It’s a hard slog for road transport operators, as tough economic conditions continue to bite. Rising costs, high interest rates and public sector job cuts have all taken their toll.

So, it was heartening when the government confirmed in Budget 2024 that it would plough more money into big roading and infrastructure projects. The long-term benefits will far outweigh the costs – and we have all seen the rising costs of not investing in these critical areas.

New Zealand roads have been underfunded for decades, and it is holding back economic growth, vital for the community and businesses.

To sum up the main points, the Budget announced the government will spend $1 billion to accelerate land transport projects, including Roads of National Significance. This is on top of $3.1 billion already signalled in the Government Policy Statement.

Other transport investments include $939 million to repair roads damaged by last year’s severe weather events in the North Island and $200 million for maintenance and renewals on the national rail network.

Another $1.2 billion will go to the new Regional Infrastructure Fund, and the government will also establish a National Infrastructure Agency.

So, the increased investment is long overdue, and we welcome the support and commitment by Transport Minister Simeon Brown. However, while this investment will make a difference, it won’t happen overnight. Right now, road transport operators are doing it tough.

Transporting New Zealand is hearing from many members who have seen revenue drop significantly over the past few months. Many trucking firms haven’t seen the traditional post-Christmas uptick in business. Bulk and aggregate and logging operators were some of the worst affected.

Transporting New Zealand account manager Lindsay Calvi-Freeman has been speaking with members across the lower North Island. He says some have reported their revenue is down 40% on last year, while others have been forced to lay off staff.

Fellow account manager Odette Geyer says the pain is being felt across the supply chain. She says liquidations have increased, driven by the lending costs and reduced business confidence. In May, three transport liquidations were announced in three days. The road freight industry also supports a whole range of suppliers, so tough conditions for our members have a significant flow-on effect.

Vicki Harris, who manages Transporting New Zealand’s member benefits and commercial partners, says she has noticed an increase in members looking for savings across fuel, insurance and supplier services. She says members are looking to cut expenditure and maximise their “bang for buck”. We’re seeing many referrals through to Transporting New Zealand’s supplier discount schemes, including fuel and tyre retailers.

The latest economic data support the tough operating conditions reported by trucking operators. The Reserve Bank noted in its May 2024 Monetary Policy Statement that economic indicators have been weak, as growth remains subdued. The Reserve Bank isn’t forecasting an official cash rate cut and associated interest rate relief until mid-2025.

The April 2024 ANZ New Zealand Business Outlook survey reported business confidence fell across every sector from March to April 2024. The March 2024 NZIER Quarterly Survey of Business Opinion showed net 23% of firms reported a decline in activity over the March quarter. This is in line with the feedback Transporting New Zealand receives from members.

There was more welcome news in the May 2024 ANZ Truckometer, showing the heavy traffic index up 3.3% higher than 12 months ago (using a three-month average), and rising 0.3% month to month. The heavy traffic index tracks the flows of vehicles weighing more than 3.5 tonnes on 11 key roads and has a strong contemporaneous relationship to GDP. However, the Truckometer doesn’t reflect factors like reduced loads, or vehicle movements outside of those identified routes, which will impact Transporting New Zealand’s membership and the wider road freight industry.

We’re still confident that the road freight industry will navigate the difficult economic conditions as it has with previous challenges.

Over the past few years, we’ve seen road freight operators successfully deal with the Covid-19 pandemic and severe pressures on the supply chain, acute driver shortages and cost pressures, and now the dual challenges of an economic recession and continued inflationary pressure.

Things are tough, but road freight firms are very resilient.