Veteran transport operator John Di Losa, with over four decades in the industry, highlights the multifaceted nature of these challenges. "We've got mechanical bills that have shot up, refrigeration costs have gone up, we have land tax and rates on our sites," he explains. Notably, land tax on his Melbourne sites surged from $96,000 and $80,000 in 2021 to $402,000 and $322,000 respectively in the following year.
To mitigate these rising costs without passing them onto clients, Di Losa has diversified his business model. By offering additional services such as pick and packing for customers and line haul operations-transporting pallets of stock between states-he aims to create new revenue streams. "We're looking at every possible angle to get some extra income streams coming in because it's too hard to rely on just one income stream," he states.
The broader industry reflects similar trends. Patrick Coghlan, CEO of CreditorWatch, notes a 40% increase in insolvencies compared to 2024. He attributes this to escalating input costs and a reduction in consumer discretionary spending, leading to decreased demand for transport services. "All the input costs are generally going up, and then you combine that with a reduction in discretionary spend from the consumer... so all of a sudden there's a lot less that needs to actually be delivered," Coghlan observes.
Additionally, there has been a 100% increase in trading partners lodging defaults for non-payment of invoices, including fuel, finance, and insurance companies. This trend indicates a heightened risk of business failures within the next 12 months.
In response to these challenges, transport operators are adopting several strategies:
- Diversifying service offerings to create multiple revenue streams and reduce reliance on traditional transport services.
- Implementing cost-saving measures such as optimizing fuel usage, maintaining vehicles efficiently, and renegotiating supplier contracts.
- Exploring alternative financing options to manage cash flow effectively amidst rising operational expenses.
By proactively addressing these issues, Australian road transport businesses can navigate the current economic landscape, ensuring sustainability and resilience in the face of rising fuel costs and associated financial pressures.
