The price Kiwis pay for nationwide overnight postage is “ridiculously cheap” and should cost at least twice as much, the chief executive of listed company Freightways says.

Mark Troughear said on the Herald’s Stock Takes podcast that overnight $3 postage to get a small parcel from the North Island to the South was “chronically underpriced” for the undertaking required, using expensive aircraft and often unsuitable roads.

“The reality is we have some services that are just chronically underpriced. It’s nuts.

“It’s a phenomenally high level of service ... For a ridiculously cheap price.”

Comparing prices to Australia, he said same-day delivery across a congested city like Sydney cost up to A$40, and between A$6 to A$8 for next-day delivery.

“If customers want reliability, and we can always improve on that, you have to charge for it.”

However, Freightways was limited with the prices it could charge because of competitive pressure from state-owned New Zealand Post, Troughear said.

“A competitor that maybe doesn’t have the same requirements on them as we do.”

Freightways owns New Zealand Couriers among other delivery businesses. Photo / File

Freightways was already pushing higher prices through over the next two years to cover a 10 per cent increase in wages, he said.

“Wage inflation has been pretty material for us in the last year. We’re going to have to recover that through pricing.”

Other costs had also increased, such as fuel, and the added time spent in more traffic.

Its inability to pass on the higher price of petrol quickly last year cost Freightways up to $5 million, he said.

Although it did increase the price of residential deliveries during lockdowns, as online shopping demand spiked, because the business was losing money on those customer deliveries - it typically delivered from business to business.

“At the very least, we got to a point where we could get break even on it, and it would pay the contractor and it would pay for the network we were running.”

Troughear reflected on the pandemic which initially reduced its business to business freight volumes to zero overnight, and then surged when e-commerce businesses were allowed to operate again and deliveries to consumers resumed.

“We built marquees in the car park because we ran out of space. It looked like we were about to have an AC/DC concert.”

Its volumes had now normalised somewhat, he said, with total volumes made up of 80 per cent business deliveries and 20 per cent residential deliveries.

Freightways owned New Zealand Couriers, Post Haste Couriers and Big Chill Distribution among other specialised delivery businesses.

Listen to the full podcast for more from Mark on the state of shipping in New Zealand post-Covid.

Stock Takes is available on iHeartRadio, Spotify, Apple Podcasts, or wherever you get your podcasts. New episodes come out every Wednesday and are brought to you with support from Fisher Funds.