Economic woes force rethink of freight task growth

Recent economic turmoil may threaten transport operators' viability and stall growth in the freight task

By Brad Gardner

Recent economic turmoil may threaten transport operators’ viability and stall growth in the freight task, according to the peak transport and logistics council.

Australian Logistics Council (ALC) Chairman Ivan Backman says figures predicting a surge in the freight task by 2020 may need to be re-examined as the declining world economy impacts on Asia’s demand for minerals and the Australian dollar’s value.

Backman says this will be exacerbated by the freight task cycle, which slows in the remaining six months of the financial year.

"It [the growth in the freight task] might need to be modified. There are temporary glitches and this might have a short-term impact," he says.

According to Backman, small operators will suffer the most from reduced work.

To survive, he says they must ensure their business run efficiently and productively as possible to reduce costs.

"People’s ability to manage their business is absolutely critical. Those who do that will be the winners," he says.

However, Backman says it is too soon to predict how much of an impact current conditions will have on the freight task, which is expected to double in the coming decade.

Backman is hopeful the industry will not be adversely impacted over a long period of time, saying Australia’s well-regulated economy means it has strong foundations in place to avoid the problems crippling the US and UK markets.

Backman says exporters will relish the conditions in light of a dramatic drop in the value of the Australian dollar, while a drop in revenue from reduced work gives businesses the chance to look inwardly to analyse and evaluate their operations.

"There will certainly be opportunities out there. The good will survive," he says.

Despite the economic downturn, Backman still expects demand for skilled labour to grow because he says there is still an enormous shortage.

He welcomed the Rudd Government’s $10.4 billion stimulus package to encourage retail spending, saying the cash injection will help drive demand for the industry’s services.

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