News & Thinking
UPDATED: The definition of essential goods and the law of unintended consequences…
Update as at 18 April:
In the original version of this article (below), we highlighted some potential issues with the Government restrictions on freight movements. The Ministry of Transport has now updated its rules and we have received some information from Government about transport under Alert Level 3.
All freight can now be distributed and received, including de-vanning of containers, delivery to and receipt by businesses (including non-essential businesses not permitted to trade in Level 4). All freight can also enter and leave the country. That sensible decision unblocks the supply chain, allowing the return of empty containers, addressing some of the issues we note below.
However, the loosening of the receipt and unloading restrictions does not change the restrictions on non-essential businesses, who remain unable to trade under Alert Level 4, except to receive goods. Also, in Level 4, essential freight must be prioritised and only transport operators/workers carrying essential goods are permitted to also move non-essential goods.
Under Level 3, there will not be any restrictions on freight transport (provided that COVID-19 related H&S measures (including physical distancing) are followed. The Ministry says: “The movement of all freight is permitted at Level 3, including the ability of business and customers to send, distribute and receive freight.”
We continue to follow these fast moving developments closely.
The transport and logistics industry are essential services.
After a few adjustments, we now know that the transport and logistics industry provide “essential services”. This includes:
- any transport service involved in the carriage of essential goods or essential workers;
- all personnel involved in the movement of freight by ship, internationally and domestically, when undertaking an essential service;
- workers and operators involved in the delivery of essential goods (as defined in essential services list on the COVID-19 website) by road and rail freight;
- lifeline utilities (as defined by the Civil Defence and Emergency Management Act 2002), including air and sea ports;
- service providers for the maintenance and ongoing operation of critical infrastructure (i.e. those lifeline utilities mentioned above) and the vehicles of those providing essential services (e.g. vehicle testing, mechanics and tyre services).
However, those essential services are to facilitate the movement of essential goods (both imported and for export), i.e. food, medicine, fuel or other supplies essential to maintain life.
Therein lies a problem. Inbound ships are carrying containers and cargo containing both essential and non-essential goods. And of course a lot of “non-essential” cargo/containers was already stored at ports and other logistics businesses at the time of the lockdown, ready for the next step in their supply chain.
The Ministry of Transport has in the last few days clarified that non-essential goods located in a place which is blocking the movement of essential goods can (and must) be moved to storage elsewhere. However, such goods can only be moved once, cannot be distributed and containers containing non-essential goods cannot be devanned (unless they contain a mixture of essential and non-essential goods – but then what do we do with the non-essential goods?). Any additional workers who assist with the movement of non-essential goods to create space for essential goods, become essential workers for the purpose of moving those goods.
The requirements are not clear and there seems to be some inconsistency between government agencies. Customs New Zealand says that the movement of non-essential goods from a port to a Customs Controlled Area for storage requires its permission. Adding to the confusion, Customs also says that containers can be devanned to assist in storage requirements and reduce hireage costs, but seemingly only within a Customs Controlled Area which is also licensed as an Approved Transitional Facility.
The only other circumstance in which non-essential goods at a port can be transported is (according to the Ministry of Transport):
- if essential workers are already located at the port for the purpose of dealing with essential goods; and
- the movement of non-essential goods at the Port does not impact on the movement of essential goods or the delivery of essential services at the Port.
So now we have (at least) three new problems:
- we are rapidly running out of storage space for non-essential goods;
- we have reduced the flow of empty containers back into the system, which may cause knock on delays and disruption;
- consignors or consignees of non-essential goods may face additional storage and container detention charges, as well as delays and the risk of damage and deterioration of their goods. We understand that at least some shipping lines have extended detention-free periods until April 23. At this stage, it is unclear what might happen if the Government extends the lockdown beyond that date.
Identification of workers
Identification/validation that states workers are undertaking essential services has also become an issue. There is no official or standard identification card or similar for workers who are required to be out in the community delivering essential services. But both the Ministry of Transport and Customs NZ say that essential workers may be asked, while travelling, to show who they are, who they work for and their role.
The National Road Carriers Association is recommending drivers carry a letter of authorisation on company letterhead or some other form of identification linking them with a transport company.
The Association is also creating a database of drivers who are not working but available to stand in for drivers who become ill, or drivers who choose not to work during the pandemic because they are at greater risk, such as older drivers.