SHOULD a viable cash flow be included in chain of responsibility?
This concern has faced many truck operators over recent years and it raised its head at the recent Australian Trucking Association conference in Darwin.
Setting the scene, the CEO of the National Heavy Vehicle Regulator, Sal Petroccitto, had introduced a legal workshop on the ramifications of the Chain of Responsibility legislation amendments due to come into force next year.
Mr Petroccitto was taking questions from the audience following a robust debate between the pros and cons of the Northern Territory system of compliance compared to the states that were working under the Heavy Vehicle National Law.
A well-known operator rose to his feet and, in a low voice, put to Mr Petroccitto a question that seemed to hit a core of interest in the room.
Simply put, the operator asked if freight forwarders and prime contractor,s who were running late with payments to a subcontractor or who were using extended payment terms to 90 or 120 days, should be included as a link in the Chain of Responsibility?
In other words if a prime contractor was late with payments and an operator couldn't afford to make required repairs and an incident or injury ensued, should that prime contractor carry responsibility under the CoR legislation?
Mr Petroccitto did not have a clear answer and it became obvious that the NHVR had taken a technical and engineering approach to the chain and did not have the resources or expertise to venture into what was a matter of economics and business models.
The regulator did not by any means shut down discussion, he just did not have an answer on the day.
The executive officer of the Northern Territory Road Transport Association, Louise Bilato, told Big Rigs that she had a growing concern about the gap that seemed to be getting bigger between national freight companies on one hand
and owner drivers and small fleet owners on the other.
"The national business model of the bigger end of town is really starting to have an impact,” Louise Bilato said."I personally have concerns about our ongoing safety and the industry's viability if that model continues.”
Listening to operators following that particular session in Darwin, it became clear that these concerns were widespread.
So let us look at a scenario.
An owner driver is working under a seven-day account for fuel, cash or credit card for many purchases and 14 or 30 day accounts for workshop service and maintenance work.
The cash flow for an owner driver or a small fleet owner running line haul is huge, the cost of fuel alone builds at an exponential rate.
Possibly the owner driver is subcontracting to a major freight forwarder and instead of payment upon presentation of invoice, the payment period extends to, as the questioning operator in Darwin put it, to 90 or 120 days.
That's three or four months with thousands upon thousands of litres of fuel being consumed between job completion and when payment arrives.
Our operator knows that maintenance is needed on a truck, perhaps a vital part is required urgently.
The truck is due to go out, the operator is behind on payments, even the family home is under some financial pressure.
The owner driver takes a gamble, "she'll be right”, and sends the truck out.
There is a bad one, that vital part gives way, people are injured possibly killed.
It's easy to point the finger at the owner driver or small fleet owner, but the pressure was great and that financial stress is directly traced to the extended payment regime of a multinational freight forwarder. It is Ms Bilato's contention that that freight forwarder should be part of the Chain of Responsibility and in the fictional scenario above, should be liable for one of the million dollar plus fines under the amendments to the CoR legislation.
"I have had concerns for a long time about how little the profit revenue is trickling down to our own drivers and small businesses from the big end of town,” she told Big Rigs.
"We know that repairs and maintenance can only be done when you've got money in the bank and we can't afford to have the big end of town to be exceptionally profitable at the expense of our smaller operators.”
At this time, we understand there is no liability or responsibility under the Chain of Responsibility amendments for a freight forwarder to maintain regular payments to subcontractors.
Perhaps it is time for associations and representative bodies, state and national, to start to push for better payment regimes without necessarily going all the way to prescribed rates that are being pushed by the Transport Workers Union.
Whatever the outcome, regular cash flow in some form seems to be integral to ongoing road safety.