Linfox rules the trucking roost

The empire that Lindsay Fox built reigns supreme over Toll, with K&S rounding out the top three players in trucking

Linfox rules the trucking roost
Linfox rules the trucking roost: IBISWorld
By Brad Gardner | November 6, 2012

The empire that Lindsay Fox built reigns supreme over rival Toll in the game of trucking, according to market research firm IBISWorld.

The group’s snapshot of the major trucking companies operating in Australia places Linfox well ahead of Toll, which suffered a 75.9 percent drop in profit last financial year.

IBISWorld’s Road Freight Transport in Australia report says Linfox controls 4.3 percent of the trucking market, compared to Toll’s 3.1 percent.

"Over the years, Linfox has evolved from a simple trucking company into warehousing, contract distribution, airport operations and supply chain management. Its overseas operations are in New Zealand, Thailand, Singapore and Malaysia. Linfox is also following its Australian customers to China and India," the report says.

"Over the five years through 2011-12, Linfox’s industry revenue is expected to outperform the market, with revenue growing at an annualised 10.8% (without adjusting for inflation). On the same basis the industry grew 7.8%. As a result, their market share has increased from 3.8% in 2006-07."

Conversely, IBISWorld says Toll has "underperformed", with the company suffering declining profits and volumes in recent times. Toll announced in August a 2011-12 profit of $70.9, down from $294.8 million the previous financial year.

IBISWorld says K&S Freighters rounds out the top three, with the company snagging a 1 percent market share. K&S’s largest shareholder, the Scott Corporation, is ranked fourth with a share of 0.4 percent of trucking.

It says K&S has felt the effects of a slowing economy and declining volumes, while Scott Corporation took a hit from the Queensland floods.

"Company revenue and profit was negatively affected by the floods in Queensland, with loss of demand from clients and one-off costs relating to damaged plant and equipment," the report says.

K&S Freighters, which recently took over Collare Transport, announced a $16.4 million net profit for 2011-12, an increase of 10.9 percent. Meanwhile, Scott Corporation reported a $3.36 million profit.

The rest of the trucking market (91.2 percent) is split among medium and small operators, with IBISWorld saying single operators made up more than two-thirds of enterprises in 2009-10.

"The few major players in the industry have a disproportionate influence as they subcontract a significant proportion of freight movements to owner-operators to provide road freight services," IBISWorld says.

It says the major retailers, Coles and Woolworths, also wield considerable influence. While both deal with the major trucking operators, IBISWorld says contracts are subcontracted to smaller operators.

"Because there is such market power positioned with the large retailers, manufacturers and major transport companies, the margins for small operators are very low," it says.

The report lists StarTrack and the QR National-owned CRT Logistics as emerging players.

While the trucking industry has felt the pinch in recent times from the global financial crisis (GFC), IBISWorld says the long-term outlook is positive. It says demand for freight movements in Australia is set to increase over the next five years.

"Industry revenue is forecast to grow by an annualised 3.6% in the coming five years, with revenue reaching $57.6 billion in 2017-18," the report says.

"In the years through 2017-18 the industry is expected to remain the dominant mode for transporting non-bulk goods around the country."

However, it says operators will struggle to maintain profitability in the face of growing skills shortages, the reduction of the fuel rebate and the onset of a new road pricing regime.

In bad news for operators, IBISWorld says the price of diesel will continue rising as the global economy recovers from the GFC.

"As the price of fuel increases, major players are expected to once again introduce fuel surcharges to protect profit while smaller operators struggle. Profit margins are forecast to decline to 6.5% in 2017-18 as a result," it says.

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