Escalating fuel expenses may push some trucking companies to the brink of collapse, warns an industry association.
The ongoing conflict in the Middle East has led to the closure of the Strait of Hormuz, a critical shipping route, resulting in unpredictable oil prices.
Oil prices soared to over $US100 ($NZ169) per barrel on Thursday, adding pressure to an already strained industry.
With over 90% of freight transport in Aotearoa reliant on road transportation, the surge in oil prices is expected to trigger an increase in the cost of goods.
The New Zealand Trucking Association revealed that fuel costs now surpass labor costs as the highest operating expense for trucking businesses. Fuel expenses currently make up 30% of operating costs, marking an increase of approximately eight to 10% since the recent unrest in the Middle East.
David Boyce, CEO of the NZ Trucking Association, expressed concern over the spike in fuel prices, stating, “It’s a challenging time for many in the industry. For some, this could be the tipping point.”
Despite the challenges, Boyce remains optimistic about the industry’s resilience. He mentioned, “Many operators will persevere, hoping that this surge in costs is only temporary.”
Boyce highlighted the drastic price fluctuations, noting a 35% increase in diesel prices within a week. He emphasized that the cost escalation would eventually impact consumers as transport operators have limited room to absorb additional expenses and must pass them on to customers promptly.
Assuring the public of an adequate diesel supply, Boyce stated that New Zealand currently has a 25-day supply of diesel, with another 29 days’ worth en route. However, he cautioned that any disruptions in supply chain could swiftly alter the situation.
Meanwhile, the Commerce Commission announced heightened monitoring of fuel prices and vowed to address any unjustified price hikes swiftly. Commissioner Bryan Chappel emphasized the importance of transparency in pricing and encouraged motorists to compare prices using tools like the Gaspy app.
Chappel assured consumers that the commission would provide regular updates on retail fuel prices and monitor them against the cost of importing fuel on their website.
