Navigating the fuel shock: tough choices for transport operators
National Road Carriers this week has attended multiple daily meetings with government, continuing to play our part supporting the road freight industry through the oil price shock.
I am pleased to be able to say the government is making every effort to listen to businesses and industry, as well as the public, so that they know what assistance is needed. This is in stark contrast to the “we know best” approach taken during the Covid-19 pandemic.
The government cannot come to the rescue and shelter us from a global storm like this one. What they can do is provide support services to help weather it. The message is very clear, each individual and business needs to make the right decision for themselves as to how to respond to the increasing price of transport. No one is better placed to take those decisions affecting their businesses and families.
There is no emergency fund sitting in waiting to help the economy. The government is finding what they can from adjusting the operating budget to providing the in-work tax credit for those most in need, low-income working families who have to drive to work every day.
Some are calling for other support such as lowering road user charges and fuel excise duties. There are two problems with this. One, this is actually creating another form of debt, by reducing the amount of dollars we have to repair our roads, which are continually hammered with un-forecasted repair bills due to repeated weather events. Secondly, it reduces the price of diesel which then will increase the consumption at a time when we need to be prudent in case supply constraints emerge.
Stuart Donovan, a Senior Fellow at Motu Research has noted that “Allowing fuel prices to rise is reducing demand for fuel and, in turn, helping to preserve our supplies of diesel and petrol.” He points to the Ministry of Transport Fuel Response Monitoring Dashboard where the data confirms these changes.
There are no good choices left for New Zealand – we simply do not have the wealth to shield us from a price shock of this magnitude. Once we accept this fact, each of us is better placed to make the difficult decisions we need to make to get our businesses through.
Many of our members are facing the difficult decision of what to do if a customer won’t accept the increased fuel price. There is only one rational response – don’t deliver if a customer can’t afford the service. This is the way business works. Either a customer can pay for a service or they can’t – let them make that choice. Providing a service where a business is losing money is the fastest way to go under.
Diesel stocks
Wednesday’s report showed 52.2 days of diesel stock available, down two days from the 54.5 days reported on Monday.
Stocks remain healthy, and fuel importers are advising that there continue to be no signs of contracts or shipments not being met. April will be a critical month for learning how the restriction of crude exports from the Strait of Hormuz has affected downstream refineries.
Government exploring temporary regulatory relief to improve road freight productivity
Australia has been quick to the mark in helping the Road Freight industry weather the diesel price increases. The National Heavy Vehicle Regulator has provide a number of measures to give the industry a productivity lift, including temporary network access for higher-productivity vehicles, relaxing some curfew and operating hour restrictions, and providing some temporary route extensions.
Over here, National Road Carriers has joined industry representatives in working with the government to explore what options are available. Work is underway at pace, with the regulator looking to identify temporary productivity gains that could be granted without compromising safety or introducing long-term pavement damage.
Fuel Response Plan
The government launched the fuel response plan on Monday. Currently New Zealand is in Phase 1 of the plan. National Road Carriers have been working with government alongside the land transport industry for how any changes in Phase would be responded to, and providing advice on the proposed priority bands. Should any fuel access restrictions need to be put in place, priority access needs to be easy to understand and practical in how they are managed for road freight operators.
A time for hope
At National Road Carriers we are proud of the fact that our members keep in touch to let us know how they are getting on. We are seeing that while brave faces are put on, worries are increasing – with people wondering how will they will be able to keep up with all of the responsibilities of running a business when the price of diesel has doubled.
This weekend the country stops to celebrate Easter, a season of hope. What better time to step away from the day-to-day worries of running a business, and to appreciate all the things we have to be grateful for in our life. For most of us that is our family and loved ones we’ll be spending time with, and for the beautiful and peaceful country we get to call home.
Whether busy keeping the supply chain running or resting, I wish you a safe, and thoughtful Easter.
Justin
