Head­ing north­ward

Australia’s road trans­port in­dus­try has achieved sig­nif­i­cant growth in the past 25 years

Australian Transport News - - Contents - Will McGre­gor is an IBISWorld in­dus­try an­a­lyst

Australia’s road trans­port in­dus­try has achieved sig­nif­i­cant growth dur­ing the past 25 years

Australia is a na­tion char­ac­terised by vast dis­tances, large un­in­hab­ited ar­eas and seem­ingly never- end­ing roads. For close to a cen­tury, road freight has pro­vided a vi­tal link be­tween the na­tion’s cities. Trucks have acted as an eco­nomic artery, car­ry­ing goods, live­stock and agri­cul­tural prod­ucts through­out the land.

The abil­ity to trans­port goods by road has fu­elled ex­port growth and ce­mented Australia’s po­si­tion in the global econ­omy. To this day, road freight re­mains vi­tal to the eco­nomic suc­cess of our na­tion, and is ex­pected to haul in $ 42.6 bil­lion in rev­enue in 2017-18.

Over the decades, small op­er­a­tors have been the dom­i­nate force in road freight trans­porta­tion, with non- em­ploy­ers ac­count­ing for ap­prox­i­mately 50 per cent of the road freight in­dus­try’s en­ter­prises.

How­ever, the busi­ness struc­tures of the in­dus­try’s larger com­pa­nies dif­fer sig­nif­i­cantly com­pared with the in­dus­try’s small- and medium-size com­pa­nies.

The in­dus­try’s larger play­ers, such as Toll and Lin­fox, pro­vide in­te­grated lo­gis­tics and dis­tri­bu­tion ser­vices. Due to their mar­ket power, these com­pa­nies are in a stronger po­si­tion to ad­just prices to pro­tect prof­its.

Con­trast­ingly, fierce com­pe­ti­tion has char­ac­terised the lower tiers of the in­dus­try over the past 25 years.

Sources of road freight de­mand have shifted over the past 25 years. Whole­salers have grown in im­por­tance as the need to trans­port im­ports on ar­rival to Australia has in­creased. To­tal mer­chan­dise im­ports and ex­ports have risen dras­ti­cally over the pe­riod, in­creas­ing from $120.3 bil­lion in 1992-93 to an ex­pected $ 530.6 bil­lion in 2017-18.

In the 1990s, road freight sur­passed 100 bil­lion tonne-kilo­me­tres (tkm), a mea­sure of tonnes trans­ported per kilo­me­tre, for the first time in the his­tory of Aus­tralian road freight. By the end of the 1990s, road freight drove steadily past 130 bil­lion tkm per year, and has since con­tin­ued this up­ward tra­jec­tory.

Strong con­sumer de­mand for cheaper im­ported prod­ucts has sup­ported de­mand growth for road freight trans­port ser­vices to trans­port these goods from ports to ware­houses. While whole­salers have grown in im­por­tance, de­mand from many ar­eas of the man­u­fac­tur­ing di­vi­sion has de­clined in more re­cent times, re­strict­ing in­dus­try rev­enue growth over the past five years. This trend has largely oc­curred due to Australia’s in­abil­ity to com­pete with low-wage man­u­fac­tur­ing in many coun­tries in Asia.

Over the past 25 years, road freight over­took coastal freight as a share of ac­tual do­mes­tic freight tasks. As the on­line econ­omy has grown in im­por­tance, speed and ef­fi­ciency have be­come crit­i­cal, and road freight is typ­i­cally faster than coastal freight. To take ad­van­tage of the growth in on­line shop­ping, many op­er­a­tors have launched ini­tia­tives to help their cus­tomers, such as on­line track­ing and ex­press de­liv­ery op­tions.

How­ever, tech­no­log­i­cal change in the in­dus­try has re­mained sta­ble. No sig­nif­i­cant new prod­ucts have been launched into the mar­ket since the in­tro­duc­tion of B-dou­ble trail­ers in the late 1980s, as road in­fra­struc­ture sig­nif­i­cantly lim­its any in­crease in truck and trailer sizes.

In re­sponse to the in­creas­ingly global econ­omy, the in­dus­try has shifted to­wards de­vel­op­ing in­te­grated lo­gis­ti­cal supply net­works, which span across trans­port modes and in­ter­na­tional borders. Road freight has al­ways been part of Australia’s econ­omy, cre­at­ing a vi­tal link be­tween our widely spaced cities.

The in­dus­try’s strong per­for­mance over the past 25 years is a re­flec­tion of road freight’s im­por­tance to the Aus­tralian econ­omy.

“Road freight has al­ways been part of Australia’s econ­omy, cre­at­ing a vi­tal link be­tween our widely spaced cities”

Above: To­tal mer­chan­dise im­ports and ex­ports in­creased from $120.3 bil­lion in 1992-93 to an ex­pected $530.6 bil­lion in 2017-18

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