‘Two Islands, Two Transport Hubs’

Canterbury Manufacturers’ Association
Media Release
7 February 2007.

‘Two Islands, Two Transport Hubs’.

The Canterbury Manufacturers’ Association says that the price fixing allegations being brought against Air New Zealand is a warning as to the distortions in New Zealand’s logistical and transport sectors.

“Although the court case is being undertaken in Australia, one of the issues that it highlights for New Zealand companies is the mounting cost of freight and firms on this side of the Tasman Sea are already questioning why this is happening”, says CEO John Walley. “The allegations aside, there are distortions in the logistics system as a whole that are pushing freight costs higher and this applies to road and sea freight as well as the airlines in New Zealand. The options available to local companies in terms of carriers are limited and problems and costs increase because we continue to focus on Auckland as our central transport hub”.

The CMA says that New Zealand needs a ‘two island, two hubs’ solution with the building of the necessary terrestrial infrastructure to support this. The Association says that there needs to be an equal distribution between islands because if Auckland continues to be the main focal point for incoming and outbound transport, then firms based elsewhere will suffer and lose profitability.

“What option does a company based in Christchurch, Dunedin or Invercargill have when they want to use roll on roll off transport to Australia other than to use Auckland? High cost of transport and smaller local markets simply encourages firms to relocate all or some of their business into other markets”, says Mr. Walley. “New Zealand has already lost a number of companies to our competitors and more will consider relocating if the problems and cost associated with infrastructure and transport are not met with a coherent strategic solution and Government is best placed to lead this.”

“The scrutiny currently being applied to the airlines is due in part to the fact that a small number of carriers in the market means less competition and higher prices”, says Mr. Walley. “Unfortunately, this is becoming a fact of life for so many companies and unless a solution can be found to ease freight costs and increase access we simply increase the pressure to relocate offshore.”

ENDS

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