SPECIAL REPORT
ONGOING COVID-19
CRISIS
SEE TRUCKING COSTS
SOAR
Story by Shannon Williams The ongoing global Covid-19 crisis is seeing the cost of doing trucking business in New Zealand hit the roof – with no end in sight.
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ith the pandemic causing shipping delays, labour shortages, and longer lead times, the costs of manufacturing, product components, shipping and employment within New Zealand’s transport sector have all increased. David Boyce, CEO at the New Zealand Trucking Association, says the costs for New Zealand trucking companies have gone up significantly. “The trucking industry is no different to any other businesses or parts of the New Zealand economy that have been affected by Covid. You have all the delays in shipping materials that have
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caused the costs of things to go up. If you try and go buy product, even at retail level, you’ll get told there are delays,” he says. “The cost of steel has gone up, the cost of tyres, fuel – all those things have gone up, and all those things are driving up labour costs as well.” Boyce does cost-modelling for companies looking into the viability of buying trucks and trailers. “In the past 12 months, at least 20% to 25% of those trailers have gone up in cost. It’s quite a bit,” he says. “And a lot of the truck and trailer manufacturers and truck-body builders – they have lead times for everything. “It all flows through, and operators definitely need to keep tabs on their rates to make sure they are not going backwards. You have to be reviewing your freight rates pretty regularly to make sure you are keeping up with all the increases in costs.” Boyce says the increased
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cost from throughout the supply chain is being passed on to consumers. “At the end of the day, trucking operators can’t keep absorbing costs – they’ve been doing that for decades, and you can’t keep doing it forever.”
Impact on supply “brutal” Craig Fowler, business manager at HCB Technologies NZ, says the impact of Covid-19 has been “brutal” on the supply side. “Particularly in North America, a lot of the wage subsidies over there are quite generous, so a lot of the manufacturers are struggling to get people to work because they are basically getting paid the same money to stay at home,” he says. “One of our largest American suppliers is running at 50%, so when you have a factory and you’re short 35% of your staff, you can’t operate. So they end up sending staff home, and the result of that is the
mothballing of massive factories in the States that we draw a lot of commercial product from.” Fowler says that will impact the coming year because the company will be facing stock shortages from key suppliers. In response, HCB has had to find alternative suppliers to meet the market. “We’ve hedged ourselves as much as possible with other suppliers, so we draw products from Europe, the States, Central America, South Korea and China, so we have enough options that we can move volume around,” Fowler says. “But it’s like squeezing a balloon. When you think you’ve solved one problem, another one pops up, and it’s going to be like that for a while. Some of the American factories are telling us it’s 12 to 18 months before we’ll see stock again.” For HCB, Fowler says the most dramatic increase in cost is freight. “It’s brutal. It’s something we do have to pass on onto customers, and
