Southern Link report launched!

Rapid growth in trade between Asia and South America is opening the door for New Zealand to potentially reap billions in economic benefits as an aviation hub for travel and e-commerce trade, according to an NZIER report for the New Zealand China Council (NZCC).

The Southern Link was proposed by the NZCC in 2019 as a way for New Zealand to capitalise on the growing airborne trade links by making New Zealand a major conduit for the flow of people and goods between Asia and South America.

Transiting via New Zealand offers the shortest air route between many major cities on the two continents, along with time zone advantages and efficient hubbing and servicing.  NZCC executive director Rachel Maidment says the Southern Link places New Zealand in the middle of a global value chain, generating growth in trade, tourism and export opportunities.

“The report identifies direct benefits of $1.87 billion for New Zealand’s e-commerce, tourism and education sectors over 10 years, and indirect benefits through new employment and construction of hubbing infrastructure.

“Fully realising these benefits will require close coordination between business and government, but the value is clear and the foundation of the opportunity is already being built,” Maidment says.

Last year, the route was used by LATAM Airlines and Aerolineas Argentinas to transport emergency medical equipment and PPE, and other businesses are now planning to leverage the competitive advantages of routing e-commerce traffic from Asia to South America via New Zealand.

International e-commerce and mail carrier Asendia has been trialling the Southern Link route.  Oceania Managing Director Dene Green says the route offers clear time advantages, with less congestion and smoother logistics.

“There’s been huge growth in demand from cross border e-commerce between China and South America in the past couple of years.  Moving goods through New Zealand has allowed us to exceed our KPIs and ensure faster and easier shipping to our customers.

“The Southern Link places New Zealand in the middle of a global value chain for the first time, bringing businesses closer to market and unlocking opportunities,” Green says.

Maidment says while the Southern Link is still in its infancy, the route illustrates how New Zealand can assist the economic recovery of the wider region in the post-pandemic world.

“Increased interconnectivity will generate real value and growth for Asian, South American and New Zealand businesses.  The Southern Link is exactly the kind of initiative we need to help build a positive economic environment in the post-Covid era,” Maidment says.

The full report can be accessed here. A podcast of a panel discussion about the report can be found here. An explainer video on the link can be accessed here.