Higher Fuel Costs Pressure New Zealand Forestry Sector

New Zealand’s logging industry is warning of potential shutdowns in higher-cost regions as rising diesel prices and shipping rates strain operations, The New Zealand Herald reported (3-24-26).

Fuel costs have surged amid the conflict in Iran, with shipping rates to China increasing from about US$33 per m³ in March to roughly $45 per m³ in April.

Forest Management Group Director Glenn Moir said higher diesel prices are significantly increasing operating costs, particularly in remote and steep terrain forests. “I can see that if it does continue, we’re going to face some real pressure in the higher-cost forests—so the ones that are further away from the market and have steeper country—just to make it economic.”

Moir said the industry is highly diesel-dependent, requiring about 12 liters of fuel to produce one ton of logs, with contractors facing cost increases of around 25%. “The industry can’t sustain that,” he said, adding that discussions are ongoing with forest owners and other stakeholders. “It’s a perfect storm right now.”

Prior to the recent cost increases, 2026 had been shaping up as a strong year for the sector, supported by rising export prices and improving domestic demand. Government forecasts showed forestry exports increasing by 2% this year.

The industry employs about 42,000 people and remains a key export sector. While demand from China has softened, Moir said demand from India has been growing, supported by a recent free trade agreement.