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Freight costs soar as Australia explores onshore wool processing

Concerns raised over soaring Chinese freight costs for Aussie wool despite industry’s latest cash injection

The CEO of one of Australia’s biggest wool manufacturers has told Flow of how Chinese freight costs have skyrocketed recently in an exclusive interview.

Steven Read, the boss of Michell Wool, highlighted the astronomical price hikes which can be attributed to credit squeezes as a result of shipping delays in China.

“There’s an eight week waiting list to get a vessel – container rates used to be $1200 USD a container and now they’re talking $25 thousand USD a container.”
“So one is it costs a bomb which is extraordinary... I filled up the car yesterday and got excited about the price of petrol but that’s nothing compared to the [price] rises we’re seeing in freight.”
“One is the price, the second is can you get a vessel? It’s just extraordinary.”

Michell Wool has processing plants in both China and Salisbury, in the northern suburbs of Adelaide.

Listen to the full interview with Steven Read on the FlowNews24 podcast:

Read's industry acumen and interest in agri-politics lead to him nominating for the Australian Wool Innovation (AWI) board elections earlier this month. He went on to tell Flow about the dismal percentage of votes made by stakeholders at the peak body’s recent board elections.

“I must admit, the biggest lesson I learnt was the lack of interest by growers.”
“They spend a small fortune on that company and only 6 percent of them actually voted.”
“If you divide that back there’s so many shareholders or levy payers who haven’t actually registered to be a shareholder, so we’re talking 95 per cent of growers are not interested and don’t vote.”

Rikki and Wayne discussed Steven Read's revelations on the Morning Show:

AWI voters returned the existing board despite an independent review committee's recommendation for changes on the board - including Read. Days earlier AWI voters had also opted against raising the industry's levy rate to support additional research, development and promotional activity.

Federal agriculture minister David Littleproud declared on Thursday that WoolProducers Australia would be awarded a $662,000 grant ‘to explore new markets and processing options for Australian wool’.

Littleproud stressed the importance of the cash injection for the industry in that it would help the industry to explore new markets.

“Currently, the bulk of Australia’s wool clip is exported to and processed in a small number of markets.”
“If there’s one thing the global pandemic has taught us, it’s that market diversification is important for healthy industries.”
“By looking for alternative markets for our wool, we can make sure we aren’t falling into the trap of putting all our eggs in the one basket.”
“This grant will examine the feasibility of bringing back early-stage processing of greasy wool in Australia. It will also examine the feasibility of early-stage processing in offshore locations, providing our wool producers with new markets.”
“It could also mean investment into manufacturing, greater job opportunities in our regions, and a chance to value-add to our wool before export.”


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