Fuel crisis: Higher diesel, shipping costs pile pressure on logging industry

Diesel-reliant crews burn 12 litres to produce one tonne of logs. Photo / Michael Cunningham

By RNZ

The logging industry is warning that some companies could be on the brink as the conflict in Iran pushes up the cost of diesel.

Logging operators say it’s increasingly difficult to get logs to port and if the situation drags on, export-reliant regions like South Canterbury and the west coast of the North Island could face shutdowns.

The costs of shipping have risen dramatically, with rates going from roughly US$33 ($56) per cubic metre into China for March, through to about US$45 in April.

Forest Management group director Glenn Moir said that would put some companies on the brink.

“I can see that if it does continue, we’re going to face some real pressure in the higher-cost forests – so the ones that are further away from the market and have steeper country – just to make it economic.”

There had been some huge cost pressures going through the chain.

The industry was diesel-dependent and it took 12 litres of diesel to produce one tonne of logs.

Higher diesel prices meant a 25% increase in costs across their operations for logging contractors.

“The industry can’t sustain that,” Moir said.

Talks were continuing with everyone involved, including forest owners, to try to get some agreement on what could be done in the short term.

The costs of shipping were also rising dramatically, Moir said.

“It’s a perfect storm right now.”

Moir said until the war in Iran started, 2026 had been looking like a fantastic year for the forestry industry, with export prices rising and domestic demand growing.

“All that turned on its head three weeks ago and we’re struggling a little bit now with these rising costs.”

The Government’s latest Situation and Outlook for Primary Industries report showed forestry exports were forecast to rise 2% this year.

The industry employs 42,000 people around the country and is the sixth-largest export owner.

While the Chinese market was declining, there was growing demand for New Zealand logs from India, Moir said, “and the FTA [free trade agreement] towards the end of last year really helped that”.

The forestry industry was a resilient bunch, he said.

“We’ll work together and get through this.

“It is going to be pretty tough, especially if we move to Level 2 under the National Fuel Plan.”

Impact on older New Zealanders

The head of Age Concern Auckland said soaring petrol prices were making the basics of life even more difficult for already vulnerable elderly people.

The Government announced on Tuesday that about 143,000 families would receive up to $50 per week through the in-work tax credit to help with fuel costs.

But beneficiaries and superannuitants would not qualify.

Age Concern Auckland chief executive Kevin Lamb said increases in superannuation, in response to the high cost of living, were not agile enough to meet the sudden rise in petrol prices.

Superannuitants would miss out on trips to the doctor or medication as rising prices started to eat into basic budgets for food and essentials, Lamb said.

– RNZ