Costs free-for-all at industry’s expense must end
Trucks are critical to Australia’s supply chains. A significant majority of non-bulk domestic freight is carried on roads, and the Productivity Commission has found that only 10 to 15 per cent of the freight task is contestable across both rail and road. Without trucks – there is no supply chain.
But governments are building in increasing costs on these supply chains, imposing cost burdens on our ability to export and import goods. Additional cost burdens on trucks are nothing more than a barrier to local jobs.
Toll road charges for trucks are growing rapidly.
Small trucking businesses simply cannot afford them.
These charges are set by state governments and the arrangements for setting them are not transparent. They do not take into account costs across the supply chain.
There is also a problem with increasing landside port charges. Earlier in 2017, DP World unilaterally increased the infrastructure surcharge at its Melbourne terminal and imposed a new surcharge of $21.16 per container at its Port Botany terminal.
ATA member association Road Freight NSW pointed out that the Port Botany surcharge could cost carriers up to $150,000 per year.
Separately, Patrick increased its existing surcharges in July, and introduced a $4.76 surcharge per container at its Fremantle terminal and a $25.45 surcharge per container at its Port Botany terminal.
These charge increases cannot be avoided by trucking operators; they have not been subject to detailed regulatory scrutiny; they simply build additional costs into Australia’s supply chains.
To fix these problems, heavy vehicle tolls and landside port charges should be set by a road price regulator, which should ultimately be the ACCC or a dedicated body established under its Act.
Such a regulator should be established by the Australian Government’s agenda for independent price regulation of heavy vehicle charges.
The Government also needs to act on fixing the overcharging of truck and bus operators for the use of the road network.
Operators pay for their use of the roads through a fuel based road user charge, administered as a reduction in their fuel tax credits, and very high registration charges.
It is meant to be a cost-recovery mechanism, but without reform it’s nothing more than a road tax.
The National Transport Commission – an independent government body – found that this system overcharged truck and bus operators.
Instead of reducing charges, governments decided to freeze heavy vehicle charges at 2015-16 levels until July 1, 2018.
Based on NTC figures, the decision will overcharge truck and bus operators $250.2 million in 2016-17 and $264.8 million in 2017-18 – $515 million in total.
The overcharging will continue beyond 2017-18 with the meter ticking up by more than $725,000 per day. Governments have not yet agreed on how to deal with this problem.
As a down payment on future reform, governments must address and resolve the overcharging.
Such reform would deliver fair registration and road user charges, and should be extended to regulate toll road and landside port charges.
We need fair charges for trucks, so we can maximise the competitiveness of Australia’s supply chains.
Geoff Crouch is Chair of the Australian Trucking Association.
Check out the full article in the September edition of ATN. Subscribe here.