Opinion

VTA advocates for Covid compliance cost recovery

The onslaught of Covid-19 restrictions has placed financial, economic and social pressures upon our communities that has not been seen in many decades. Persistent lockdowns, closures and hibernation of business and trade sectors has seen many businesses collapse or withdraw and not invest in their futures. 

The transport and logistics industry, even though it has remained working as an essential service, has not escaped the many constraints and additional demands of customers and consumers. The disciplines, systems and diligence we have introduced to maintain a Covid-free environment has been exceptional and exceeded the government recommendations on almost every occasion.

This work has not come ‘free of cost’. The costs of maintaining the structure and integrity of these supply chains have risen exponentially based upon the ever-changing directions, orders and encumbrances placed upon this industry sector due to Covid restrictions.

Examples of the practices and structure that have had to be created and implemented into a transport business include:

1. Personal protection equipment – ongoing supply of hand sanitiser, face masks, sanitised wipes are available at a variety of locations in every business.

2. Training and education – all employees have undergone and will continue to have reinforced the basic Covid principles and specific rules and directions.

3. Border crossings – all states have differing processes for the validation of crossing borders. Different permits, letters of employers, time off for regular testing and mandatory vaccinations. 

4. Covid plans and marshalls – these plans and actions are specific to every business and include record keeping, education and auditing to ensure confidence and compliance.

5. Customer demands – customers are demanding that transport operators always highlight and confirm their adherence to the specific health directions while reducing opening times and available labour.

6. Mandatory vaccination – the transport industry has led the provision of mandatory vaccinations as an integral part of the social licence to operate.

7. Labour shortages – with no new migrant workers, at least 10 per cent of the workforce walking away from mandatory vaccination, and the licencing system working against the introduction of young HV drivers, there is a chronic shortage of drivers and logistics workers. 

8. Increasing entitlement values – as restrictions continue and the need to work longer hours to keep the systems working, many workers have their leave entitlements growing to record levels, which is a massive liability for businesses. 

There has been an increase in operating costs because of the Covid impacts on transport and logistics operators. It has been a hidden cost increase as maintaining the consistency of supply chains have been respectfully honoured and fulfilled.

Covid compliance comes at a cost. Being able to maintain the structures, disciplines and processes to provide the services that are demanded of customers and consumers cannot be easily absorbed within current cost structures and pricing.

For these reasons, transport and logistics operators must take prudent steps to recover Covid compliance costs by factoring them into their pricing of direct movement of goods within the community. Whether goods are moved by road, rail, sea or air, all logistics operators now face increasing costs due to the Covid restrictions, further eroding already precarious margins. 

Such a surcharge should be based upon the relative quantifiable increase in costs, together with other factors that impact a costing model or set service price. 

It should not be based upon a rise and fall mechanism; rather, it should directly apply to material costs to business created by the application of Covid safe practices. How that may be determined should vary from the current application of the fuel surcharge that is linked to a monthly published fuel price. 

Pricing variations should be voluntary and only be in place for as long as jurisdictions remain in a state of emergency and under chief health officer orders. 

The VTA recommends that its members and industry consider the requirement to recover costs associated with the Covid conditions and decide whether to implement or not. As with any cost increase or variation, it is important customers are given fair notice and that they understand the demonstrable need for transport businesses to remain sustainable and viable.

We will support members, and the industry, by highlighting that operators must recover Covid business costs to remain sustainable.

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