Iran war: Diesel price rise adds a $7 million cost a day to NZ, trucking body says
Wednesday, 25 March 2026
The speed at which the cost of diesel is rising is unprecedented, the head of a large trucking company says.
The price of diesel has nearly doubled from about $1.69 a litre at the pump at the beginning of the month to about $3.29.
Graham Redington is the managing director of Auckland trucking firm Northchill Group, running a fleet of about 40 large line-haul trucks carting chilled and frozen goods for supermarkets, entertainment equipment for live events, and general freight, employing 45 staff.
The firm counts Foodstuffs, owner of Pak’nSave and New World, McDonald's and Tegel among its key customers.
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Redington said the company had always used a variable surcharge to account for fluctuations in diesel prices, up and down, known in the industry as a Fuel Adjustment Factor, or FAF.
“It's a cost you can't carry. You can't absorb it into your operating costs, it's got to be passed on,“ Redington said.
Under normal circumstances FAF was set monthly, but it had never been this volatile, he said. Last week, it was the first time he could remember having to increase the FAF price twice to keep up with the rising price of diesel.
“At the end of the day, the consumer is going to pay for it.”
“We're probably lucky from the point of view that our businesses is food-related, and food's got to move,” Redington said.
The head of the National Road Carriers Association, Justin Tighe-Umbers, said New Zealand used about 11 million litres of diesel a day on average.
“There's a cost increase that's going up here of at least $7 million a day extra on fuel for the whole economy,” Tighe-Umbers said.
That cost burden would hit transport operators’ cash flow. For an operator running a fleet of about four trucks, they would be looking at $1000 extra a day for fuel, he said.
“So they've got to find that cash from customers and be able to pass through that bill directly, or they rapidly start getting into cashflow constraints.”
Tighe-Umbers said the industry was asking the Government for some targeted relief, specifically aimed at transport workers, who usually worked in places with limited or no public transport, and at night.
Fuel vouchers or fuel relief would be an important place to start, he said.
“There probably will need to be some sort of business level support for small and medium-sized operators, and it's just a question of, how do you do that in a way that's going to land the money where it needs to get to without a massive administrative burden, but equally without throwing money out the door in an untargeted fashion.
“We're encouraging our members and operators to be prudent from a fiscal perspective, but there's no need to panic about fuel availability,” Tighe-Umbers said.
There was about five to seven weeks’ fuel supply. “We don't get ahead of ourselves in terms of speculation on diesel running out. We are nowhere near that yet,” he said.
At the other end of the transport sector are the couriers. Nearly all of them are contracted to corporate transport companies and forbidden to speak publicly.
But one Auckland-based courier said the rapid rise of diesel meant filling up the tank had increased from about $75 before the war in the Middle East to about $160 last week. The price of diesel had since increased by another 35 cents a litre. A tank lasts just three days.
“I never, ever thought I would see diesel go as high as it is.” From next month, they said, “I'm basically working to pay gas. We really are just living a day at a time.”
The impact of the Gulf war on couriers was worse than the Covid pandemic because then, couriers provided an essential service and “the freight was booming” as people went shopping online.