The cost of living has already spiraled out of control, but things are getting worse for Aussies as a crucial industry is pushed to a breaking point.
Australia’s trucking industry has been hit by crisis after crisis – and it could quickly lead to more pain at the supermarket checkout.
The industry has already faced unprecedented pressures of late, including the Covid pandemic, global supply chain problems and a nationwide AdBlue shortage.
But now our truck drivers are grappling with an even worse nightmare, with skyrocketing fuel costs and tolls fueling fears of an impending industrial exodus – and price hikes for consumers.
Simon O’Hara, CEO of Road Freight NSW, said recent years have proven “without freight, nothing moves” – and everyone loses when the industry struggles.
And while we’re all paying more at the bow these days, Mr. O’Hara said freight carriers were also reeling from the 22.1 cents per liter cut to the 44.2 cents fuel tax introduced by former treasurer Josh Frydenberg. during the April 2022 federal budget.
While the move saved motorists about 22 cents on refueling, the savings previously offered to truck drivers were cut.
The fuel tax cut was a welcome relief for consumers, but hit the truck industry hard.
Previously, freight companies got 17.8 cents per liter back, but from March 30 this was reduced to 4.3 cents per liter.
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“One problem for freight carriers is fuel costs are rising, and we’re seeing that rise at the bow with prices well above $2,” Mr O’Hara told news.com.au.
“The problem is that not only do truck drivers pay higher fuel costs when they refuel, but the discount they would normally expect during tax time – tax credits, in fact – has been taken off the table for three months as a result of the reduction in fuel consumption. the fuel tax imposed by the Morrison government just before the election.
“That’s going to lead to a number of things — first, there’s probably going to be a $20 increase (on the average weekly grocery store) for consumers, and also for freight carriers. It means higher costs.”
Mr O’Hara explained that freight forwarders cannot immediately pass on those higher costs to their direct customers because it takes time to negotiate contracts – meaning “profit margins are declining quite quickly”.
He said the crisis will eventually lead many to wonder “if they can continue to operate in this kind of environment”.
“We will make sure that carriers are making the conscious decision to exit the industry, and the tightening we’ve seen over the last six months is going to get even tougher… when there are fewer freight carriers to rely on,” he said.
Mr O’Hara noted that rising fuel costs were just one of the many issues plaguing the industry at the same time.
“It’s all happening at once, so it’s a very interesting time,” he said.
Last month, chairman of the Australian Trucking Association (ATA) David Smith also warned government grocery bills would explode if the fuel tax credit was not reduced to 17.8 cents.
In a letter to former Prime Minister Scott Morrison, Mr Smith said a reduction in the number of trucks on the roads would lead to supply chain problems that could “add $20 a week to the average household’s food bill”.
“The fuel tax credit is an important part of the well-established freight business model,” he wrote.
“The food supply chain can only keep store shelves stocked if operators can offset the loss of the tax credit.
“This will negate the cost of living that the government wanted to provide.”
Mr Smith also warned that a number of operators will “inevitably collapse in the coming months” unless changes are made.
‘Never had more stress’
Meanwhile, the Transport Workers’ Union has also hit NSW’s notoriously expensive toll network, which NSW Secretary Richard Olsen told in a recent interview with The Daily Telegraph†
TWU National Secretary Michael Kaine told news.com.au that the industry was now at a breaking point.
“The skyrocketing fuel prices are pushing road transport to the brink. Transport families have never been more stressed about how they will make enough money to break even, let alone make a small profit,” he said.
“We’ve heard countless stories of employees parking as truck drivers are left even further behind after finishing a ride due to insane operating costs.
“The result is an industry that is less sustainable and more lethal. When truck drivers’ razor-thin margins are curtailed, there’s the pressure of risk-taking, overloading, fatigued driving or less maintenance to make ends meet.”
Kaine said it was time for the government to intervene.
“This is bigger than a single fuel spike. National supply chains are existentially threatened because truck drivers lack the means to recoup the fuel costs of wealthy companies at the top that draft transportation contracts,” he said.
“It is critical that the federal government takes steps to urgently establish an independent body with the power to establish enforceable binding standards for road transport, as recommended by the Senate nearly 10 months ago.”
– with Jessica Wang
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