A group of Australian freight brokers have permission from the consumer watchdog to collectively bargain agreements with freight carriers.
Lodged by KIS Transport Australia, the notification will remain in force for a period of six years as requested by KIS, instead of the default period of three years, the Australian Competition and Consumer Commission (ACCC) announced this week.
The other current members of the collective bargaining group are Hydra Logistics Solutions Australia Pty Ltd, Total Freight Logistic Services Pty Ltd, Transfreight Solutions Australia Pty Limited and KIS Corporate Pty Ltd.
The members of the collective bargaining group provide freight broking services, which connect a customer who wants to send freight, to a freight carrier, while also managing other aspects of the supply chain for that customer (such as insurance, freight monitoring, warehousing and customer services).
The current freight carriers which the group intends to collectively negotiate with are Toll Express, TNT, Couriers Please, Followmont Transport, Hi-Trans Express and Northline.
The ACCC said it considers the collective bargaining is likely to result in public benefits in the form of transaction cost savings and improved input into contracts by the members of the collective bargaining group, and there is likely to be minimal public detriment.
By lodging a notification with the ACCC, KIS and the other freight brokers gain legal protection to participate in collective bargaining that may otherwise risk breaching competition laws because it involves joint action by competitors. Participation in collective bargaining will be voluntary for the freight brokers and freight carriers.
In its submission to the ACCC in December last year, KIS said that in recent years, the acquisition of local freight and delivery companies by large multinational corporations has resulted in a less competitive marketplace for freight.
“As the cost of freight transport has increased, the freight brokers have ultimately had to pass this cost onto their customers, resulting in an increased cost to the general public and decreasing access to the service because of the perceived expense associated with the use of freight transport,” its submission said.
“As larger multinational corporations have purchased a significant amount of freight companies operating in Australia, these corporations can deal with each other on a global stage resulting in the negotiation of competitive pricing for foreign companies resulting in some locally owned companies paying significantly more in freight costs than is otherwise fair.
“In addition the Contracting Parties, for the purposes of providing efficient services to their customers, are largely a captive audience of the national freight carriers.
“The Contracting Parties cannot logistically use small or undercapitalised freight carriers because those companies do not service Australia or the types of freight being moved. Negotiating reduced freight rates would improve the competitiveness of Australian companies and lessen the disadvantage the Australian companies suffer in comparison to their international competitors.”
Further information about the ACCC’s decisions is available on the ACCC public register at: KIS Transport Australia Pty Ltd.