VTA tells customers to accept cost increases, claiming the financial health of transport is at stake due to ballooning running costs
December 8, 2010
The health of the trucking industry is at stake, according to the Victorian Transport Association (VTA), which is telling customers accept cost increases or risk sending transporters broke.
VTA CEO Philip Lovel has issued a plea to clients following the release of the latest cost index figures from the association showing a 3.89 percent rise in transport costs.
Lovel says labour accounts for most of the rise (2.43 percent), followed by interest rates, capital costs and fuel prices. Administration costs also jumped as the industry grapples with more regulatory obligations.
“Margins are quickly disappearing with heavy vehicle registration charges continuing to increase annually, while the diesel fuel tax credit available to on-road transport operators continues to reduce,” Lovel says.
“Customers must accept cost increases being passed on or they will find more transport companies disappearing or reducing services. The financial health of the transport sector is at stake.”
Lovel says interest rates and vehicle capital costs added 0.75 percent to the rise, followed by fuel at 0.36 percent.
His call for customers to pay follows comments from Ferrier Hodgson’s Brendan Richards, who says compliance costs for transporters are increasing while freight rates are decreasing.
“There are a lot of people that are operating as a sole operator with one truck, companies are going broke and I would expect to see a significant spike in those numbers for the next 12 months,” he says.
Richards believes small trucking companies are struggling to compete with larger carriers such as Toll and Linfox because they cannot meet customer demands for a comprehensive transport and logistics solution.
“Customers these days need the transport operator who can interface with their own systems and usually it’s only the larger players who have the capability of providing that.”