Institutional structure of New Zealand licensed road freight carriers

Road freight transport in New Zealand has operated under government regulations since 1936, primarily to protect the freight revenue of the New Zealand Railways. In 1983 an Act was passed to deregulate the freight transport industry and to switch over to a qualitative licensing system. This is expected to have some impact on competition within the road freight industry as well as between road and rail. This paper analyses the institutional structure of the road freight industry at the pre‐deregulation phase. The trend over the last few years, shows that the number of single vehicle owners (mostly owner‐drivers) and their share in the industry is growing at a faster rate than others. The vehicle authority distribution varies widely from one region to another in the country. Economic factors like employment, population, urbanization etc. could not explain this variation. The segregation of demand by existing government regulations appears to be the main reason for such diversity in vehicle authority distribution. Apparently there is no monopoly trend in the aggregate nor in the regional distribution. However, many owner drivers work closely with large firms, which may change the concentration observed in the distribution of vehicle authorities. Productivity is relatively high for one person operations, i.e., mainly owner drivers. It then goes down and then rises to a certain limit. This gives an indication of the possibility of economies of scale, the single vehicle firms being an exception.