The Australian Trucking Association (ATA) says the industry must force customers to pay higher freight rates to reflect rising fuel
The Australian Trucking Association (ATA) says the industry must force customers to pay higher freight rates to reflect rising fuel costs.
ATA Chairman Trevor Martyn says a 35 precent increase in the price of fuel—from $1.34 cents per litre in October last year to $1.80 a litre in some capital—means operators can no longer afford to remain viable without adjusting their fuel levies.
His call for operators to ensure they pass on costs reflective of rising fuel prices comes amid his warning the price of diesel may exceed $2 a litre in the coming months after crude oil hit a record high $133.58 a barrel.
“Some trucking companies impose fuel levies and adjust them regularly, but many companies have been trying to absorb the rising cost of fuel,” Martyn says.
“Those companies will go out of business unless their customers pay freight rates that reflect their real costs.”
However, the trucking industry may face stiff opposition from customers with Martyn saying they can expect a massive hike if operators adjust their fuel levies accordingly.
“The freight rate increases could be substantial, depending on the trucking company and its cost structure,” Martyn says.
“Some companies haven’t received a rate increase for the last eight months – they would need an increase of more than 10 per cent on average just to break even.”
Despite this, the ATA is calling on customers to understand the alternative—that if they refuse to pay a rate to keep trucking operators viable, customers in turn will risk their bottom line.
“They can either pay freight rates that reflect the cost of fuel, or a large number of trucking companies will have to close down. Once that happens, our customers won’t be able to find operators to move their goods in a timely way,” Martyn says.
But he stopped short in calling for government intervention, arguing it can do nothing to reduce diesel prices despite the fact it sets the fuel excise. According to Martyn, the price of fuel is skyrocketing because of China’s booming economy.
Opposition leader Brendan Nelson last week proposed cutting the fuel excise by five cents per litre but the ATA opposed this because it argued a drop in the fuel excise would mean less money would be spent on key transport infrastructure projects.
“The Opposition’s plan would reduce our effective fuel tax to just 14.633 cents per litre. It is just too low. It would not be enough to pay for the safer roads, more rest areas and better regulations that we need,” ATA Communications Manager Bill McKinley says.
In light of the price of oil hitting a record high, Martyn says diesel prices will be a key issue at the Australian Trucking Convention to be held in Canberra.