Reade Pictu Dire straits on transparency
OVER the past 12 months until recently fuel prices, both at the retail and wholesale level, increased significantly. All of us have seen pump prices go from $1.30-odd to near $1.70 per litre, but it is not only at the service station these hikes hit.
Fuel prices have a direct impact on a state such as Tasmania, which as an island relies totally on freight for the transport of goods in and out.
Such costs are inevitably passed onto consumers and small business, including farmers. In some cases they make some businesses unviable.
The TFGA has recently become aware of a fuel surcharge being applied to all freight across Bass Strait. In one case this surcharge stands at 16 per cent, up from 8 per cent.
The problem with shipping companies applying such surcharges is a complete lack of transparency as to how they are calculated. For example, what is the benchmark figure used to justify any surcharge and why does the current level of 16 per cent remain when global fuel prices are in decline.
Shipping companies have the capacity to forward contract their fuel, allowing them to level out volatility. Arguably all fuel costs, like all costs, should be a component of the freight charge that shouldn’t be based on what you are transporting, but the volume.
The TFGA has become aware there are significant issues in the way freight charges are calculated for products into and out of Tasmania. Bass Strait is recognised as one of the most expensive freight passages in the world. It has now reached a point where government needs to provide clarity to not only ensure we have capacity across the strait but also that the cost of freight truly represents genuine costs incurred by shipping companies.
Things such as fuel surcharges only add complexity to a situation that is already to complex. In that lies the high cost of freight to this state.
This not only affects farmers, but all Tasmanians.
The TFGA will be raising this with the State Government to get transparency into the system. Our view is that we should start with the Government’s own TT-Line.
Economically, Tasmania is moving forward but we cannot stand by while freight issues constrain our potential.