Recovering compliance costs in COVID year

The onslaught of COVID-19 restrictions has placed financial, economic and social pressures upon our communities that has not been seen in many decades.

Persistent lockdowns, closures and hibernation of business and trade sectors has seen many businesses collapse or withdraw and not invest in their futures. The transport and logistics industry, even though it has remained working as an essential service, has not escaped the many constraints and additional demands of customers and consumers.

The disciplines, systems and diligence we have introduced to maintain a COVID-free environment has been exceptional and exceeded the government recommendations on almost every occasion. This work has not come ‘free of cost’.

Maintaining the structure and integrity of supply chains has seen costs exponentially rise, based upon ever-changing directions, orders and encumbrances placed upon this industry sector due to COVID restrictions.

Examples of practices that have created additional compliance costs for operators include Personal Protection Equipment, Training and Education, Border Crossing Regulation, COVID Plans and Marshalls, Mandatory Vaccination & Record-Keeping, Labour Shortages, and Increasing Entitlement Costs.

There has been an increase in operating costs because of the COVID impacts on transport and logistics operators.

It has been a hidden cost increase as maintaining the consistency of supply chains have been respectfully honoured and fulfilled. COVID compliance comes at a cost. Being able to maintain the structures, disciplines and processes to provide the services that are demanded of customers and consumers cannot be easily absorbed within current cost structures and pricing.

For these reasons, transport and logistics operators must take prudent steps to recover COVID compliance costs by factoring them into their pricing of direct movement of goods within the community.

Whether goods are moved by road, rail, sea or air, all logistics operators now face increasing costs due to the COVID restrictions, further eroding already precarious margins. Such a surcharge should be based upon the relative quantifiable increase in costs, together with other factors that impact a costing model or set service price.

It should not be based upon a rise and fall mechanism; rather, it should directly apply to material costs to business created by the application of COVID Safe practices.

How that may be determined should vary from the current application of the fuel surcharge that is linked to a monthly published fuel price.

Pricing variations should be voluntary and only be in place for as long as jurisdictions remain in a state of emergency and under chief health officer orders. The VTA recommends that its members and industry consider the requirement to recover costs associated with the COVID conditions and decide whether to implement or not.

As with any cost increase or variation, it is important customers are given fair notice and that they understand the demonstrable need for transport businesses to remain sustainable and viable. As we approach the end of another disjointed and disrupted year, it is well worth recognising the tremendous way our industry has worked together to advocate for outcomes that benefit transport operators and the customers and communities we serve.

The freight industry has operated in challenging and high-risk environments, and has endured levels of compliance, record-keeping and red tape never seen before.

Compounding this is the fact that different jurisdictions have maintained their own systems and processes, which we know has been particularly challenging for operators and drivers that regularly cross borders. Together with our affiliate associations NatRoads, Western Roads Federation, Tasmanian Transport Association, Northern Territory Road Transport Association, and the Queensland Trucking Association, the VTA advocated forcefully for uniformity on several issues to keep national supply chains as open and functional as possible.

This included having our industry recognised as an essential service during states of emergencies, and a uniform approach to COVID testing to limit the personal intrusion of regular testing.

With lockdowns ending in New South Wales and Victoria, following high rates of compliance and vaccination, it is my sincere hope that 2022 will start to bring about the return of normalcy we have all craved.

In the meantime, please enjoy a safe and happy Christmas with family and friends, and I look forward to engaging with you on these pages in the New Year.

Peter Anderson
CEO,
VTA

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