Latest / Best of Business / Mark Troughear: Freightways CEO on the impacts of the Middle East crisis and fuel prices

Transcript

Mark Troughear: Freightways CEO on the impacts of the Middle East crisis and fuel prices · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk zed B.
• 0:12
  Speaker 1: Follow this and our wide range of podcasts now on iHeartRadio. Now.
• 0:16
  Speaker 2: The boss of Freightways is warning there's way too much
• 0:19
  Speaker 2: hysteria about rising fuel prices. He says we're still quite
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  Speaker 2: away from the heights of the Ukraine War when diesel
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  Speaker 2: hit three dollars. A leet of the bosses obviously.
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  Speaker 3: Mark trou Here, Hi, Mark, Hi, Heather, how are you?
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  Speaker 2: I'm well, thank you. So why don't you think it's
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  Speaker 2: going to be that bad?
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  Speaker 3: Well, I think it's an evolving situation. But I think
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  Speaker 3: where we way off having to panic about things just yet.
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  Speaker 3: There's plenty of fuel in the country, there's fuel on
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  Speaker 3: the way, there's plenty of supply there. I think we're
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  Speaker 3: in a better position than many other places. There's probably
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  Speaker 3: other challenges that are a little bit closer for us
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  Speaker 3: at the moments. On the last week, we've had only
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  Speaker 3: two entrine into fairies, two fierries operating over the cook Straight.
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  Speaker 3: That was probably a bigger issue for us late last
• 1:00
  Speaker 3: week to worry about than fuel.
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  Speaker 2: Yeah, I mean, I would agree with you that we
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  Speaker 2: have some issues here that are quite massive. But are
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  Speaker 2: you saying that you believe that the fue f price
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  Speaker 2: is not going to hit the heights that I mean,
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  Speaker 2: some people are talking about four dollars twenty two, four dollars.
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  Speaker 2: You don't think it's going to get there.
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  Speaker 3: I'm not sure and I don't know. I mean, if
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  Speaker 3: you looked at the Ukraine situation back in twenty two,
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  Speaker 3: diesel prices hit up around three dollars, and to be honest,
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  Speaker 3: I don't remember the same level of annik and the
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  Speaker 3: same amount of news around that back then. So I
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  Speaker 3: think those things will play out. As they do. People
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  Speaker 3: will have to have a think about how they can
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  Speaker 3: serve fuel and how they manage and work with the budgets.
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  Speaker 3: That that'll be the same for us as businesses as
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  Speaker 3: it will for private citizens. But those things haven't happened yet.
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  Speaker 2: Okay, so what do you and I think the other
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  Speaker 2: thing that's freaking people out, and I want your take
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  Speaker 2: on this mark is that we are sitting here at
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  Speaker 2: the moment, we haven't even started to feel the possible
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  Speaker 2: effects of any kind of fuel disruption, right because the
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  Speaker 2: ships are still they've just landed in Singapore, We're still
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  Speaker 2: got our ships coming, so it's almost like we're looking
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  Speaker 2: at a storm. It's building and coming for us, and
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  Speaker 2: we're already sitting above three dollars a letter in ninety one,
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  Speaker 2: So is it not right to be slightly worried about
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  Speaker 2: the lag effect here?
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  Speaker 3: I'm not sure if people need to be worried, but
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  Speaker 3: I think they need to be prepared, you know, prepare
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  Speaker 3: for the worst, hope for the best, and to our
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  Speaker 3: business again, just like private citizens, we'll start thinking about
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  Speaker 3: what you need to do if you need to use
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  Speaker 3: a bit less fuel. I've just driven thirty five minutes
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  Speaker 3: back in the traffic and I reckon ninety percent of
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  Speaker 3: the vehicles only had one person in them. You know,
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  Speaker 3: there's a whole lot of things that we can all
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  Speaker 3: do and then that we would do in our business
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  Speaker 3: if we had to minimize the amount of fuel we
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  Speaker 3: were using or reduce the amount of fuel we were using,
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  Speaker 3: and there for the cost.
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  Speaker 2: Yeah, some of the things, though got I feel like
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  Speaker 2: I'm but let's put your argument through its paces though.
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  Speaker 2: One of the things, I mean, we can talk about
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  Speaker 2: potentially cutting down our fuel use, and that may be possible,
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  Speaker 2: work from home, carpool, do that kind of thing. But
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  Speaker 2: you can't eat less bread, and you can't eat less
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  Speaker 2: meat right without going hungry, And that's all going to
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  Speaker 2: go up, isn't it.
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  Speaker 3: Yet there will be an impact in terms of inflation,
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  Speaker 3: So most transport businesses will be lifting fuel adjustment factors
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  Speaker 3: or fuel search arges that they have through their businesses.
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  Speaker 3: So that type of thing will happen just as it
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  Speaker 3: did back in twenty twenty two. Yet they will happen
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  Speaker 3: for a period that sort of thing. That we operate
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  Speaker 3: a children frozen food business, and a lot of the
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  Speaker 3: food we handle has been higher value food, and what
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  Speaker 3: we've seen through the recession is that people have consumed
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  Speaker 3: less of that high value food and shifted to cheaper food.
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  Speaker 3: So I think those types of things happen all the
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  Speaker 3: time in relation to all sorts of impacts. They fuel prices,
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  Speaker 3: be they recessions, be it COVID, so on and so forth.
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  Speaker 2: Okay, so what is it that your business is watching.
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  Speaker 2: What are the key signs for you that things have
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  Speaker 2: gone from being manageable to not.
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  Speaker 3: Well? I think for us things are still manageable. I mean,
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  Speaker 3: we'll keep a close eye on the amount of fuel
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  Speaker 3: in the country and on the way here, there's plenty
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  Speaker 3: of lead indicators for that. So we're going to have
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  Speaker 3: plenty of notice if there are genuinely short fuel shortages.
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  Speaker 3: We use jet fuel for the aircraft we run, we
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  Speaker 3: use diesel, and we use a little bit of petrol
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  Speaker 3: in some vehicles, but we will have plenty of notice
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  Speaker 3: of that. We're going to see that coming. There's plenty
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  Speaker 3: of things we can do that might sacrifice a little
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  Speaker 3: bit of timeliness to be a bit more efficient with fuel.
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  Speaker 3: If we're talking about twenty percent of fuel supply being
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  Speaker 3: impacted through the Strait and if we use that as
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  Speaker 3: a proxy for what we have to adjust for, I
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  Speaker 3: don't know. I think if you went back through COVID,
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  Speaker 3: you'd find New Zealand used a hell of a lot
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  Speaker 3: less fuel during that period.
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  Speaker 2: Yeah, fair point. How are you feeling about the impact
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  Speaker 2: this might have on GDP, Because mate, I feel like
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  Speaker 2: we've just come through COVID, that's been a frasal. Now
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  Speaker 2: we've gone through the recession that Adrian All put us
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  Speaker 2: in and we're just coming right and now this is
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  Speaker 2: going on. So I don't know, what do you think
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  Speaker 2: this is going to do to the economy?
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  Speaker 3: Well, look, it could put a little then I'm not
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  Speaker 3: an economist by any means, but I've been in this
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  Speaker 3: business a long time and seeing plenty of impacts. I've
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  Speaker 3: seeing probably three recessions go through. Look, I think the
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  Speaker 3: underlying fundamentals are okay. We were starting to see customers
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  Speaker 3: trade up up to this point. It's a little early
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  Speaker 3: to tell whether that has changed yet. But look, I'm
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  Speaker 3: reasonably optimistic that we'll come through this. If there's a
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  Speaker 3: little hit, everyone wears a little hit. If there's a
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  Speaker 3: bit of inflation, you know, maybe that's temporary, depending on
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  Speaker 3: how long this goes for. But I think I think
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  Speaker 3: part of our funk over here, and I spend quite
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  Speaker 3: a bit of time in Australia, we sometimes talk ourselves
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  Speaker 3: into a funk, and Australia is facing largely similar conditions
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  Speaker 3: higher levels of inflation. But jeez, most of the customers
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  Speaker 3: and operators over there are talking pretty positively.
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  Speaker 2: Yeah, it's a fair point you make, Mark, Thank you
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  Speaker 2: as always really appreciate talking to you. Mark trow here,
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  Speaker 2: who's the Freightway's chief executive.
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