Fuel, insurance and wages are rising for livestock transport operators, which is putting enormous pressure on companies to make a profit.
Already, there are reports of one livestock transport company selling their fleet because costs are not retrievable.
O’Connor Livestock Transport, arguably one of the best operators in the business, is selling up.
This story was mooted last week, and confirmed by the O’Connor family on Monday.
However, the O’Connors did not want to comment further.
National Transport Association secretary and Livestock and Rural Transporters Association of Victoria (LRTAV) vice president John Bee said on Saturday while at the open day of the new CVLX at Miners Rest, that it would be difficult for any livestock transport operator to raise their rates, as there are some that would step in and take that spot.
Transport costs can be done two ways – on a per head basis (which will generally equate to a per kilometre rate), and per kilometre.
The latter varies between operators, sometimes influenced by obtaining a back load. However rates can vary from $5-$6 per kilometre.
Some of this is contract work and some is defined by the distance from a processor or producer. Long haulage is usually worked per kilometre.
O’Connor Livestock Transport is one of the best operators in the country, with immaculate trucks and solid management.
Another such operator is Storr’s Livestock Transport.
This is a family business with numerous trucks, employing sons and soon, grandsons.
Stuart Storr said that fuel cost had risen at the bowser from $1.09 cents per litre in April 2017, to $1.59c/ltr today.
This equates to a rise of 33 per cent in running costs just on fuel alone.
Stuart Storr said his net profit margin for 2017, and without disclosing the actual figure, had gone from 20 per cent, 20 years ago, to just two per cent today.
This leaves little room for rising costs into the future. To buy a new B-Double combination today there would be no change out of $800,000.
To insure a rig can also be very expensive.
Recently, there was a conversations about the cartage costs when buying hay.
For these operators, who are charging around $5.30-$5.50/kilometre, their trip pays only one way.
This is similar to the milk industry, and generally the timber industry too.
Transport operators cannot run at a loss, and when profit margins are small, working for next to nothing is not good either.
With wages for a good driver being around $100,000, including on-costs, a level of insurance premium dependent of accident record (and costly), let alone fuel and registration, who would want to own a truck?
Obviously, and thankfully, many still do. However, there have been numerous single and small operators selling up to larger companies in recent years.
While cartage rates have risen little in recent years, the added costs of better designed trucks, and waste tanks only add to the issue.
Interestingly, when speaking with John Beer on Monday, he said Regional Infrastructure, the owners of the new CVLX complex, had installed a dump point for trucks to empty their waste tanks.
