New Zealand prices of ‘anything attached to fuel’ will rise, logistics boss warns

The increased price of fuel will see prices increase at the pump, Don Braid says. Photo / RNZ, Dan Cook

By RNZ

Oil costs are contributing to “off the charts” freight prices and it is only a matter of time before it flows on to consumers, a logistics boss says.

The war in Iran has closed the Strait of Hormuz, a vital shipping route carrying about 20% of the world’s oil and gas.

The Ministry of Business, Innovation and Employment said, as of Sunday, New Zealand had 25 days’ supply of diesel in country and 29 days more on its way.

Mainfreight managing director Don Braid told RNZ that New Zealanders could expect price increases to petrol, diesel, freight and international travel in coming weeks.

He said he expected to see an impact in fuel pricing soon which would flow through to freight, passenger air travel and anything that has fuel attached to it.

There had been significant disruptions to air and sea freight, he said.

“In terms of sea freight, whilst ports are operating within the area we’re not seeing any vessels transiting through there ... so that’s adding time to transit and in terms of cost as well.

“Not so much as you would think for New Zealand and Australian exporters because we can route across Asia or for that matter across the USA, it’s for that freight that has to transit via the Middle East.”

The situation it was “just a part of everyday life in logistics” as they had to deal with issues such as earthquakes, wars and floods, he said.

Braid said he had already seen diesel prices lift.

“We are being told to expect further increases in terms of diesel and that will be impacting our operations around the world, unfortunately we will have to pass that through.”

The longer term worry would be if this war did not end quickly, he said.

Asked whether he had confidence in New Zealand’s fuel supply situation, Braid said the closing of Marsden Point refinery meant New Zealand had to rely on other countries.

“Jet fuel, I think, is 24 days that is being held currently, those are the things we wouldn’t want to see become an issue. So yes it worries us, but we’ve been able to get through all sorts of other catastrophes and events of late, so we’ll have our fingers crossed and just get on and do the job,” he said.

“We are being told by those fuel companies that we shouldn’t worry about supplies, so therefore I don’t see a need for panic but I do expect us to see an increase in pricing.”

Any price increases would flow through to freight, passenger air travel and anything that had fuel attached, he said.