ANZ Truckometer points to an economy humming along at an encouraging pace

NZ’s  domestic  economy is  tracking  much  better  than  many predicted, as  it  adjusts  to  something closer to normality   after  the Covid-19  lockdown.  Just  how  well  may  emerge   when  the  Reserve Bank  delivers its  verdict  this  week on  whether   there is  any  need for  new  monetary  policy  moves.

Bank  economists  are  divided  on   the  issue:   some  argue   it  needs  to apply  more  stimulus  through  its  quantitative  easing programme,  others   that  because  the  economy is  doing better than  anyone expected,  there is  no  compelling reason  to  lift the cap  on QE  just yet.

The  most recent  data  on  how the  economy  is  performing  came    from  the  ANZ’s Truckometer,  which   underlines  how  NZ   is  back in business.

ANZ  chief  economist  Sharon  Zollner  reported the Light Traffic Index lifted 5.6% in July, while the Heavy Traffic rose 2.7%.

Light traffic in the month of July was 9.5% higher than the same month the previous year while heavy traffic is up 10.2% on year-ago levels.

It’s very encouraging to see both indexes bounce back so strongly – heavy traffic likely reflects a degree of restocking, and light traffic enthusiast domestic holiday-making, given the lack of alternatives. However, it is too early to draw any conclusions about where the data will settle in trend terms.

“Just as business and consumer confidence and activity measures have started to wobble, traffic may also give up its overshoot in coming months. But the data certainly highlights how lightly New Zealand has gotten off in terms of disruption to everyday life for most people. Touch wood…”  

She  believes   it  will take some time for the dust to settle,

“ … but having traffic there or thereabouts versus where it was this time last year certainly sets New Zealand apart from the rest of the world, where ‘normality’ remains a distant dream”.

At present some catch-up overshoot is occurring in both the heavy and light traffic indexes. On a three-month average basis light traffic is still slightly lower than a year ago, whereas heavy traffic is higher – pretty impressive, considering the three-month average captures two weeks of alert level 3 and nearly four weeks of level 2.

In the broadest terms, heavy traffic reflects the movement of goods; light traffic the movement of people. The latter was much more impacted by lockdown.

One  of  the  leading  companies in  the industry, Mainfreight, heard  its  chairman,  Bruce  Plested,  tell  shareholders   at  its  annual  meeting last  month  that  deep in  the    company’s culture is a strength to challenge and overcome whatever circumstances are put in front of it.

He  said the company has so far been fortunate to not have been as seriously affected as businesses involved in travel and tourism.

Almost every year we have to cope with one or more earthquakes, droughts, floods, tidal waves, riots, snow, bush fires or volcanic eruptions occurring somewhere where we operate. We learn from all these, and have been aware for decades that somehow we almost always emerge stronger from them in the longer term.”

In  its  latest  year  Mainfreight’s   profit  rose  $15m  to  a  record  $159m   before  abnormals  and  its  share price   moved  up  to  $45.37,  a  rise  of 10%  in the  12  months.

Another  major  company  in the   industry, Freightways, has  expanded  its  operations    with  the  integration  of  the  Big  Chill  trucking  business.

Freightways   has  also  diversified   through  its  participation   in  the governments international air freight capacity scheme   which has been extended until at least the end of August.

Though  an international airline cargo newcomer, Freightways  has become one of the largest trans-Tasman operators.

The freight operator has  found a strong niche for its trans-Tasman flights, with crayfish, blue cod, flounder and mussels making up a large portion of the 1m  kgs per month of Kiwi product landing in Australia’s top restaurants and retail outlets as a result.

Neil Wilson, General Manager of Freightways  says the  company adapted quickly to provide Kiwi export businesses some certainty after freight became near impossible to move when the borders closed.

As a result of the scheme’s success and extension, Freightways has purchased over 200 extra airfreight containers – mainly from Singapore – to cope with the volumes which have it moving over 250,000kg of produce per week.

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