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Transport costs to hit consumers

3 July 2008

Transport costs to hit consumers

Transport operators must pass on higher government charges to consumers or risk the viability of their businesses, according to Trevor Thornton, a specialist adviser to the sector.

Thornton, who is also chairman of business advisory and chartered accountancy firm Grant Thornton, said consumers needed to brace themselves for a huge lift in road transport costs.

“My advice to the transport industry is to pass on the Government imposed charges and accept that the consumer will pay. Competition is well and good but it is not a race to the bottom.”

His comments follow the Government’s sudden increase in road user charges, which came into effect on Tuesday.

“You certainly have to wonder about the timing of this. Government has effectively made road transport less competitive against rail at the very time that it has bought back the trains and ferries, following the official handover of Toll,” Thornton said.

But he said rail was not the answer at present as it needed more equipment to meet the Government’s requirements of immediately getting trucks off the road.

“Rail just can’t get goods there as quickly as road transport. To get trucks off the road, rail will have to improve its efficiency and customers will have to think further ahead, plan better and allow more time for deliveries. We live in an ‘instant’ society but that approach might not be practical in this environment.”

Thornton said that while calls for protection of the environment were very laudable, sustainability of the transport industry was also important.

“Sustainability is going to require businesses to be innovative. However, as the New Zealand economy grows, the freight task will grow as well. The alternative infrastructures of rail and sea will not meet the demands of this increasing workload. Transport companies and their customers will need to be creative to meet customer needs. In the meantime the customer will have to pay more.”


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