On the right terms

It’s one of those endemic problems in the trucking industry which pops its head up every few years. The problem of the big customers bullying smaller trucking operations into accepting longer payment terms to help the big boys cash flow is a perennial problem. Late payment can wipe out cash flow, at a stroke.

 

 

The issue has come to prominence after two Senators, from either side of the house, National Senator John Williams and Labor Senator Glenn Sterle, came together to put the topic on the agenda. Both are members of the Senate Rural and Regional Affairs and Transport References Committee, currently tasked with conducting an inquiry into aspects of road safety in Australia.

 

 

Road safety and financial viability are both being challenged by customers with too much market power taking extra time to pay on their invoices. Terms are being pushed out past 90 days to 120 and, in some cases, beyond. Smaller operators are being told to take it or leave it, accept payment on these terms, or they will find somebody who will.

 

 

These kinds of bully-boy tactics are commonplace throughout our industry and many in the transport game have learnt from the past and have found ways to work with the typical unreasonable client. However, everyone has a breaking point, it does not make sense and it is not good business to squeeze the supplier until they become financially unviable.

 

 

The problem is it has become part and parcel of the new paradigm which governs business, from the supermarket’s point of view, in Australia. Just ask the produce suppliers of Australia how they have been squeezed to the point of breaking by unreasonable terms and demands by the big boys.

 

 

With drivers expecting a weekly wage and fuel suppliers dictating tough terms from operators there is little wriggle room for anyone in the trucking industry to accept the prospect of getting paid up to four months after doing a job. This kind of treatment could be the straw which breaks the camel’s back.

 

 

Squeeze cash flow and something has to give. One of the first things to come under pressure is the kind of safety procedures we now work with. The temptation to push the driver just a little harder, put a bit more pudding on the load, or cut corners on routine maintenance, will begin to compromise the great improvements in trucking in recent years.

 

 

Emotions were running hot and strong in discussions on the topic at last week’s NatRoad Conference in Brisbane. Everyone agreed it was wrong and the situation untenable. Responsible members of the association are also those likely to stick together and resist the pressures as best they can.

 

 

Unfortunately, these responsible operators have competitors who are less interested in the common good and are also under immense pressure to keep up cash flow in tight times. It only takes one to break ranks and we are back to the trucking industry’s default position, stabbing each other in the back for a few dollars worth of freight, on terrible terms.

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Author: Tim Giles

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