Iran war: Interislander nearly doubles fuel charges to trucks as marine oil spikes
Tuesday, 5 May 2026
Trucks travelling on the Interislander are being hit by a new wave of costs as the Cook Strait service nearly doubles its fuel fees for commercial vehicles.
The head of trucking lobby group Transporting NZ says the increase has raised concern from his members, while Rail Minister Winston Peters is defending the move.
Like all fuel, Interislander’s marine gas oil, which is a low sulphur type of diesel, has been increasing in price since the start of the Iran war.
To deal with the price fluctuations Interislander has a “fuel adjustment factor” tool (FAF) which is a percentage of a freight invoice, charged on top of that invoice similar to GST.
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The percentage can be ratcheted up and down each month according to prices at the time.
In April KiwiRail set the FAF surcharge for commercial vehicles at 27.7%, but for the month of May that has nearly doubled to 54.36%.
KiwiRail’s chief customer and growth officer, Adele Wilson, told The Post fuel was one of the company’s largest operating costs and sustained increases were creating “material cost pressures” across freight and Interislander operations.
“Like other transport operators, KiwiRail does not receive fuel subsidies, so prolonged periods of elevated fuel prices must be actively managed to ensure services remain financially sustainable over time.”
Wilson said the rail company understood the latest increase was a steep change.
“As everyone will recognise, fuel prices remain volatile and we appreciate that this is a large month on month increase.”
She said KiwiRail updates its FAF monthly to provide stability to companies.
“When prices rise steeply, this mechanism provides customers with certainty through a standard billing cycle and the benefit of the time value of money, as Interislander absorbs higher costs before adjusting charges. When prices fall, there is a lag effect before reductions are passed on.”
She said some transport operators have had to move to more regular FAF changes and KiwiRail will review its settings as the situation evolves.
Trucking lobby believes consumers will eventually pay the price
Transporting New Zealand chief executive Dom Kalasih told The Post ultimately the end users will be wearing the cost of the increases.
“At the end of the day transport operators are just providing a service for their customers.”
Kalasih said the industry was “somewhat surprised” by the scale of the increase given he thought that the ships were more efficient with their fuel than trucks.
He said his members had raised concern, particularly about the size of the latest increase.
Winston Peters defends the fee change
Rail Minister Winston Peters told The Post businesses needed to spend less than they earn.
“Interislander is taking every step available to keep its costs low to remain competitive, but no transport business can control fuel prices and that is why fuel adjustment factors exist.”
Peters said he was briefed on the planned increase and assured that it was tied to the freight customer share of Interislander fuel operating costs.
“It is completely standard in the transport industry to adjust rates based on fuel prices – so standard in fact that Bluebridge adjusted theirs a few weeks ago and Interislander is following suit.”
The Post reported last month that Bluebridge had made a “modest increase to passenger fares” on its sailings due to high fuel costs.
Supermarkets weigh in
As New Zealand’s main food suppliers reliant on freight, both Foodstuffs and Woolworths were approached for comment.
A Woolworths spokesperson said the supermarket operator had no direct exposure to KiwiRail but its contracted carriers did.
“We have our own FAF arrangements with our carriers and we will discuss fuel costs with them on a case by case basis.”
The spokesperson said the company was aware of the pressure on the cost of living caused by the Middle East conflict.
“We need to strike the right balance for everyone who relies on Woolworths. We're committed to doing the right thing for our customers, our team, our transport partners and suppliers who are facing rising fuel, fertiliser and packaging costs.”
A Foodstuffs spokesperson said its suppliers were largely exposed to costs on Cook Strait, and noted the company tended to see the impact when suppliers increased their costs to the supermarkets.
“We work closely with our suppliers and logistics partners to manage those pressures and keep prices as low as possible for customers.”
One of the world’s largest shipping companies Maersk recently increased its land transport fuel fee for New Zealand by 27%.
Maersk offers services for clients that allow them to organise their cargo to be moved from ships to their desired location on land via train or trucks, which this fee would apply to.
In New Zealand, Maersk works with KiwiRail and local trucking partners for this.
The company told The Post it was a temporary cost reflecting fuel and energy adjustments.
“It is being reviewed and adjusted on a monthly basis and varies from market to market depending on the respective local impact.”