The trucking sector is on “cost watch”, according to Ia Ara Aotearoa Transporting New Zealand, with road transport business costs having risen almost four times higher than the general inflation rate in the last quarter.

The latest Grant Thornton Cost Index shows there has been an overall quarterly increase to June 2022 of 6.24% to road transport business costs, compared to a 1.66% increase in the CPI inflation for the same period.

Between September 2018 and September 2020, despite an increasing CPI, transport costs managed to stay relatively stable. However, in the last two years, the transporting inflation index is showing unprecedented increases and the gap between that and CPI is growing wider.

Trucking businesses are now on “cost watch,” said Ia Ara Aotearoa Transporting New Zealand chief executive, Nick Leggett.

He says the sharp spike in costs may force some road transport operators out of business unless they pass costs on, and the rise will also hurt consumers and add to the already soaring cost of living.

“The index demonstrates that just passing on inflation level increases isn’t going to be enough to keep some trucking businesses afloat,” Leggett said.

“The industry cost increases are overwhelmingly higher than inflation, driven by fuel increases of 29.64% followed by an increase in the cost of tyres of 4.10%.”

Transporting New Zealand believes this is a stark warning to trucking businesses that they must understand their own costs, engage with their customers, and pass those costs on. It is important for the economy that trucking companies remain viable to avoid an even more challenged supply chain than currently exists.

“We know from a recent industry survey, that one in five transport companies say they are unable to pass any of their costs on,” said Leggett.

“The good news is that the same survey told us over 40% of industry businesses said the Government’s Road User Charge (RUC) discount of 36% was helping with these cost pressures.”

Ia Ara Aotearoa Transporting New Zealand is continuing to advocate for an indefinite commitment from the Government to extend the RUC discount, fuel excise tax reduction and public transport fare reduction.

“Whether it’s people or freight, we know that transport gets more costly on households and businesses in tough economic times,” said Leggett.

“Our fear is that we are only at the beginning of hard times. While our members are working hard to minimise costs to customers, but they also have to survive as businesses.”

“Government discounts on fuel make all the difference right now. Removing them on January 31, 2023, would be a disaster.”