Government Fuel Response Package
On Monday, Ministers Willis and Jones released the Government’s Fuel Response Plan. We are in the first of four phases, Phase 1 being “Watchful”, and the next stage being “Precautionary”. The “Watchful” environment is one where “The fuel market is operating effectively and fuel is available nationwide. However, prices are rising due to global market changes. This phase is about supporting the market and making sure Kiwis have good information.” In essence it’s business as usual.
We will move to Phase 2 when “The market continues to operate effectively and fuel is available nationwide, but there are signs of significant supply disruptions”. When we reach that stage, the Government suggests we should start being smarter on how we use fuel. For example, we should do things like combining trips, and/or using other modes, and rather than just being aware of EECA guidance on additional measures to help save fuel day-to-day, start following it.
Phases 1 and 2 are largely based on relying on normal market forces and managing our way through with minimalist Government intervention. To be fair, I was pretty surprised at these Phases. I cannot think of a member that feels like they’re operating in a BAU environment!
A lot of our members are already implementing the recommended Phase 2 actions. Vehicle utilization, load consolidation and optimisation, following Safe and Fuel Efficient Driving (SAFED) behaviours and techniques, and other good practice measures to reduce fuel wastage have been in place for several years, or even decades in most good transport businesses.
In my time as Logistics Manager at Z, my team scheduled the loads on the road tankers. Of the hundreds of thousands of truck loadings made over that time, I cannot recall a truck ever leaving the fuel terminal without being loaded to the maximum weight that the regulations allowed.
Smart use of fuel is key to running a competitive and efficient trucking service, and many procurers of transport services will already be demanding this from providers. Therefore, my concern is that if the Government does escalate New Zealand to Phase 2, the expectation that these measures would lead to significantly reduced fuel demand will simply not eventuate.
Within a couple hours of the Plan being released we recommended to MBIE and the Ministry of Transport that the Government consider advancing to Phase 2: Precautionary as soon as practicable.
Seeing our way through this
Given the increasing length of this challenging time, we’ve been able to see what’s happening overseas, particularly in Australia, and we’ve had the opportunity to hear from members to get a mandate for a way forward.
Consequentially, we are developing a multi-faceted approach to help our country and our industry through this period.
We have provided some new tools to help our members to better understand the impact of changing fuel prices.
We will continue our discussions with officials about increasing productivity within the current framework and with changes to VDAM.
Next week, we will also be making a recommendation to the government on how it can provide a financial support package to businesses.
Alternative markets unlocked
Following our advice to MBIE last week, it was pleasing to see on Tuesday that the Government has amended the Engine Fuel Specifications Regulations 2011 and retained the existing New Zealand limit of 10ppm sulphur.
In essence this change will mean fuels such as petrol, ethanol E85, diesel, and biodiesel could be supplied from Australia without there being any engine compatibility issues.
Hear the good oil
We have arranged a seminar in on Thursday 9 April in Wellington (and online) to hear energy sector experts discuss New Zealand’s fuel supply chain and sources of refined fuel, our fuel stock holdings, monitoring of global commodity price movements and of local fuel pricing.
Presenters include Steve West from New Zealand’s leading fuel market analysts Envisory and Bryan Chapple of the Commerce Commission.
You can register for that seminar here.
Cook Strait crossing
A highlight of this week was our Sector Group Meeting in Wellington. It was clear across the sector groups that transport operators have significant concerns about moving freight between the North and South islands.
Please rest assured that while a considerable amount of our time and energy is being taken up by participating in all the groups and meetings focused on fuel, we will continue to advocate for increased resilience across the Strait.
Have a great, safe and enjoyable Easter.
