Negotiate to pass on fuel price hikes: VTA


Lovel warns bankruptcy looms for operators who can't pass on extra costs

By Rob McKay | March 8, 2011

Transport operators should negotiate now with their customers to pass on fuel price hikes, the Victorian Transport Association (VTA) has urged.

Diesel prices are starting again to be a real concern for the viability of road transport operators VTA Chief Executive Philip Lovel says.

"The average price for diesel in February 2011 was 136.76 cents per litre (cpl), compared to 124.19 cpl in March 2010 – an increase of 12.57 cpl or just over 10 percent in 12 months." Lovel warns.

The VTA advises transport operators to:

· monitor fuel prices daily;

· have a fuel levy set up and agreed with customers;

· establish specific fuel levies across different fleet and customer segments. For instance, a long distance levy is very different to a level for urban or local vehicles.

Lovel’s intervention came as investment firm Dun & Bradstreet Australia highlighting a sharp upturn in business failures last year compared with the previous two years.

In a call reminiscent of those made two years ago when diesel prices last
soared. Lovel points out that operators rarely recover the extra costs from their customers fast enough, resulting in many going bankrupt.

The reduction in the Fuel Tax Credit rate for on-road diesel use is another factor to consider on top of the rising price of diesel at the pump.

The National Transport Commission (NTC) has recommended a reduction in the Fuel Tax Credit rate from the current level of 15.543 cpl to 15.043 cpl from 1 July 2011.

"In January 2009, the Fuel Tax Credit rate for on-road diesel use was 18.51 cpl." Lovel says. "So, the rebate available to transport operators will have fallen 18.73% in two years when the latest reduction takes effect." Mr. Lovel observed.

"I strongly suggest that transport operators allow for cost indices to recover this ever reducing diesel Fuel Tax Credit rate."

Separately, the VTA acknowledged the importance of fuel-saving strategies to help reduce expenditure when prices were high.

It pointed to its EcoStation initiative as promoting decreased emission as well as lower fuel costs.

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