Road transport operators: how to avoid hitting the wall
13 August 2019
The road transport industry is a crucial component of Australia’s economy. However, many operators are doing it tough. In the last few months we’ve seen numerous operators facing significant financial distress, and in some cases being forced out of business.
Many factors are contributing to the enormous pressures the industry is currently facing:
- Higher than normal fuel prices (and inability to obtain fuel rebates)
- A slowdown in the economy following sustained growth over the past 7 years
- A fragmented and extremely competitive industry which is driven by price (meaning low profit margins and less opportunities to differentiate based on service)
- Oversupply of operators caused by the availability of cheap debt finance
- Fleet financing options now tightening
- Operators can’t pass on costs to customers as prices have been locked in
All of the above impact the short term viability of the road transport industry.
In the medium term, strong competition from a rejuvenated and privatised rail sector is expected to impact the long-haul market. Medium sized transport operators are likely to be the hardest hit: they do not have the size to command market share and better price control, and they are being undercut in price by small operators with lower overheads.
What you can do to protect yourself
Don’t become another statistic. If you act early, you can turn your business around and avoid personal exposure to debts and liquidation costs.
The key is to get expert advice by an experienced professional who understands the transport industry, and has a proven track record of helping struggling businesses to adapt to market conditions and return to profitability.
Rodgers Reidy & Trafalgar Business Advisory help businesses facing financial difficulty to implement a turnaround plan. With early intervention, the options available to work through the issues threatening your business, and your likelihood of survival, increase greatly.
Contact us today for a confidential, no-obligation discussion of your options.