Globally, hundreds of mega ships are being mothballed as demand for raw commodities and retail goods contract under the recession.
But New Zealand's "second tier" service using the smaller international classes of vessels is unaffected, prompting "massive" swings in quotes on sea-freight costs.
The global credit crunch is having a huge negative impact on the traditional international "letters of credit" guaranteeing payment, which has seen some Otago exporters burned in recent times.
In theory, there should be a shortage of ships now plying New Zealand routes, meaning more demand for less space and upward pressure on rates, but that had not eventuated, said Mark Willis, director of DCB International, which is Dunedin's largest freight company.
Southern exporters of dairy products, meat and timber were enjoying freight price reductions of up to 20%, and importers of machinery, parts and furniture, reductions of up to 50%.
That was a "massive variance" which at least ensured competitiveness and warded off any complaints of cartel pricing, Mr Willis said.
"The cost of wet-leasing ships on a daily basis is down hugely. [Southern] exports have been very strong, with unprecedented volumes during the past six months," he said when contacted yesterday.
There was not a squeeze on demand for space, though New Zealand was a second-tier route and serviced by smaller vessels which were still being used to capacity for exports, Mr Willis said.
"[Lack of ] space has not been an issue. There's more supply than demand, which is a rare occurrence. Something we did not expect to see this side of Christmas."
While other economies reeled with the decline in shipping, Mr Willis said bunkering (fuel) costs were down by as much as 70% on record prices about a year ago and the New Zealand dollar had eased from around US80c to the mid-US50c range.
Freight rates during the past two years, especially when tied into shipping lines servicing the then booming Australian mineral market, became crippling for some exporters, with forestry companies moving to containerising logs in the absence of ship calls at Port Chalmers and other exporters seeing freight costs eat away profit margins.
While there were plenty of positive indicators for southern exporters, Mr Willis noted up to four clients had been caught out when "letters of credit" were rejected and new buyers had to be foundUnder the age-old letter of credit scheme, the bank of a commodity seller negotiates for a letter of credit from the bank of the buyer for a guarantee of payment on delivery of the goods.
However, Mr Willis said that conditions in Asian letters of credit had been broken by the buyer in a small number of instances.
While the goods were still at sea, new buyers negotiated a new, often lower price, in the knowledge the goods were en route and "at the point of no return".
"It [letters of credit] is an issue clients have to be aware of," Mr Willis said.
The critical Baltic dry index, which measures shipping costs, is sitting at a 22-year low of less than 800 points, having struck almost 11,800 points eight months ago.
Mr Willis said one ship for charter, plying between Perth and Shanghai last year on a mineral resource run, had been offered for $US65,000 a day, but was at present available for $US6000 a day.
Similarly, Time magazine has reported a bulk carrier rate once on offer of $US234,000 a day now at around $US3000.
With the oversupply of ships, a US shipping line had written off a $US53 million deposit for six ships in order to scupper paying a total $US530 million for the deal.
"There are a lot of vessels sitting out there with ridiculous rates," Mr Willis said.
Last year, Port Chalmers was bereft of log ships, which preferred to stay closer to home ports and take part in the more lucrative Australian minerals routes, he said.
"We've seen a real boom in timber exports, as long as they are getting paid in letters of credit," Mr Willis said.
The Southern chilled meat trade to Europe was enjoying increased exports, with Mr Willis noting that at one point last year fuel costs for shipping around Europe were greater than the actual cost of freight.
While exporters appear set to enjoy competitive rates for some time yet, Port Otago's largest shipping line, Maersk, cut more than 100 calls to Port Chalmers, effective from September last year.
It prompted the port company to predict a decline in container handling numbers, from a forecast 225,000 this financial year to 175,000 units, though the latter figure is near the previous record.
Port Otago container volumes since 2006 have increased 54%, from 135,000 a year to 209,000 during 2008.
