Red tape 'a serious threat' to trucking's survival

Governments told they are threatening the long-term viability of trucking companies by imposing mounds of red tape

Red tape 'a serious threat' to trucking's survival
Red tape 'a serious threat' to trucking's survival
By Ruza Zivkusic | March 25, 2011

Mounds of red tape are a "serious threat" to the long-term survival of small trucking companies, a transport specialist firm says.

Ferrier Hodgson partner Brendan Richards believes compliance requirements such as fatigue laws and chain of responsibility are causing more stress to trucking operators than anything else.

He says the industry is notorious for its resilience but there has been a 10 percent exit rate over the last few years associated with consolidation, business closures and insolvency appointments.

"Even relatively small organisations are nowadays burdened with at least one dedicated resource looking after nothing but completion of forms for various government departments," Richards says.

"This is a serious threat to the long-term viability of the smaller players and the various governments need to accept that the consequence of not dealing with the overbearing compliance burden is ultimately going to be a less competitive transport sector."

Richards says operators traditionally struggle under tight profit margins, and the situation has worsened over the past few years.

"Costs have been rising with strong wages pressure, increasing running costs and an increasingly burdensome regulatory regime being the key drivers," he says.

Richards says large corporate firms have been best placed to absorb the cost pressures because they offer comprehensive transport and logistics services.

"They have a ‘one stop shop’ capability, and with [a] tougher economic environment this is important to customers who can minimise their own management of logistics by outsourcing the entire function," he says.

Richards says it is important businesses introduce a detailed financial management system and performance indicators and review them daily, weekly and monthly.

He is calling on the transport operators to think strategically, saying it is easy to get stuck in a "rut" and worry about day to day issues.

"Those who have made a real go of a trucking business have been able to divorce themselves of every detail of day to day business to think about the bigger picture, to develop a plan and to ensure execution of it," Richards says.

Despite the release of an ambitious national freight strategy that proposes dedicated truck routes and greater use of higher productivity vehicles, Richards has told the industry not too get too excited about it.

"There is a lot of noise at the moment around the national freight strategy and I fear that that is all it is. My advice to operators is to not let it be a distraction; it might never be relevant anyway," he says.

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