Metcash signs deal with Linfox; operators cry foul

Metcash accused of killing off small trucking operators after signing distribution deal with Linfox

Metcash signs deal with Linfox; operators cry foul
Metcash signs deal with Linfox; operators cry foul
By Brad Gardner | March 26, 2010

Marketing and distribution company Metcash has been accused of killing off independent trucking operators after it signed a new delivery contract with Linfox for IGA stores in Queensland.

The deal was signed this year to give Linfox sole access to Metcash’s distribution centre at Creastmead south of Brisbane, which supplies retail and grocery items to IGA and Foodworks stores in northern NSW and Queensland.

The supermarkets were in the past allowed to select their own carrier, but now have been ordered to use Linfox to collect orders.

A spokesman for Metcash says the company chose to solely use Linfox to boost efficiency. He says the number of different operators entering and leaving the distribution centre caused delays.

If the supermarkets want to use a different carrier, Linfox must collect the goods from Creastmead and then deliver them to the operator which will then take them to the supermarket.

Because of this, the owner of a NSW Northern Rivers transport company says he has lost his customers.

Based near the Bruxner Highway, the owner adds that Linfox offered a cheaper rate which small companies could not compete against.

"It’s priced us out of the market," the owner, who declined to be named, tells ATN.

"All the independent private carriers are going to be pushed out because there is no work…We’ve suffered a loss in income."

Colin Scott, who runs the family-owned K&S Transport near Brisbane, used to directly deliver to regional and rural IGA stores throughout the state.

He says his business has now lost some of its work and has labelled Metcash’s actions as "deadset wrong"

"We’re not allowed on site," he says.

"It’s their way of shafting the little guys like us."

Scott originally anticipated losing as much as 90 percent of his contracts with IGA stores, but says he has been able to maintain some because of his company’s reliability.

"We can’t compete with the likes of Toll and Linfox. All we can offer is the service," he says.

The NSW operator says some carriers relied solely on servicing IGA stores, jeopardising their viability.

"I know one bloke who lost 75 percent of his work," the owner says.

"It’s killed off a sh*tload of trucks."

He claims Linfox has sub-contracted its work but not to the independents that used to collect goods from the distribution centre.

"Once they gave it onto someone else there should have been some goodwill," he says.

The spokesman for Metcash says the distributor needed to turn to Linfox to keep pace with the two giants of the supermarket industry, Coles and Woolworths.

"Clearly the company is in a ferociously competitive market against the major chains," he says.

He says Linfox offered Metcash a good deal and also has a sophisticated transport management system to better coordinate movements.

"It promotes greater efficiency," he says of the deal.

However he says Metcash is mindful of the impact its decision has had on independent operators.

"Unfortunately it means smaller [trucking] companies will lose business and we regret that," he says.

"We do feel for those companies that might have lost work out of this."

Although the Australian Competition and Consumer Commission (ACCC) has declined to comment, ATN can reveal it received complaints from those affected over whether the contract was anti-competitive.

ATN understands the watchdog looked at the implementation of the contract and determined no action should be taken, instead choosing to monitor the situation.

The carriers that have lost work think more should be done. The NSW-based operator thinks the decision to use Linfox as a sole carrier will lead to higher prices for consumers.

"I think it’s crude what they did," the owner says of Metcash’s decision.

"I think it is a blatant abuse."

What do you think of the deal between Metcash and Linfox? Will it lead to market domination? Leave your responses below or contact ATN here

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