Live export ban threatens transport industry

Business specialist calls for industry assistance to protect the transport industry from live cattle export ban fallout

Live export ban threatens transport industry
Live export ban threatens transport industry

June 16, 2011

A business specialist has
demanded industry assistance to protect the transport industry from fallout from the live cattle export ban to Indonesia.

Vantage Performance Managing Director Michael Fingland, who specialises in saving troubled businesses, says the flow-on effect of the live export ban on cattle could devastate transport and related industries.

While the focus of the decision to ban live exports to Indonesia for up to six months has been on cattle producers, Australia’s $12 billion livestock transportation industry will also be hit.

"The issue of live export conditions must be addressed, however transport companies are the innocent bystanders and have lost a major customer for the next six months," Fingland says.

"Potentially, thousands of companies will get caught up in the supply chain fallout from the live export ban. Long haul road train businesses in particular will be really hurting.

"For every company that collapses, 100 others are severely affected, and the
impact could flow through to feedlot, fuel, tyre and truck servicing companies," he says.

Fingland has called on the Federal Government to offer assistance to transport companies in need of strategies to survive the major loss to their income.

"I’d encourage the government to consider what grants could be made available to help transport operators work out the best strategies to save their businesses," he says.

"If Australia can keep all these businesses alive, it will save jobs and this is critical at this current phase in the economic cycle."

Fingland says options may include downsizing businesses in the medium term to or finding new ways to generate income during the live export ban.

"The ban will most directly affect the livestock export industry which employs 13,000 Australians and contributes $1.8 billion to the economy," Fingland says.

Transportation of livestock is a major Australian industry valued at $12 billion per annum.

It includes both the road transport of livestock across Australian regions and the transport or export of Australian livestock to overseas markets.

Over 50 million head of livestock (cattle, sheep and lambs) are transported on Australian roads each year.

The Federal Government’s Regulatory Impact Statement estimates that cattle, sheep and lambs are transported each year on Australian roads at a cost to farmers of between $773-$827 million per annum.

"This highlights the significance of road transport to rural producers across Australia," Fingland says.

Fingland claims numerous companies will collapse if they aren’t properly advised on how to survive the crisis.

"Stakeholder management will be critical," he adds. "Business owners must ensure that they keep all key stakeholders up to date with their plans to provide them with comfort that they are on top of the issues.

"This includes major customers, suppliers, employees, financiers and shareholders."

Vantage Performance suggests the following steps to take if your business loses a major customer

1. Undertake a strategic review to identify ways to generate additional revenue and/or reduce costs - or to see whether the business owners need to look at selling or merging.

2. Stress test the cash flows to identify what the impact will have and whether you need to raise additional capital. This may include selling non-core assets, raising finance, raising equity or managing working capital more efficiently

3. Consider diversifying the business into other areas to provide a more stable business.

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