Scott’s Refrigerated Logistics collapse highlights trucking industry under pressure

“Who has the negotiating power? It’s as simple as that.”

Australian Trucking Association chair David Smith said operators were also being choked by laws that varied between states, creating regulatory headaches that meant the same multi-trailer vehicles were subject to different rules around the weight they were allowed to carry and types of roads they could use.

The regulatory burden has, in part, contributed to a national deficit of about 24,000 truck drivers, resulting in unused trucks.

“If five years ago, you would have told me that I will park trucks because I won’t be able to find drivers, I would have laughed at you,” Smith said.

“We’ve got businesses literally operating on a knife edge and really doing it quite tough at the moment.”

Smith and Clark are calling for greater help from the federal government to help trucking operators rebuild profit margins and be viable in the future, particularly by implementing legislation that cracks down on unfair contract terms that have led to larger customers terminating five-year contracts with 30 days’ notice.

“It’s not everyone, but it’s rife in the industry,” Clark said.

“It’s about a fair go for all. These guys are small business operators, a lot in rural and regional areas. All they’re trying to do is deliver a service for industry and get home safely.”

Transport Workers’ Union national secretary Michael Kaine said nearly 200 transport companies became insolvent last year and workers were facing a crisis in the industry.

“The collapse of Scott’s is a distressing reminder that drivers and operators are being attacked on all sides. Wealthy companies are squeezing contracts from the top, putting pressure on operators in their supply chains to cut corners in safety to make ends meet,” he said.

“Supply chain pressures on operators and drivers worsened considerably under a decade of a government which played a hopelessly inactive bystander role throughout the pandemic, bushfires, floods, global supply chain crises, skyrocketing fuel costs and a rise of gig exploitation.”

Kaine is also calling on the federal government to do more to protect transport operators being squeezed by retailers, manufacturers and oil companies.

“Without the backing of legislation, operators and workers consistently bear the brunt of increased costs like fuel, the threat of unfair competition from gig models and deadly pressures to work harder, faster and longer to make ends meet,” he said.

Federal Transport Minister Catherine King’s office was contacted for comment.

Restructuring firm McGrathNicol partner Jason Ireland said Scott’s collapse this week might be followed by more later this year.

“There’s definitely pressure that means we could see an uptick,” Ireland said.

“If businesses aren’t able to renegotiate contracts or pass on cost increases to their customers, [they] will definitely have liquidity, cash flow crunches. And that’ll either mean people need to inject more money into those businesses … or they’ll fail, or there’ll be consolidation.”

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