Lessons in BM and Afin from stink beetles

Car transport
By Lauren O'Brien, TPS Level Controller

18 February 2019

Why did 'stink beetles' from East Asia potentially cost thousands of jobs in the car industry in New Zealand? We can analyse this somewhat bizarre business situation from the perspectives of TC BM, TPS Afin and TPE.

No, this isn’t a riddle, it's in reference to a BBC news article, which explains a delivery of car shipments from Japan trying to get into New Zealand were banned because of a stink beetle infestation on the ships.

The worry was that these beetles could seriously damage the valuable fruit and vegetable industry in New Zealand, so the ships were held at sea. As an added complication, the fumigator most commonly used against the beetles would damage the car upholstery to the point where it is unusable.

This clearly had issues for the Japanese car manufacturer, but you have to imagine that the New Zealand market is just a fraction of their global sales.

The larger concern was probably for the New Zealand car industry, with serious fears for jobs.

Reflection points for TC, TPS and TPE

In TC BM we introduce the concept of using intermediaries and the supply chain, both of which are in play in this situation. We also discuss pricing in relation to demand – what could potentially happen to the price of cars in New Zealand if the situation continued?

In Afin we discuss trade and export finance, and there are a number of ways importers and exporters can protect themselves. As the importer in this scenario, the New Zealand car companies could have used bonds, for example, as a method to protect against non-delivery.

And from a TPE perspective, you could easily see this sort of scenario in a TPE case study. For those students about to start their TPE studies, try to put yourselves in the position of both the New Zealand car industry and also the Japanese suppliers, and have a think about solutions to this problem.

Look at it from both angles – at TPE we talk a lot about evaluating situations from a variety of perspectives. Also, consider the implications of your suggested solutions. There are very different implications for both parties, and this is something you will consider at TPE when making recommendations.

Try to think commercially if you can. Commercial awareness is crucial at TPE, and in class you will develop the skills to help you critically assess similar situations.

In the end of the stink beetle conundrum, Biosecurity NZ turned back all four ships, and some technicians and compliance checkers had their hours cut back or were laid off. The potential devastation to the NZ natural environment such as the fruit industry had to be measured against the cost of the imports, and now Japan has implemented ship inspections before they leave the country.


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