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Covid costs must be passed on

It is time that freight operators started to ask themselves hard questions about sustainability and costs, said Road Freight NSW CEO Simon O’Hara.

With the increasing emergence of Covid-related surcharges hitting operators in the pocket, O’Hara said there needs to be more discussions around how freight companies are able to recoup some of the “significant losses”.

“It is not the role of the trucking industry to be the short-term banker for larger business customers with payment terms, nor the ATM for companies instituting numerous, dubious, fees, surcharges and levies,” he said.

“But freight now performs those functions. Freight hasn’t seen meaningful increases in 5-6 years and Covid has now delivered significant losses.”

RFNSW CEO Simon O’Hara.

O’Hara said the industry wants to entice new faces but needs to pay them the best rates.

“To do this, freight businesses must be able to make sustainable and sustained profit.”

O’Hara believes there is now a strong argument to be made for the industry to look at their options in terms of Covid levies.

He said you only needed to look at how some NSW companies were operating over the busy Christmas break to see the impacts of Covid.

Absenteeism rates were running as high as 50 per cent, with many stories filtering back to O’Hara’s office of CEOs and COOs operating forklifts and performing other yard duties just to keep the freight moving.

Add to that the rising cost of AdBlue, rapid antigen tests (if you can get them) and increasing delays at DCs due to staffing shortages, and many operators are at breaking point, he said.

“Some might see that freight is in clover in terms of Covid, but freight’s been at this for two years. They’re fatigued, they’re struggling to keep up with demand as a result of all of these factors and costs. 

“So, what you are seeing effectively is higher costs hitting freight, not just through Qube putting in place their Covid levy of $28.50, which is significant per container, but we’re also seeing rising costs at port.

“You’re seeing early and late fees being reinstituted from March 1 at $90 per container and seeing other charges come into play at the beginning of this year at the port

So, we’re seeing this flow-on effect of higher costs, and there’s a good rational for freight to examine its position, given there is only a 2-3 percent margin in freight that’s been eroded.”

The Victorian Transport Association (VTA) wrote to its members in October last year encouraging them to consider ways to recover the massive cost of compliance that Covid regulations and requirements have cost the freight and logistics industry.

CEO Peter Anderson said cost recovery should be based upon the relative quantifiable increase in costs, together with other factors that impact a costing model or set service price. 

The Australian Competition and Consumer Commission said it was aware that some logistics groups were setting charges related to the pandemic and is “monitoring the situation”.

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