Big supermarkets have responsibility to support supply chain: NatRoad

The financial woes of Scott’s Refrigerated Logistics signal that it’s time to cut the heavy vehicle industry some much-needed slack, believes the National Road Transport Association (NatRoad).

NatRoad CEO Warren Clark said that Scott’s, which was placed in the hands of receivers earlier this week, is a vital link in the backbone of an essential industry.

“It’s not only 1500 jobs at risk – there’s a ripple effect throughout the entire supply chain,” he said.

“My heart goes out to all the drivers affected, many of them sub-contractors to the supermarkets and NatRoad members, and I can only hope the administrator quickly finds a buyer for the business.

“Surely this sends a message that enough is enough and our industry can’t take any more hits.”

Clark said soaring diesel prices, global knock-on effects of the Ukraine war, higher AdBlue costs and the impact of the previous government’s six-month fuel tax cut are all hitting operators.

“From April 1 to August 18, 2022, some 2000 heavy on-road transport operators had to negotiate payment arrangements with the ATO because of the fuel tax budget decision,” Clark said.

“It’s been one thing after another since Covid-19 and long-standing driver and diesel mechanic shortages are adding to the burden.

“We need the national transport ministers to freeze road user and registration charges.

“And we urge the federal government to look at additional concessions for the heavy vehicle industry in its May budget.”

Clark said the impact of any disruption of the supply chain ultimately risks higher prices for consumers.

“This also underlines that big supermarkets also have a responsibility to ensure the supply chain is properly supported. The contracts they offer need to enable supply chain road freight operators to be viable.

“Many people, including sub-contract drivers and small trucking operators, depend on them for their future.”

According to a report in The Australian, however, there is some glimmer of hope for the Scott’s staff.

Transport companies Toll Holdings and Lindsay Brothers are believed to already have held talks about a potential acquisition.

Meanwhile, the Transport Workers’ Union (TWU) said it is working with receivers KordaMentha to ensure hundreds of transport workers are prioritised throughout the administration process for Scott’s, Australia’s largest cold chain transport operator.

The union said the operator is the largest of many casualties of cost-cutting in transport supply chains, which puts safety and businesses at risk. Transport is Australia’s deadliest industry and is in the top 10 industries for insolvencies.

The TWU said that razor-thin margins are common for transport operators, despite the booming profits of major retailers, such as Aldi – one of Scott’s Refrigerated’s clients – which is estimated to have reaped the rewards of an 8.4 per cent profit margin in 2022, far higher than Australia’s other supermarkets.

TWU National Secretary Michael Kaine said a decade of government inaction on the crisis in transport left operators fending for themselves in a broken market.

“This is another tragedy of the untrammelled commercial power at the top of transport supply chains,” Kaine said.

“Retailers are reaping the gains from razor-thin margins while operators and drivers collapse under the strain.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Send this to a friend