New Zealand forestry is facing a double blow – diesel prices have risen by as much as 80%, and transport costs by 36%. The Iran conflict is proving especially difficult for New Zealand's 42,000-strong logging sector. The negative impact is being felt both in transport and at the ports. Companies in the industry are warning that work may have to stop altogether.
New Zealand's logging companies have found themselves in a crisis that points to serious questions about business survival. The rapid escalation of the conflict with Iran by the United States and Israel has triggered a sharp rise in diesel prices. Regions of New Zealand and Australia that depend on timber exports are also facing the threat of business shutdowns if fuel prices do not come down. This is confirmed by Glen Moir, director of New Zealand's Forest Management Group, who says the industry has been caught in a "perfect storm" created by rising fuel and freight costs. Only three weeks ago, the year had looked like one of positive breakthrough for the forestry sector.
Diesel in New Zealand is currently selling for 2.34–3.32 NZD a litre, or 1.16–1.65 EUR, which, as the New Zealand Ministry of Business, Innovation and Employment notes, is at least one New Zealand dollar more than before the conflict began and 90% more than a month ago. At some Auckland service stations, diesel is now more expensive than E91 petrol. Fuel prices in New Zealand and Australia are climbing continuously. On 29 March, diesel prices in Australia stood at 2.84–3.20 AUD, or roughly 1.75–1.88 EUR a litre.
For the logging sector, which burns around 12 litres of diesel to harvest one cubic metre of roundwood and bring it to the roadside, the upward price trend is anything but theoretical. Costs at logging companies have already risen by 25%.
Glen Moir said that the heaviest cost burden falls on the "expensive forests" – those further from the port and on more difficult terrain. "If the trend continues, we will face particular strain in forests where costs are already higher for the work to be economically worthwhile. Our industry will not be able to withstand it."
It should be stressed that the situation is worsening at a time when, alongside the rise in fuel prices, shipping rates to China have also climbed sharply – from around 33 US dollars per cubic metre for March deliveries to roughly 45 US dollars for shipments scheduled for early April. That is a 36% jump in four weeks. The hardest hit are regions whose economic wellbeing depends on exports, particularly South Canterbury in New Zealand and the west coast of the North Island.
In the Australian state of New South Wales, forestry firms have spent an extra 200,000 dollars on fuel alone in the space of three weeks, as the price of diesel in Australia has risen by more than a dollar a litre, and the Australian Trucking Association is warning of a potentially financially devastating blow to the industry within a matter of weeks if conditions in the fuel market do not change.
Talks are continuing with forest owners in New Zealand and Australia and with other players in the supply chain in order to find a short-term solution. "Everything was turned upside down three weeks ago; we are in difficulty," industry experts stress. Before the conflict in the Persian Gulf escalated, 2026 had looked very promising in both New Zealand and Australia, with export prices rising and domestic demand growing. Unfortunately, the situation changed rapidly once active hostilities began in the Persian Gulf and the Middle East.