Port's tug operation costs rising due to fuel price hikes

Te Mata one of two tug boats at Napier Port. Photo / Paul Taylor.

Record fuel prices across New Zealand are ramping up "significant" costs for logistics companies - and not just those filling up at roadside petrol stations.

Napier Port has experienced rising costs not only for wheeled vehicles but also its two tug boats that together now cost an extra $3000 a month to "fill up".

Napier Port chief executive Todd Dawson said the port, like other transport-based businesses, also faced significant fuel cost increases to move Hawke's Bay's cargo.

"In the last 12 months Napier Port has seen a 43 percent increase in fuel costs for its machinery including our tugs, forklifts and cranes. In just the last week we've had a 7 percent increase in fuel costs.

"As an example, that's added $1500 to the cost of filling one tug a month.

"At the moment we're absorbing those costs however, like others in the shipping industry, we may need to review this in the future if costs continue to rise".

Hawke's Bay Chamber of Commerce chief executive Wayne Walford said the impacts on fuel rises usually hit consumers hardest.

"Businesses can generally pass the cost increase on unless they have a contracted rate or are impacted by the digital market. Significant market changes like fuel prices and the exchange rate are not that easy to absorb and can negatively impact profits."

Tomoana Transport managing director Stewart Taylor said while fuel increases had not yet hit the business in the pocket, the company had been forced to pass costs on to its customers.

"Back in 2006 we implemented a fuel adjustment factor that's based on the analysis of what percentage influence a fuel price increase has on your total rate."

During the past 12 months that percentage rate had gone from zero to 13 per cent.

"That's a 13 per cent increase in costs for all our customers. I guess ultimately the impact could be that some of our customers decide not to move freight because of that cost increase."

So far its customers were in turn passing those costs on again to their own customers.