Last week's meeting of transport ministers was a good one for supply chain management in this country. Agreement on a
Last week’s meeting of transport ministers was a good one for supply chain management in this country. Agreement on a new national framework for logistics policy, with a set timetable for implementation, is at least a roadmap for significant regulatory and infrastructure reform.
But the decision by ministers to adopt proposals by the National Transport Commission (NTC) for big hikes in truck operating costs could hit the cost structures, and efficiency measures, of supply chains hard.
Registration fees will rise on some multi-combination trucks, including B-doubles, by almost 100 percent over three years. And a 1.36 cents per litre hike in the diesel excise, to be applied from January, will hit all truck owners and freight users.
The trucking industry, not surprisingly, is angered by the decision. Its operators run on tight margins and cannot absorb further cost increases.
Ultimately, the trucking industry must pass those costs on to customers, which in turn must be passed on to consumers. Its a cost shifting process that will force up grocery prices and, some warn, inflation.
But perhaps more importantly, it could turn transport operators away from higher productivity vehicles. Some are unwilling or unable to go to customers with demands for rate increases. Many operators are already talking about abandoning B-doubles for smaller capacity semi trailers, where the registration cost is considerably less.
For all the work ministers are doing on transport productivity, it could be a backwards step.
These new input costs must be carefully managed across the supply chain. Any imbalance could tip the scales of efficiency in the wrong direction.
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