With the Christmas break over, most of us in transport are back to the grind. This is a good time in the year to reflect about the important role that we play in the wider Australian economy. The road transport industry is a pivotal component of Australia’s economy, facilitating the movement of goods across vast distances, connecting urban centers with remote regions and enabling trade both domestically and internationally. This important service to the nation’s economy needs to be properly funded to remain viable.
As we grapple with the pressing challenges of rising costs of running and maintaining our vehicles, living on the road and rising fuel costs, it’s critical that we ensure we don’t let standards slip when it comes to our rates of pay. This isn’t just a case of making ends meet, but staying safe on the road. It’s important for us to make it clear to clients up the chain that enough money needs to be flowing through the supply chain for us to cover our costs and operate safely.
Sustainable rates is undoubtedly the biggest area for improvement for us, as we settle back into our role of keeping Australia moving. The sustainability of our rates is significant because as owner-drivers we need adequate remuneration for our businesses to operate viably and to stay safe on the roads, as well as ensuring that members of the community that share the road with us are also safe.
At the outset, it is essential to define what constitutes sustainable rates within the context of road transport and in particular the owner-driver business model. Sustainable rates refers to pricing strategies that incorporate not only the direct costs of transporting goods from one location to another, but the associated expenses of running a transport operation. This includes getting paid well enough to cover rising fuel costs, as well as ongoing maintenance costs that ensure our trucks are roadworthy and safe, for instance ensuring we can put aside funds to replace worn-out or faulty equipment. As owner-drivers, it’s up to us to manage our on-road expenses, so it’s essential that we’re always putting aside money for a rainy day. Sustainable rates also applies to our living expenses, ensuring we are earning enough to provide for our families, especially given rising inflation and the much-publicised challenge to keep on top of the rising cost of living.
Over the years there have been a few calculators designed specifically for road transport, some good and some not so good. In my view, a simple way to keep track of our costs is to just use an Excel spreadsheet to determine and calculate our rates, minus any overheads, including potential future costs so we’re able to stay viable. When calculating the costs of operating, we need to include all variable and fixed costs and ensure all figures are realistic and accurate. For instance, if you need to put money aside for when the time comes to replace your truck, there’s no point in over or underestimating the amount, or inputting an amount that doesn’t reflect the value of your truck, as it will blow out your figures one way or another.
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Often we see rates being increased and decreased as fuel fluctuates. Fuel is a major expense and is often the first thing to come to mind, but it is not the only overhead to take into account. What is always overlooked is the fact that other costs such as tyres, spare parts, repairs, cleaning products and even the cost of living on the road have risen but are seldom discussed. Well-maintained vehicles are safe vehicles and when it comes to trucks, safe trucks protect not only the driver, but other road users, given the size and power of our vehicles.
Given the need to maintain our vehicles, cover the cost of rising overheads and, importantly, to ensure ourselves and our fellow road users remain safe on the roads, we need to ensure enough money is flowing through from the top of the supply chain. After all, if our industry collapses or is unviable then everyone loses out, not just us.
Lastly, we also need to keep in mind our profit margin. We are not a free community service and we’re as entitled as any other business to ensure we’re able to profit from the service we provide. Every successful business needs to have a reasonable profit margin and we’re no different. I have even been told that when an owner-driver pays off their equipment, the asset, being the equipment, would be their profit. I have never heard of any other business that would work that way and, in any case, once equipment has reached the end of its useable life, it is either worth nothing or it is traded and rolled over for newer equipment within the business.
Sustainable rates in our industry are essential for ensuring safe and reliable equipment and services, fair compensation, financial stability and eventually being able to upgrade to environmentally friendly equipment. By adopting a holistic view of the costs associated with transport, we as industry stakeholders can better appreciate the long-term viability of our operations and also the implications for society at large. In essence, we can’t run a safe, profitable and essentially viable owner-driver operation without proper remuneration that covers all rising expenses.
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