Transport pays the price for rising fuel costs

Coupled with compounding shortages in global trade — most notably the fuel additive AdBlue — the cost of business is proving too much for many in the transport industry, according to Baxter Transport managing director Kelvin Baxter.

‘‘What we’ve seen recently is several notable transport companies selling their businesses and shuttering their doors,’’ he said.

Mr Baxter’s Berrigan business hosts a fleet of 45 prime movers.

He is also chair of the Australian Trucking Association’s Industry Technical Council.

‘‘Most operators run on a profit margin of between five and ten per cent, or less,’’ he said.

‘‘So, any increase in prices, especially fuel, makes a huge difference to the bottom line.’’

Diesel costs contribute an average 25 per cent toward Baxter Transports’ operating expenses.

According to Mr Baxter, it now represents ‘‘well over a third’’.

‘‘We’ve had to pass those costs on to our customers,’’ he said.

‘‘When you’re operating on such a fine margin, you really have no choice.

‘‘The reality is fuel prices have gone up and we’ve had to follow that trend — but we’ll be more than happy to follow them back down.’’

Despite this, Baxter’s Transport remains well positioned to bear these costs.

‘‘I’m reasonably confident we can weather the storm,’’ Mr Baxter said.

‘‘Fortunately, the commodities we deal in, especially wheat, are in high demand at the moment.’’

In 2019 a report from the Liquid Fuel Security Review found Australia held just 22 days’ worth of diesel in reserve.

The Federal Government has worked to bolster its reserves, purchasing 1.7 million barrels of oil, and introducing a new law requiring importers hold 24 days of gasoline in onshore reserves.

But more must be done, according to Mr Baxter.

‘‘A country spanning distances as vast as Australia’s simply has to hold more fuel in reserve,’’ he said.

‘‘Like a lot of commodities, we need to become less reliant on international markets.’’