Big changes are coming
LAST MONTH I HAD THE OPPORTUNITY TO WRITE FOR THE FIRST time about the Road Transport Association and our perspective. It was good to see in that edition a number of comments about folk in the transport sector understanding how to make pricing changes, given the rise we’re seeing in fuel prices…and how this will affect them.
There is a need to understand the whole concept of a Fuel Adjustment Factor (FAF). What was concerning however, was that while everyone said you needed to do it….no one really explained how to do it.
The critical thing here is that to do it you need to have contracts and terms of trade that specify that when fuel prices change, you will be passing these on.
Secondly, you need to know your costs and know exactly the cost of fuel (as a percentage of your total cost), so that when you adjust the FAF you only change the percentage cost of the fuel.
For example, if your fuel cost is 15% of the total operating cost and if fuel increases by 2% you only change the 15% by 2% (not the total).
If you need help with this, the membership of RTANZ has access to area executives who can help. Also, on our website we have a tool to show you what you have to do and how to apply the FAF. Please, if you are a member, check it out.
Last month I talked about what the RTANZ membership wanted from us as an organisation, and I provided some background on the things we are doing to assist the membership.
I also said that we needed to have a voice around these issues to support the membership – and I would like to draw to your attention a good example of why this is so.
I believe we’re about to see some significant changes in our industry. Not only will we be facing a changing sector over the next few years, I think that some of the Government’s proposed policy will have a profound and far-reaching effect on us. Ideally, we need a strong and single body or voice to deal with this.
One area to consider is the labour reforms that the Government is entertaining – namely national awards and collective agreements over entire sectors.
Don’t get me wrong, I think that we should have good pay rates and those in our industry are attracted by both the great conditions and the pay – I just don’t think that national awards necessarily deliver this.
We don’t have the Government setting the transport rates; we live in very competitive times so we need to have a mechanism across the sector to set wage rates to be able to manage competitively and remain profitable.
This is where your association can have a unique place. It would be even better if it was one voice and was seen as an authoritative body – so that it can engage on these issues.
If the sector and the bodies advocating for them are seen as fragmented, then we are starting on the back foot. This is a very good example of how we need to think about looking forward to the future, not backwards to the past.
Going forward, I don’t think we can just cruise along with
“business as usual” – we are not going to be operating in “usual” conditions: We are clearly operating in a changing world.
This is going to be huge for us and we must have an industry-wide strategy.
It is clear that change will happen. But are we ready for it?
Road Transport Association NZ chief executive Dennis Robertson