Strait of Hormuz uncertainty, but NZ fuel supply remains strong

As I write this a fragile two-week ceasefire agreement between the United States and Iran is tentatively holding.  One of the terms of that agreement is that Iran opens the Strait of Hormuz, which if held to may see some fuel shipping out of the Persian Gulf, providing shipping companies have confidence their vessels will be able to navigate a safe passage.

We watch and wait. 

New Zealand Diesel Stocks

Diesel stocks remain stable, with just under 52 days of diesel reported Sunday 5 April. On shore, domestic distribution to pump sites also remains stable, with very few sites reported as running dry after the initial significant spike in demand fuel companies experienced in the first two weeks. 

We are experiencing a major price shock, but not a supply shock.

Oil supply from Singapore and South Korea (providing approximately 80% of NZ supply) continues to be robust. Singapore has significantly increased import flows since the start of the conflict and is maintaining higher than normal volumes. It has among the most flexible refineries in the world for processing multiple crude blends, making it possible to import crude from many markets outside of the Middle East. Both South Korea and Singapore have increased crude supplies from the United States.

The takeaway for transport businesses is that there is no need to stockpile fuel, our supply remains strong.

 National Road Carriers continues government engagement

We continue to attend daily meetings with the Ministry of Business, Innovation and Employment, and the Ministry of Transport.

Our principal focus has been to support Government efforts to explore how to increase road freight productivity to help offset fuel costs and providing expertise on how fuel allocation could work if Phase 3 or 4 was ever implemented, which is looking increasingly unlikely. 

Unfortunately, regulatory changes providing meaningful uplifts to productivity are looking increasingly unlikely in the near term.  Approving increased mass (heavier loads) is not a silver bullet for many reasons – mainly because our bridge stock and roading network has not been maintained well enough. This is another reason why NRC does not support a Road User Charge (RUC) discount – RUC pays for our road and bridge maintenance, and New Zealand is already years in arrears in maintaining our road network.

Outside of mass, the other option is to increase length. This is being explored, but even with regulatory approval it takes time to build and configure the trailers required, so would only deliver a very modest uplift in productivity in the short term. 

Member support

The NRC team remains busy providing support to members through the crisis. We are seeing a significant increase in new members joining as transport operators look for help through the crisis.  Services in demand are advice on the fuel adjustment factor and engaging with customers, cost modelling and understanding what the government response means for transport operators.

Don’t forget to use our member hub for the latest updates and guidance.

We are very aware that over the next week or so fuel accounts come up for payment.  This will place a lot of transport operators under cashflow distress. Make the most of NRC services, we are here to help you through the tough times, and to lend a supportive ear when you are going through hardship. You can contact us at enquiries@natroad.co.nz

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