EDITORIAL: Transport costs blow-out heats up supply chain inflation

By: Jason Whittaker


The Australian Bureau of Statistics will later this week release its price movements for transport services during the December quarter.

The Australian Bureau of Statistics will later this week release its price movements for transport services during the December quarter. Anyone who has filled their car up at the petrol station lately will be able to guess the sort of inflation that will be reported.

And fuel is not the only concern. Other transport inputs, like vehicle registration charges, could potentially rise significantly later this year. The job of constraining distribution costs for freight consignors could become even more difficult.

Proposals to hike rego charges, and fuel taxes, from July, with further steep rises over a three-year period, will hit the supply chain. Farmers, for one, are concerned and skeptical.

Charles McElhone, the Manager for Economics at the National Farmers Federation (NFF), has told ChainMail high-turnover, low-margin farm producers will suffer under the proposals.

And McElhone is doubly concerned. Not only could transport costs rise, farmers aren't seeing improvements in road infrastructure to allow better access for higher productivity vehicles and better regulation in terms of the roads that are actually available.

Kevin Rudd has vowed to fix infrastructure bottlenecks in the supply chain as a way of keeping a lid on economy-wide inflation. Better roads means users — transporters and customers — must pay more.

But as the trucking industry argues, hiking transport input costs is only going to more pressure on inflation, not less.

Rudd and the state governments — which will soon vote on the trucking cost hike proposals — have a difficult balancing act to stop the economy, and the supply chain, from overheating.

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