More than 30 per cent of New Zealand’s log volumes have been wiped from the country’s export ports as a Middle East-driven diesel spike forces forestry contractors to halt harvests, with heavy-machinery running costs so high that forest owners face zero return or outright losses on the timber they cut.
That is according to Farm Forestry Association president Dougal Morrison, who told 1News the latest port figures showed a 30 per cent drop in log volumes compared with previous months and described the cost pressure as running through every link in the export chain. “That’s huge,” Morrison said. “Fuel is used in the harvesting equipment, and you’ve got the transport — the logging trucks on the roads — and the ships exporting the logs as well.”
Wood Central understands the cost squeeze runs hardest amongst contractors, where the bulk of capital sits. Northland company Tree People told 1News that no felling work had been booked beyond this month, after every client halted harvesting.
Director Peter Davies-Colley said his staff would shift to tree maintenance instead, though he warned the bigger industry risk lay with contractors losing crews that could not be quickly rebuilt once conditions improved. “It doesn’t make sense for them to harvest on the day that high fuel prices mean that their forest isn’t worth anything,” Davies-Colley said. “The major crisis for our industry is when you lose that skillset because you don’t build these teams quickly.”
The contracting base carries the weight of investment that forest owners and processors have not had to make themselves, with Forest Industry Contractors Association chief executive Rowan Struthers telling 1News that roughly NZ$300 million in capital has been invested across the New Zealand contracting fleet since 2013. Most of that investment has come from contractors rather than from the forest owners or mill operators it serves.
“Since about 2013, probably $300 million or so has been invested, capital has been invested, and most of that investment has come from contractors,” Struthers said. “These contractors are family-owned businesses… That might own 2 to 3 crews, with anywhere from 10 to 30 employees. These are the groups that are most at risk during this fuel crisis because of the level of capital investment that they’ve made.”
Struthers said electrification trials were running on loaders, log trucks, and hybrid harvest machinery across the country, but the technology was not yet at the scale to absorb a diesel shock hitting an existing fleet that handles almost the entire harvest-to-port chain.
Otago logging contractor Steve Jones said his crews were still operating, though he was losing sleep as US presidential rhetoric pushed diesel toward NZ$4 a litre and tore through margins on contracts that could not be repriced fast enough to absorb the shift. “Because you just don’t know, when the guy over there mentions a word, and the price goes up 30 cents,” Jones said.
The pressure is moving down the chain to the mills, with Forest360 director Marcus Musson telling 1News he was concerned for sawmills already pulling shifts off the roster as log availability fell behind processing capacity. “There are a lot of sawmills out there that are having to take shifts out because they simply don’t have the log availability anymore,” Musson said.
Australian haulage operators flagged the same diesel exposure earlier this year, as Wood Central reported, with the Dorney family of NSW contractors and Denis Greensill among those flagging route-by-route losses ahead of the National Cabinet fuel excise decision. The New Zealand contractor base now joins the same arc, with the cost shock hitting before any equivalent national-level policy response has been tabled in Wellington.
Morrison said hundreds of millions of dollars had been spent across the New Zealand forestry sector on machinery upgrades for safer, more efficient harvesting in recent years, with the qualifications and training tied to that capital now sitting idle in contractors’ yards from Northland to Otago.
