Rates, not the answer

THE fact that the transport industry needs a "Safe Rates" system has been bantered around for a very long time. My personal view on this subject is that this industry is no different from any other, and the laws of supply and demand set the rates.

The fact that there are owner operators and other bigger organisations in the industry going bankrupt comes back to the fact the supply currently exceeds demand, and the fact that these operators are going to the wall is due to the over supply situation.

What dictates the over supply issue in my view is two fold - firstly, economic and climatic factors beyond our control; and secondly, we have a lot of operators who don't understand the very basic requirements of being in business.

An operator's understanding of basic business principles for their business is paramount. This understanding needs to begin before they actually go into business. They need to complete and clearly understand the numbers.

Whenever I have undertaken a new business venture, I do three sets of numbers - best, most likely, and worst case scenarios. Rarely does the business venture rise above the worst case scenario for the first couple of years and you need to have planned for this situation. There are a very significant number of well-established and professionally run transport operations struggling at the moment due to economic conditions and the previous influences of weather, as well as other unwarranted government intervention in some areas.

My concern is that the "Safe Rate" will define the benchmark for the industry, it might pull some operators' rates up, however, there is a very real risk of dragging the majority operators' rates down.

When you consider the cost of fuel across Australia for example, if you operate in Brisbane you are going to be well ahead of the operator working out of Katherine in the Northern Territory. The same can be said for the maintenance costs such as tyres, brake parts and the list goes on ...

What about the small operator who runs two or three trucks? He has overheads that owner operators with just one vehicle have no concept of. Driver's wages for example are like fuel, if you live in Brisbane you will be paying less than if you operated a transport business in Mt Isa. Why would you drive a truck for $900 a week when you can work in the mine $2000. My advice to Federal Transport Minister Mr Albanese is not to implement Safe Rates, but set a standard where you undertake a business training course before you can become a owner driver.