National Road Carriers Association

By James Smith, COO, of National Road Carriers Association

James Smith

difficulty in every opportunity: an optimist sees the opportunity in every difficulty.”

It’s time to wheel out our optimistic selves – especially as New Zealand is doing comparatively okay.

I recently attended a briefing from Treasury Chief Executive, Caralee McLiesh, on the state of our economy. The meeting highlighted one of New Zealand's biggest advantages. We get round a table and work through issues, can access senior officials easily and there is genuine interaction.

Our economy has shown incredible resilience during the pandemic and our growth is still among the best in the OECD. Inflation at 7.3% is at the lower end of the range in the OECD – not good but better than most. It is likely high inflation will remain in the short term although there are indications it will ease as the Reserve Bank has increased interest rates quickly and the economy has reacted with an easing of demand.

Treasury is not forecasting a recession. The trick is balancing demand with supply which, as most of you that run businesses know, is harder than it looks.

There is still very strong demand in our economy although it is constrained by labour and material shortages brought about from supply chain constraints and the conflict in Ukraine. Growth forecasts for the global economy are cooling but New Zealand is still expected to fare better than most as forecasted demand for our exports remains high.

The national workforce reduced by 4% due to the borders being shut and this will take time to address. Nine per cent of the workforce are under-employed and unlocking the barriers to fuller employment will be important for New Zealand as we compete on the very tight global talent market. Everyone underestimated how resilient our economy was and the expected rise in unemployment did not occur, with unemployment actually falling.

There will be a transition to self-management of COVID with less direct Government intervention. There is now a greater understanding by all agencies of the importance of supply chain and its role in ensuring resilience in the economy.

The transition to a low carbon economy will be one of the biggest transformations ever and it will occur over a compressed time. We are already seeing the impacts of climate change and we will need to adapt to changing weather patterns. Carbon budgets are going to become at least as important as fiscal budgets as global carbon pricing ramps up.

New Zealand remains one of the best positioned economies to adapt to change but more work is needed to help businesses prepare. My advice to road transport operators is five simple points: 1. Understand your business – stop looking at other people and look at yourself. What are the influences on your business and what can you do about those? 2. Understand your staff – especially drivers, who are an aging workforce. What are their plans? Who is at risk of resigning or retiring and how will you replace them? 3. Understand your customers – especially in a time of economic uncertainty. For example, in this time of decarbonisation will your customers ask or require you to go electric? 4. Don’t cross-subsidise – make sure each part of your business is profitable. If you’re robbing Peter to pay Paul, you’re in big trouble if you lose Peter. Also, don’t have all your eggs in one basket. 5. Don’t worry about what you can’t influence – the chain of influence has links to the left and right. Too often people worry about links that are far away. Just influence what you can.

In summary, while there are real challenges, there are also opportunities and one of the biggest advantages we have is our ability to access the policy makers, who do respond to constructive engagement. We don't always get everything we ask for but every week we get better at asking.

The best thing NRC members can do is to engage. Do not sit on a concern. If you see an issue, tell one of the Commercial Transport Specialist team so it can be fed into whatever workstream is best to address it.

The team is always available to assist anyone who chooses transport as their occupation. If you need any assistance, please call us on 0800 686 777. T&D