It’s been another week dominated by fuel price rises and increasing pressure on freight operators. Despite these record operator costs, trucks continue their essential work.
We remain in the “Watchful” first phase of the Government’s Fuel Response Plan, letting normal market forces manage demand. In other words, as the price of fuel increases, there will come a point where some trips won’t be made, or will be made by other means. This could also include trips being made more productively, for example through carpooling or commuting via public transport.
Members wanting the latest fuel stats and updates can find them on Transporting New Zealand’s website.
While increasing fuel prices are having a significant impact on light vehicle traffic, most trucks trips are continuing to be made. Heavy commercial vehicle traffic data published in Ministry of Transport’s recently developed dashboard demonstrates the high level of inelasticity between fuel pricing and demand:
Graph: Transporting New Zealand using MoT sourced telematics data
It was good to hear the leader of the Ministry of Transport recognise this point in yesterday’s Freight Advisory Council meeting.
Compare this to light traffic movement, which has seen median traffic volumes drop by 4.3% in Auckland, 5.2% in Canterbury and 8% in Wellington compared to the same time last year. This is despite petrol prices increasing far less than diesel. To me, this is further evidence of how critical freight movement is to our economy. It also highlights that there is limited scope to materially reduce freight demand, which is why Transporting New Zealand is continue working with officials to unlock productivity gains as quickly as possible. The different roles of diesel and petrol are also becoming clearer to officials, and there appears to be increasing recognition that they need to be managed differently. That is a helpful development.
To members updated, and ensure regulators are hearing directly from industry, we hosted a Fuel Supply and Pricing Update with Envisory and the Commerce Commission yesterday. Thank you to the 90 attendees who joined in person and online. A recording is available on the TNZ dashboard and member app.
I am very mindful of the stress and strain that our members are under, particularly over the next few weeks as payment for work completed over March falls due. This will provide a much clearer picture of transport customers’ willingness to absorb these unexpected and unprecedented fuel cost increases. We are keeping a close eye on geopolitical changes, cost pressures, and member feedback as we continue our advocacy to government and supply chain partners.
I encourage any operators who haven’t completed our fuel survey to spend two minutes completing it today. This will support our case for targeted industry support, as cost pressures continue to mount.
