Surging oil prices threaten transport sector

In News2 MinutesBy NZ Trucking magazineJuly 15, 2022

Surging oil prices mean road transport operators across New Zealand are facing cost pressures like never before, according to Transporting New Zealand.

Of the 400 transport companies surveyed across the sector, almost nine in 10 said recent cost increases have had a major negative impact on their business.

“We are very concerned about some businesses being able to survive,” said Transporting New Zealand chief executive Nick Leggett.

“The nearly one in five businesses who report they are unable to pass on increased costs to customers obviously face the greatest threat.

“We are raising the alarm given the fragility of our supply chain. The trucking industry carries 93% of freight so these survey results really go to the heart of supply chain vulnerability. Simply put, if operators can’t make their business viable, trucks don’t move, and if trucks don’t move, shelves don’t get stocked,” he said.

“Transport companies are often the meat in the sandwich. They operate at low margins and therefore even the smallest cost movements can bite. Our economy requires viable transport companies to keep things moving and productive, at a time when there are already enough challenges.”

A year ago, only 20% of the industry had fuel making up more than a quarter of their business costs. Today, 64% say fuel is more than a quarter of their costs. A total of 45% of operators say fuel is now in excess of 30% of their costs; a year ago that was just 8%.

Leggett said it was very concerning that only half the operators interviewed as part of the survey felt their customers appreciated the need to increase rates.

“We are a service industry. Wheels of trucks roll to deliver goods for customers. Fixed costs like fuel can’t be avoided. These costs need to be fairly shared by all parties in the supply chain.”