GFC strikes hard, but operators ready for growth


Financial crisis hit hard, but SA operators ready for growth so long as they don’t lose out to interstate competitors

By Brad Gardner | October 11, 2010

The global financial crisis hit the transport industry hard, but new findings show South Australian operators are primed to benefit in the coming years.

According to an economic study commissioned by the South Australian Freight Council, growth in the mining industry is expected to restore bottom lines trashed by the 2008 economic meltdown.

The study, undertaken by consultancy firm Hudson Howells, says the crisis weakened demand for freight and forced many companies to cut back.

"To preserve bottom line results many companies have rationalised costs often in the form of staff redundancies and there is anecdotal evidence that the state is losing market share to interstate competition," the report says.

"On a more positive note, industry profits are expected to recover from 2010 as freight and passenger movements recover on the back of an improving Australian economy."

The study claims the mining sector will drive the state’s economy and the transport and logistics industry over the next 10 years due to sustained demand from Asia for Australian mining, energy and agricultural exports.

It also cites population growth as a key driver in propelling the transport industry forward.

However, South Australian operators will need to contend with interstate competition.

"In comparison with other states and mainland capital cities, South Australia and Adelaide have amongst the lowest road freight industry growth rates – suggesting it is slowly losing share in the national freight task," the study says.

It says the decline might change in the coming years due to population growth and the success of the mining sector.

In its study, Hudson Howells highlights South Australia’s transport and logistics industry as an economic powerhouse which is 40 percent larger than the wine and motor vehicles industries and 70 percent the size of the mining and agriculture sectors.

In 2007 the industry contributed 17.1 percent of gross state product and had a turnover of $7.6 billion ($8.4 billion in 2010 figures).

The study recommends keys issues for planners to focus on, including better land use and infrastructure investment and planning, reduced regulatory burden and better coordination between government agencies and industry bodies.

Commenting on the study’s findings, SA Freight Council Chairman John McArdle says they prove transport’s importance.

"The transport and logistics industry should not be underestimated – it is a key contributor to the health of the national and state economies and communities," he says.

The Council plans to use the report’s findings to work with government on improving the sector’s competitiveness and efficiency.

"The efficiency of our industry has a critical impact on all other industries – including the wine, mining and agriculture sector – and will influence their success into the future," McArdle says.

According to the report, a 10 percent efficiency improvement could boost GSP by $800 million and lead to 8500 more jobs.

The study also recommends a re-examination of Adelaide’s airport curfew, the promotion of regional hubs to reduce costs through scale, and rail upgrades to allow trains to carry more freight per load.


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