Wool exports' unsteady seas

Wool exports' hit by shipping pressure

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Wool exporters are facing shipping obstacles as skyrocketing profits lure shipping companies to ditch the Port of Melbourne for more lucrative northern hemisphere routes.

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The commercial shipping routes that carry Australia's $3.5 billion worth of greasy wool annually are clogged, causing the country's wool exporters to wear the costs of a broken system.

The latest obstacle is skyrocketing profits, luring shipping companies to ditch the Port of Melbourne for more lucrative northern hemisphere routes.

Supply headaches that were viewed as temporary when the coronavirus pandemic began are expected to last through 2022, according to Australian Council of Wool Exporters and Processors president Josh Lamb.

Last month, two major shipping companies withdraw from the southern hemisphere shipping route, wreaking havoc on wool trade out of the Port of Melbourne.

"We had 10 days' notice that COSCO Shipping Lines wouldn't have any more services before Christmas (from Australia), and we had wool orders destined for Italy that we needed to get off the ship," Mr Lamb, of Endeavour Wool Exports, said.

"There were more companies affected... that late notice cost USD$8000 to juggle the impact."

The median cost of shipping a standard 40-foot metal container from China to the West Coast of the US hit a record $20,586 this month, four times what it cost in January, according to the Freightos index.

In comparison, Mr Lamb said Australian exporters were managing prices that were nearly half that value, at $10,300, referencing the World Container Index by London-based maritime research firm, Drwery.

The southern hemisphere rate is still triple the price of a year ago due to high US demand and congested ports tying up ship capacity.

Reaching customers in Italy, India and Czech Republic, accounting for 12 per cent of Australia's wool exports, has forced exporters to grapple with transshipment bottlenecks at the Port of Singapore.

Retail spending in the US, UK and the EU is increasing as restrictions ease.

US clothing and accessory store sales were up 38.8pc in August 2021 compared to 2020, the US Census Bureau said.

"As exporters, we are carrying all the risk," Mr Lamb said.

"If shipping congestion remains a problem, it could slow the market down.

"Exporters' cash flow is directly linked to goods shipping - we get paid once goods have departed the port."

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