Fonterra Slams Road Charges Overhaul

Claire Rogers

Fonterra says an overhaul of road user charges ignores technology that could save it millions of dollars a year, as it faces pressure over the cost of milk.

The cooperative owns New Zealand's largest fleet of heavy diesel-powered vehicles and currently pays about $34.6 million in road user charges each year.

National transport and logistics manager Barry McColl said its costs would increase by about 6 per cent, or $2m, under the new scheme proposed in the Road User Charges Bill. They could go down by as much as 20 per cent, or $7.2m, if the bill instead allowed technology that can determine the weight of a truck and trailer at any given time to be used to calculate the charges.

The bill introduces a new deeming provision that will assign trucks a fixed weight at which charges will be calculated '“ either the maximum load the vehicle can carry or the maximum legal limit allowed in New Zealand.

Mr McColl said for the most part Fonterra's trucks were empty at the beginning of their trips and began to fill up as they picked up milk from farms.

The New Zealand Transport Agency calculated the charges on the basis that trucks of the size Fonterra used were full about half of the time, when in fact Fonterra's trucks were only full about 11 per cent of the time, he said.

"We're not working to maximum weight as frequently as [others] are.

"The cost allocation model does not apply to us. We have the technology to give an actual weight and actual distance. We should only pay for the loads we're carrying.

"If you've got lighter products or choose for good operational reasons to run a lighter weight you could buy road user licences accordingly."

The co-operative did not expect any special favours and accepted it had to pay its share of the road user charges.

"I don't care if they say there's not enough people using the technology now and they'll look at it in five years.

"They should at least see the technology coming and be prepared for it. This proposal is only looking to the end of the street rather than at the horizon."

Mr McColl would not draw a link between Fonterra's road user charges and the price of milk, saying a $7m saving would be "insignificant in terms of total operating costs".

The Road User Charges Bill overhauls the current system for charging operators of diesel and heavy vehicles for road use, and lets operators use approved systems to electronically record the distances they travel, for example using GPS units rather than mechanical hubodometers. They would be able to purchase and display road user charges licences electronically.

The existing paper-based scheme requires truck operators estimate load weights and distances in advance when buying licences for each 1000 kilometres travelled and subsequently make adjustments for over and under-estimates.

NZTA had approached Fonterra to help it develop a new business model for its administration system.

The current system was inefficient, Mr McColl said.

Fonterra bought about 1000 licences a month, which could be purchased online, but then had to manually match them against invoices. Any off-road rebates deposited into Fonterra's bank account were often incorrect and had no reference details.

The bill is before the Transport and Industrial Relations select committee, which is due to report back to Parliament next month.

- BusinessDay.co.nz