Comment: Cost and workforce pressures

Date: 10.08.2022

Ia Ara Aotearoa Transporting NZ says it's increasingly concerned at the impact that rising input costs and other external pressures are having on transport businesses

Transport costs have risen right across the board

We know that even in the best of times this is a tough industry with slim margins and high pressure, which is why we recently undertook a survey to find out just how bad things are for operators.

None of this will surprise anyone, but the headline results of the survey paint a pretty grim picture:

• More than 85% of respondents described the overall impact of cost increases on their business as ‘serious’ or ‘very serious’
• Nearly 50% of operators indicated that more than 30% of their business costs were now going towards fuel expenses
• Well over 80% of operators had increased the pay rates for their drivers over the last year, and many significantly
• More than 70% of operators were under financial strain and more than 75% were experiencing increased levels of anxiety and stress

Transporting New Zealand is working hard to communicate these issues to Government and is campaigning for the current RUC reductions (and fuel excise relief) to be extended, a position that more than 95% of survey respondents support.

Put simply, if the Government chooses not to extend the 36% RUC reduction, it will have far-reaching consequences right across the economy and will affect everything consumers buy, including food, groceries, and basic services.

Unfortunately, indications are that the reduction will be left to expire, with the Government seemingly happy to impose this further inflationary cost pressure on transport businesses and the wider economy.

This is especially concerning to me given that, according to our survey, only around half of the operators thought their customers appreciated the requirement for them to increase their transport rates as costs go up.

The reality is that any increase in freight transport costs needs to be passed on through the supply chain to the supermarket checkout. Yes, this makes it tough for households who are also trying to keep their costs under control, but what choice do we have?

If we try to soak up these cost increases, we risk the very viability of our businesses—businesses that during the last two years have kept this country moving. The latest COVID and flu waves and their associated toll on the country’s workforce are another pressure facing both our industry and the wider economy.

Unfortunately, even once we’re through the worst of the winter illnesses, the fact is that young workers are choosing to leave New Zealand for what they see as either a long-anticipated OE or just better work and lifestyle opportunities overseas.

Again, while some of this is unavoidable, it’s a situation where the Government has been slow to act. Our immigration settings just do not match the needs of the vast majority of New Zealand businesses. Certain employers, such as forestry, dairy, and meat processing have been picked for border exceptions while industries like ours are left hanging.

It’s absolutely imperative that the Government frees up our working visa settings as soon as possible and allows all parts of the economy to bring in workers from overseas. If they don’t, then they shouldn’t be surprised when once-viable businesses are forced to close their doors.  

Conference reminder

The Road Ahead Conference 2022 is fast approaching, and I want to remind industry members to get their registrations in. Obviously, with all the pressures on the industry at the moment, there’s a lot to discuss and learn about, and I’m sure that delegates will get a lot out of hearing from the likes of economist Cameron Bagrie, Waka Kotahi chief executive Nicole Rosie, and minister of transport Michael Wood.

It’s also important that delegates enjoy the social side of the event and get the chance to network with each other, which is why we’ve created plenty of time for that in the programme.

So, if you want to join your industry colleagues in Invercargill on 28 and 29 September, please register at conference.transporting.nz.

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