More carriers hit the wall with weak economy, rising costs


More transporters hitting the wall due to the weak economy, compliance costs and changes to IR laws

More carriers hit the wall with weak economy, rising costs
More carriers hit the wall with weak economy, rising costs
By Brad Gardner | August 21, 2009

More and more trucking companies continue to spiral into bankruptcy due to a combination of a weak economy, compliance costs and changes to industrial relations laws.

Operators are struggling to stay financially afloat due to the cumulative effects of chain of responsibility requirements, registration increases and fuel price rises, according to specialist transport and maritime lawyer Peter Murrell from law firm Cranston McEachern.

Murrell estimates as many as five transport companies a week are being placed in administration or receivership.

"They’re on the bones of their arse financially," he says.

Amid registration rises from July 1 that increased B-double costs by close to $3000, Murrell has noticed "a horrendous spike" in the number of businesses failing.

"The only work I’m getting at the moment is debt recovery," he says.

And as smaller operators struggle to pay bills on time, there are claims of a "spike" in the number of unfair dismissal claims under Labor’s new industrial relations laws.

Paul Ryan from the Australian Road Transport Industrial Organisation (ARTIO) says he has already been involved in 20 unfair dismissal claims this year, more than the number of those in 2008.

A spokesman for the Transport Workers Union (TWU) has contested the claims, saying it is "business as usual" and TWU has not noticed a marked increase in the number of unfair dismissal cases.

The new industrial relations laws reinstated unfair dismissal laws for small business, and Murell says he has had a number of phone calls from employees who have been sacked.

However, he adds that many understand there is little work out there for drivers and do not pursue claims against their former employers.

The introduction of chain of responsibility laws continues to add to operators’ compliance costs, with Murrell saying there are some choosing to go bankrupt rather than contest fines due to court costs.

Although saying the industry is slowly starting to understand its obligations under the regime, Murrell claims some are still struggling to comprehend the laws.

"I think most of them are largely compliant but it all comes at a cost," he says.

The grim news contradicts comments from market analysts that the Australian economy is beginning to recover.

Speaking earlier this month at the annual NatRoad conference, CommSec market analyst Juliette Saly told attendees to prepare for inflation and an interest rate of more than 5 percent within two years.

"Every piece of economic data shows we are on the way up," she says.

"We are going to start to see inflation, unfortunately, rear its ugly head."

You can also follow our updates by joining our LinkedIn group or liking us on Facebook