Business asked to join productivity campaign to fight costs

By: Jason Whittaker

Businesses are being asked to play a bigger role in lobbying governments for productivity increases in order to offset rising

Businesses are being asked to play a bigger role in lobbying governments for productivity increases in order to offset rising road user charges that will be passed on by the transport industry.

Victorian Transport Association (VTA) Chief Executive Philip Lovel says supply chain costs will increase by 30 percent over the next two to three years, coinciding with rises in registration charges — to take effect on July 1 — followed by changes to the fuel excise, which will be indexed from January next year.

As the trucking industry will pass on the costs to its customers, Lovel says the onus is on major retailers and manufactures to ensure more is being spent on transport infrastructure to boost productivity, which will reduce the cost of carting freight.

"There is a lot more lobbying work that has got to be done by our customer base," Lovel says.

"We have got to make sure internally that we pass our costs on and the customers have got to get the productivity benefits to make sure they are no worse off."

Offloading increased running costs hinges on whether major business decides to lobby governments for more to be invested in infrastructure due to the nature of the transport industry, Lovel says.

"You can’t just increase rates because it is market driven," he says.

"Our customers need the productivity gains to pay us the increased charges."

But moves are already underway in Victoria to minimise costs incurred by the industry as well as businesses. As part of the Logistics Management Group, Lovel met with major transport customers such as Coles, Bluescope and Bunnings to examine price increases in the trucking industry and what businesses can expect to pay in an environment dominated by record-high oil prices, traffic congestion and increased road user charges.

He told the group they must take a proactive approach in raising productivity concerns with the Victorian Government because they will be the ones benefiting from any upgrades made to the State’s road infrastructure network.

Rising crude oil prices are also causing concern within the industry, with news the latest increase pushed the price of oil to $110 a barrel. This follows from the increase to $108 earlier this week, which FUELtrac’s Geoff Trotter says will equate to 6 cents per litre rise in the price of diesel by next week.

According to Lovel, the only saving grace for the industry at the moment is a strong Australian dollar.

"If the Australian dollar drops then we are in the shit," he says.

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