According to James Smith, GM Policy and Advocacy, National Road Carriers Association, the latest Pulse of NZ Business survey from Forsyth Barr paints a picture that many in the road freight sector will recognise. Confidence has lifted materially, demand is improving, and importantly, the recovery is broadening across the economy. This survey is just one of a number of positive indicators that the much-anticipated recovery is actually underway.

For transport operators, that matters. Freight is not a lagging indicator. It is a real time barometer of economic activity. When volumes rise across construction, manufacturing, retail and hospitality, freight movements follow. The survey’s finding that cyclical sectors are now reporting stronger demand and improved profit expectations aligns with what we are hearing from members across the country. 

A net 69 percent of freight respondents expecting improved profitability over the next 12 months is a significant shift. That is not marginal optimism. It signals an industry moving from stabilisation into recovery. 

A broad based recovery. One of the most encouraging aspects of the survey is that the uplift is not concentrated in one or two sectors. Construction sentiment has strengthened sharply. Manufacturing continues to improve. Retail and hospitality are showing renewed momentum. Once again these findings appear across multiple surveys and indicators.

For freight operators, diversification of demand reduces risk. When recovery is broad based, fleet utilisation improves, asset productivity increases and margin pressure eases. It also provides greater confidence to invest in equipment, technology and people.

The survey’s findings on rising investment intentions are particularly relevant. Businesses do not increase capital expenditure lightly. When they do, it signals confidence in sustained demand rather than a short-term spike. That is positive for transport, which underpins virtually every part of the economy.

The regions driving momentum. Another key theme is the continued outperformance of the regions. Freight is inherently regional. Provincial New Zealand drives much of our primary production, construction activity and distribution networks. Stronger regional demand directly supports linehaul, forestry, agricultural and construction logistics.

For many operators, the last few years have required careful cost management and disciplined capital decisions. Seeing regional activity accelerate provides a platform for more confident forward planning.

There are also the first indications that Auckland is rising from its slumber with increases in freight generating construction and retail spending.

Pressures have not disappeared. That said, challenges remain. Cost inflation continues to weigh heavily, particularly fuel, compliance, labour and capital costs. While demand is improving, margins remain sensitive to input pressures.

It is to be expected that we will see continued liquidations of businesses that simply have run out of puff, have not enough left to climb out of the recession.

We can also expect to see a spike in business sales as owners that had been waiting for black ink to appear on their balance sheets cash up and retire. If you are looking to purchase one of a transport business don’t forget to run it through our cost model that will apply a different lens as it looks forward 12 months.

There is also a clear signal that competition is intensifying and that businesses must adapt to new technology. In road freight, that means digital fleet management, telematics, safety systems and emissions reporting. Productivity gains will increasingly come from smarter systems, not simply more kilometres travelled.

The transition to lower emission vehicles adds further complexity. Investment decisions in heavy transport require policy certainty, infrastructure alignment and realistic timeframes. A recovery in demand does not remove the structural challenges of decarbonisation. It makes getting the settings right even more important.

Turning recovery into sustained growth. The survey suggests New Zealand is moving from cautious stabilisation into early expansion. The priority now is ensuring that policy, infrastructure and industry capability align so this recovery becomes durable, productivity focused and beneficial for the entire supply chain. 

That is where NRC will continue to focus its advocacy. We have to lift the productivity of our sector if we are to mitigate the cost impacts to the supply chain that is coming from increased labour, capital and compliance costs.