Inflation, shortages and restrictions rear their heads
Economic issues are translating significant industry challenges in Western Australia that could see firms fail to keep their heads above water, according to the Western Roads Federation (WRF).
A confluence of developments against a backdrop of the state’s famous boom and bust cycles have industry observers noting that freight transport there is suffering something akin to a ‘green drought’.
And a word only now coming back into common parlance is being used – inflation.
“Many members are reporting rapidly escalating costs of operations – from fuel, tyres, spares and wages,” WRF CEO Cam Dumesny observed.
Dumesny noted that discussions with both state and federal Treasury departments seem to indicate a real concern that we may have far higher levels of inflation than is currently reported.
“Transport operating cost price increases in double digits are routinely being reported,” he said.
“Whilst inflation may seem helpful in lifting rates and wages, the reality is that it erodes buying power and equity even faster.
“Whilst some members report being in locked in contracts, others have been able to escalate rates to reflect the new market conditions.
“It’s not uncommon, to hear of transport companies increasing freight rates in some segments by more than 20%.
“But even then, some of who have managed to secure such increases say that costs are increasing even faster.”
The WRF has been at the forefront of training initiatives in the state but it is accepted that they will take time to flow through.
“We are genuinely happy with the results and so are members who are grabbing the graduates faster than we can train them,” Dumesny said.
“We are meeting with more groups this week to help expand the pool of potential candidates to train and also working with a number of companies to find Government assistance to help run their own internal training programs.”
In the meantime, its members continue to report substantial shortages of suitably skilled drivers, mechanical trades and operations staff.
“The reality is that until we open the borders to other states and countries, the skills shortage won’t go away,” Dumesny said.
“Even then, with shortages of skilled truck drivers, mechanics and ops staff interstate and around the world, don’t expect border opening to be a magic bullet.”
At an operational level, lingering restrictions are seeing long-haul companies refusing cross border work, with the harsh conditions imposed on truck drivers coming from the hard border closed areas of Victoria and New South Wales having led to increasing numbers refusing to come to or leave WA.
“Commendably, companies both in the East and here in WA are now actively seeking to protect their driver’s welfare by avoiding taking on work that requires them to leave WA or come to the state,” Dumesny said.
“With already over-stretched demand for road transport across the paddock, the loss of capacity due to withdrawal of services by some operators is going to hurt WA.”
WRF is meeting with the chiefs of staff of the ministers of health and transport to negotiate better conditions for our cross-border drivers.
There, as in eastern states, the problem of unvaccinated drivers is unlikely to be helpful.
“A number of drivers have chosen not to get vaccinated and as such companies are reporting a loss of drivers,” Dumesny said.
“Estimates on the actual numbers are difficult but depending on the transport segment and location those choosing not to get vaccinated would be in the order of 5% to 10%.”
“Even a number like that when we have such a chronic skills shortage of drivers hurts.”
Read how WRF highlighted again the skilled driver shortage threat, here
Not all the difficulties are confined to the open roads.
“Early on Friday members were advised that the rail operator could not handle any more containers for up to 10 ships until further notice,” Dumesny said.
“This is just another episode in the on-going tragedy that is Fremantle Port”.
With the portents looking grim, the WRF feels that leadership is needed.
“Industry representative groups from the other business sectors in WA are coming to Western Roads Federation and asking what can be done about it?” Dumesny pointed out
“The answer is that whilst we can’t solve the product shortages issues, there are things that can be done to relieve inflationary pressure.”
WRF offers the following courses for action.
Transport and logistics labour shortages:
- Allowing in international truck drivers and mechanics, subject to the drivers being put through a modified industry training program and an independent verification of competency
- Investment in industry appeal, such as expansion of rest areas with proper facilities to enable us to provide greater respect to our drivers and to also attract new people to the industry
- Support for industry campaigns to attract new people into the industry
- Support for the WA industry move to competency based not time based licensing
Productivity:
- Removal of or reduction in red tape related to transport operations
- Increased use of Higher Productivity Vehicles and Restricted Access Vehicle networks
- Removal of curfews and other related restrictions around the city for certain types of transport
- Dedicated task force to remove barriers to landside port efficiency
- Release and expansion of land available for warehousing (noting warehousing is one of the fastest growing segments, as companies move from global just in time supply chains to local just in case buffer stocks in warehouses).