State of Emergency Declared in Northland

As the Transport Minute goes to print, a state of emergency has been declared in Northland, with one month’s worth of rainfall forecast to be dumped in 24 hours.  My thoughts are with our members caught up in the flooding and road damage, please stay safe and look after one another. Thank you those who have been calling our team at NRC with updates on the road conditions. If you need assistance, please call NRC on 0800 686 777.

Government National Fuel Plan update on the way and other developments

Another week has passed and there have been fast moving developments for freight and supply chain operators.

Firstly what hasn’t changed.

New Zealand still has a healthy supply of diesel stocks, with 46.4 days of diesel stock in country and two weeks or less away on water.

Both the government and fuel companies advise that there have been no contracts or shipments not being met, and we are maintaining a five to seven week window of visibility of supply volumes.

Key developments that you need to know about:

The Ministerial Oversight Group met Wednesday evening and reviewed advice from officials on the steps in the National Fuel Plan.  The plan outlines a four-level system that is stepped through in the event that fuel supplies to New Zealand become constrained in any way.

National Road Carriers and other industry representatives are providing advice to officials on practical steps needed to implement the plan should restrictions be required.

The updated National Fuel Plan is expected to be published imminently.

Officials have advised government that the current fuel prices are likely to remain high for months even if the conflict in the Middle East was to end today.

Minister Willis announced support measures for nearly 150,000 families that qualify for the in-work tax credit – part of the Working for Families scheme. The $50 a week credit is intended to help provide relief for the doubling of fuel prices.  

National Road Carriers has made the case for targeted support to help transport operators in distress, as a critical part of the economic supply chain. The government however has made it clear that their ability to provide support to broader parts of the economy is extremely limited. The Minister of Finance Nicola Willis has stated that fiscal responsibility dictates that New Zealand cannot get into further debt, noting the $373 million of support is coming from the operational budget, not new debt.

Fuel Adjustment Factor an important tool, but must be applied properly

As fuel price volatility continues to buffet the transport sector, we are reminding members of the importance of using clear, consistent and accurate language if they are applying a Fuel Adjustment Factor (FAF) to pricing.

There is an important distinction to be understood – a Fuel Adjustment Factor is not a surcharge, and it should not be described or referenced as one in any customer communications, quotes or invoices. The term “surcharge” can imply an arbitrary or additional fee, which does not reflect the purpose of a FAF.

Instead, a FAF is a transparent pricing mechanism that enables transport operators to adjust for fluctuations in fuel costs over time. It is designed to ensure that changes in fuel prices, whether these are increases or decreases, are fairly reflected in the total cost of service.

Using a FAF benefits both operators and customers. Compared to “all-in-one” pricing, where fuel costs are embedded and less visible, a FAF provides clarity and transparency within the billing process. It allows customers to clearly see how fuel costs are calculated and how movements in fuel prices are impacting pricing over time.

Member monthly webinar

This week I was delighted to host the first of our monthly webinars where members dialled in online for an update from me on how NRC is working to help make the industry more productive, safer and resilient.  We had strong attendance from members and partners, and a lot of interaction with members raising lots of questions on fuel price volatility, productivity and other topics. For those that missed out, check out the NRC website to find the webinar and a summary of the session.

And for new developments through the week, don’t forget to visit our Members Hub page.

Justin Tighe-Umbers, Chief Executive, National Road Carriers Assn