16 Nov 2016

Freight costs tipped to rise following quakes

8:59 pm on 16 November 2016

Firms are being told to expect to pay more and wait longer to get goods delivered to their door after the North Canterbury earthquakes.

Coastal Road to Kaikoura - rail road cuts through state highway 1

Photo: RNZ / Rebekah Parsons-King

The main road and rail links between Picton and Christchurch are out of commission, forcing freight operators to consider more expensive routes.

Exporters and Manufacturers Association chief executive Dieter Adam said firms were better prepared for disruptions after the lessons from the devastating Christchurch earthquakes.

Mr Adam said the network between a firm, its suppliers and customers was complex.

He said one association member was waiting for a crucial component to complete orders.

"The goods were in transit last Friday and he's now lost track of where they are. He said, 'If I don't receive it by next Monday then I'll have to stop production until it arrives'."

Transport firms have scrambled to keep their networks going.

With goods mainly moving from the North Island to the South, Kiwirail has unloaded rail freight at Blenheim and trucked it to Christchurch. It has contracted coastal shippers to take goods to Lyttelton.

Kiwirail network services manager Todd Moyle said customers had been understanding.

"I think everybody sees the scale of both what NZTA (New Zealand Transport Agency) and Kiwirail are dealing with. What I think they also see is the various entities, including Kiwirail, are trying to fund solutions ... around freight."

Mr Moyle said the disruption was likely to be reflected in higher prices for customers.

Mainfreight managing director Don Braid agreed.

"If we need to move freight urgently into Christchurch then there will be additional costs and we will have to try and recover those."

"In the meantime we are trying to establish a coastal shipping service that won't come with an extra cost, but it'll be certainly longer in terms of transit," Mr Braid said.

Damage to highways near Kaikoura.

Damage to highways near Kaikoura. Photo: RNZ / Simon Morton

NZ Post will wear extra delivery costs

New Zealand Post is pledging to keep prices on hold.

Its chief financial officer, Mark Stewart, said it would wear the extra cost in time and fuel of taking the longer route through Lewis Pass.

"Should that become a permanent thing we'd look at [passing on the cost to customers], but at this point in time we're still classifying it in the interim or temporary category."

Prime Minister John Key was in Kaikoura this morning and said the damage he saw while flying over the area indicated the main expressway and rail line would be out of action for a while.

"Certainly looking north what you can see is a tremendous amount of rubble that we observed on Monday. Really the mountain has moved over the road."

"The engineers will have to work out how they eventually resolve that issue, but you can we sure that bit north of Kaikoura is going to be out of action of a long period of time," Mr Key said.

Uncertainty over when the main transport links will be restored points to greater use of coastal shipping.

KiwiRail is considering running one of its ferries between Wellington and Lyttelton.

Mainfreight is in talks with an Australian coastal shipping operator to ply New Zealand waters, which Don Braid hoped would bolster capacity ahead of the busy Christmas period.

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