07 Aug 2018
INFOGRAPHIC: a sharp right toward the future
Tim Suffield & Graham Kerr |
Is road transport in Australia turning the corner? We take an interactive look at the sector.
7 Apr 2022
Road transport: wheels keep turning
Amid economic disruption of the ongoing COVID-19 crisis, road transport operators have seen relatively stable demand with the sector remaining a necessary step in supply chains and a significant contributor to the Australian economy
Demand has been supported by a shift towards online retail spending, initially brought on by pandemic-related restrictions which in turn has led to a surge in demand for last-mile delivery services – a trend that is expected to continue, supporting demand across the industry.
“While industry profitability has improved, margins have been supported by government stimulus and other measures which are not expected to be repeated going forward.”
While industry profitability has improved, margins have been supported by government stimulus and other measures which are not expected to be repeated going forward. There are also several additional factors which may see competition in the sector increase, putting additional pressure on underlying margins – including geopolitical tensions, global supply chain impacts and cost volatility - most notably fuel costs.
Consolidation across the industry will also continue as bottom quartile operator performance remains unsustainable.
The Australian economy is entering a period of increased market pressures with expectations of rising inflation and wage growth with, and interest rate hikes anticipated over the coming years.
The potential exists for market forces to impact sector competition, as well as consumer and business sentiment, placing increased pressure on operator margins.
Importantly, the Australian Government is supporting the sector through significant investment, including $A120 billion over 10 years for land transport infrastructure.
Additionally, the 2022-23 Federal Budget announced a temporary six month halving of the fuel excise from A44c per litre to A22c per litre which will provide some much needed, albeit transitory, relief at the bowser – however noting that the full A22c saving will not in its entirety flow through to road transport operators.
Capital expenditure across the sector is at record lows. Australian road transport capex has historically, and continues to, lag global peers. Businesses will need to invest at some point which will require significant capital
To adapt to changing demands and market factors, businesses are moving from a “just in time” to a “just in case” supply model which will require a greater level of warehousing and improved supply chain efficiencies.
With a significant global focus on environmental, social and governance (ESG) practices, there will be continued pressure challenges faced by the industry to provide more efficient and innovative supply chain solutions.
With this will come increased investment to support sustainable solutions, such as electronic vehicles (EV’s)
B-doubling up on freight for regional Australia
- Shayne Elliott, ANZ CEO
When we think about agricultural product and regional Australia, we think of farms. But that product has to get to its end market somehow.
That’s where companies like GTS Group come into play. Based in the northwest Victorian city of Mildura, this family-run business helps store and transport Australia’s food supply - at an enormous scale.
Founded in 1980 by current Managing Director Damien Matthews’ father, GTS Group had humble origins with just six trucks and 10 flat-top trailers. Since then the business has grown dramatically to a fleet of 440 trailers and 120 full-time prime movers.
Damien, who joined the business in 1980, says GTS originally grew off the wine and beverage industry in the Sunraysia region.
“In the last 10 years, we've experience a lot of growth in the supermarket supply chain,” he explained during my trip to Mildura in early July. “We now cover just about everything you see in your pantry. We're working with the big companies like Woolworths and Coles so it's getting broader what we carry on the trucks.”
Although the Sunraysia region, where Mildura is located, only makes up around 10 per cent of GTS Group’s volume, with 90 per cent spread across capital cities, the group have decided their head office will remain in regional city.
“It's a great place geographically to have a transport logistics hub for compliance and safety, changeover of drivers, maintenance and washing,” Matthews says.
Tim Suffield is Director and Dean Evagorou is Associate Director of Client Insights at ANZ
For a copy of the report please contact Dean Evagorou
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
editor's picks
09 Aug 2017
Road transport: changed conditions ahead
Timothy Suffield |
Trucking needs $A3.5 billion in new capital over the next five years. Where will it come from?