Long wait to recover costs raises cash flow concerns

VTA says trucking operators are waiting up to a month to recover costs, raising cash flow concerns

By Ruza Zivkusic | June 2, 2011

It takes a transport company a month to recover the costs from customers when diesel prices increase, according to the Victorian Transport Association’s (VTA) survey of its members.

Half of the 240 members who participated in the survey two weeks ago, which was exclusively shown to ATN, believe it would take a month until their business recuperated.

VTA CEO Phil Lovel says the figures are concerning and indicate members are affected by cash flow.

"That must be a concern for companies. They have to change that because you should recover at least within the month because it’s a variable cost that increases and reduces daily," Lovel says.

Eighty percent of the members believe the industry is reflective on the economy.

"We’re a demand-led industry and so we’re very much led by how our economy goes because we’re a direct reflection of domestic exports and imports and domestic consumption."

More than 80 percent of survey respondents do not support a carbon tax, with 65 percent saying they do understand the impact it will have on their business.

Another 29 percent identified driver availability as a concern, while almost half of them believe profitability is the biggest challenge to the transport industry.

"That’s not surprising at all. We’re a low margin industry and we’ve got to lift our margins," Lovel says.

"We’re a market-rates industry and we really have to get back to the basics of costing. The industry has to get a cost recovery mentality, not a market rate philosophy.

"The biggest challenge to our customers is the cost on the supply chain. Our customers are worried about the cost of delivering their goods to the market."

While the members found VicRoads and Victoria Police the easiest to deal with, they found WorkCover the most challenging. Lovel says the survey will be conducted every quarter.

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