One size does not fit all

Election done and dusted so where to from here as an owner-driver or small fleet operator in this critically important road transport sector?

In my book Don’t Suck the Pencils as well as previous Big Rigs articles I have emphasised the significant role small business plays in the Australian economy and the road transport sector, in particular. 

The events and the government spending of the past few years and the forecast future government spending will eventually have to be repaid. It will be the small to medium businesses that will have to shoulder the bulk of repaying this massive deficit.

The reason I wrote my book was to target owner-drivers and small fleet operators in the road transport sector. 

The basic business fundamental outlined in my book apply to any small to medium business however the examples used for the costing are specific to the road transport industry. 

It is critically important that small business operators in any business sector understand their costs of being in business. This is critically important in the road transport sector as you have big capital outlays and high operating costs that you need to recover before you even consider making a return on your investment. 

In the past with the RSRT there were rates, defined as minimum rates for specific combinations. One size doesn’t fit all in this industry sector. The size of the country and the diversification of the road transport requirements makes setting a fixed, fair and equitable rates for all impossible.

Depending on where you operate there will be cost factors specific to your location. For example, an owner-driver operating in North Queensland will have a different cost structure for fuel, maintenance and labour than an operator located in Sydney.

The other critical message from the book is Keep it Simple. When it comes to doing the numbers there are some aspect of the calculation which remain constant no matter where you are located. These include the cost of capital the financing costs. 

The other major variable costs components which are not constant depending on location are fuel, maintenance and labour. These variable components make up close to 70 per cent of your overall costs before you start to make a return on your investment. 

In my book I have set out an example of the costing structure for a $300,000 prime mover doing 180,000km/pa. Based on a fuel price of $1.40/l and wages at $40/hr flat the total cents/km is $2.07 for every kilometre travelled. You then need to add the costs for the trailers and other running equipment which will vary on the cost and dependant on the application. 

If you are operating a triple road train in North Queensland for example your fuel will a lot more expensive and if you’re running on unsealed roads your maintenance costs will be significantly higher. With the labour cost you are competing with the mining sector. The kilometres you do with a triple will be significantly less especially if you have to load and unload which the majority of owner drivers and small fleet operators do as part of the service they offer.  

How simple would it be to have an official, online nationally recognised and sanctioned, calculation table which owner-drivers and small fleet operators can use that will enable them to know what their real costs are to do a particular job. 

This calculation would be applicable to their location costs and have provision for the configuration of the combination. Just put in your fuel, labour and maintenance costs and the calculation is done based on your real costs and not a one size fits all. 

It is my personal belief that road transport rates should fall under the umbrella of the Chain of Responsibility and defiantly be captured by the Unconscionable Conduct Legislation. A business which uses its bargaining position to take advantage or gain unfair commercial advantage needs to be held accountable. These avenues to address unfair payments and payments terms needs to be enforced. 

The overall message for owner-drivers and small fleet operators is, know your costs of doing business. As business operators, it is your money that you have invested, and it is your responsibility.  

About the author:

Graham Cotter’s passion is for small business, especially the road transport sector, and the significant role it plays in the Australian economy. 

Having both managed and owned a small-fleet operation for a number of years, Townsville-based Cotter has witnessed first-hand the difficulties small-business operators face in the day-to-day aspect of running a transport business and has now dedicated his life to assisting other business owners.

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