Stock cartage strain near breaking point
It’s an industry headingdowna road to disaster, writes JON MORGAN.
It’s the horror crash in rural New Zealand, shocking pictures of which will flash around the world – a truck and trailer overloaded with sheep drifts wide on a turn and crashes into a school bus. The bloody bodies of dead and dying children and animals are strewn across the road.
For Jason Roebuck, chief executive of Hawke’s Bay-based Farmers Transport, it is a nightmare that disturbs his sleep.
‘‘It is where the industry is heading,’’ he says.
‘‘This industry is unhealthy. Very few carriers can be making a profit and because of the paucity of earnings, some are having to overload and drive longer hours to compensate.’’
‘‘Actually, it’s worse than that,’’ says the head of the police’s commercial vehicle investigation unit, Inspector Gwynne Pennell.
‘‘The number of stock truck rollovers is already a sad reality,’’ she says. ‘‘Hardly amonth goes by when there isn’t a rollover somewhere.’’ She says the drivers should not carry all the blame. ‘‘They’re under pressure. ‘‘Driving these trucks is a really, really tough skill to exercise with very little latitude for error. And it is happening because no-one is prepared to pay a fair price.’’
Schedule prices for stock cartage to meat works are based on a price per head and the distance they travel to works.
They are set by meat companies and have changed little in the past four years.
However, they don’t take into account the costs of the carriers’ travel to the pickup point and often for less than a full load.
The carriers say it is this inequity, more than anything, that is causing financial hardship.
A system based on the weight and size of the animals has been introduced by one operator for work other than for meat companies. It has the support of other carriers, the Road Transport Forum and Pennell.
But the meat companies appear to have no desire to change.
Affco operations manager Rowan Ogg says transport operators are not raising the issue with him.
Progressive Meats and Ovation New Zealand owner Craig Hickson says a change could be possible ‘‘in principle’’.
‘‘The key for us is that the rates we agree to are competitive with those of our competitors and, of course, we’re reluctant to see any increase.
Some operators do not want to be named, for fear of losing meat
Little profit: company business. They tell of carriers ingratiating themselves with stock agents to get work, even offering bribes, including cash payments, fuel cards or discounted own cartage.
One carrier is known to have been asked by an agent to carry a full load of sheep from Hawke’s Bay to Auckland for free. He finally agreed if the agent paid for the fuel and road user charges.
‘‘It was: ‘Do it or you get no more work from me or any principal I work for, including meat companies’,’’ a carrier says. Affco is named as the toughest. Jobs once worth $2000 are now being done for $1000. ‘‘We don’t have a choice. They have a lot of work and we’ve got to keep operating,’’ one carrier says.
Ogg says Affco looks for backloads, trucks that have delivered a load and don’t want to return home empty. ‘‘People who are prepared to carry a backload for us and charge us a backload rate are more likely to get the work than a person who’s going to charge us a one-way rate.’’
Adding to the sector’s dysfunction is a rogue group of owner-drivers and new entrants lacking financial sense. ‘‘There are a lot of fools in the industry working for nothing,’’ says Bruce Stephenson, owner of the 37-truck Stephenson’s Transport, based at Waipawa.
He says these operators have allowed the meat companies to dictate terms. ‘‘The backload rate becomes the normal rate. It’s a very competitive industry and I suppose if we don’t want to be in it, we should get out.’’
Banks lending 100 per cent finance to new entrants in recent years have aggravated the problem, says Paul Parsons, the Otorohanga-based manager of three companies operating 65 stock trucks.
‘‘They’ve stopped the lending now, but it will take four or five years before these fly-by-nighters are shaken out of the industry.’’
It is ‘‘very tough’’ and no-one can be making money, he says.
‘‘Costs are going up all the time and the works don’t want to pay.’’
Bigger sheep and smaller loads are themain problems.
Parsons remembers in the 1980s being able to fit 600 fat lambs on three-deck truck-and-trailer units. Now the units have four decks, but because the lambs are bigger, only 550 can be loaded.
Also in the 1980s, he used to get $3.75 a head to cart lambs from Te Kuiti to the Tomoana works in Hastings.
‘‘We’re getting virtually the same money now and fuel was about 50 cents a litre back then.’’
The cost of parts has risen 20 per cent in the past four years, labour rates have gone up and compliance costs are increasing.
‘‘But what can you do? You’ve got all this money invested in all this gear. You can’t walk away.’’
In Whanganui, Brendan Molan, of Grange Transport, describes the ‘‘headage’’ rate as ‘‘pathetic’’ and says he is paid less than he was four years ago.
‘‘We’re working harder for less. What money we make on one job we lose on the next. It’s not a good time to be in the business.’’
He knows of operators who undercut others because they are deliberately running their trucks into the ground.
Another carrier, who did not want to be identified, calls this the ‘‘liquidation runout scenario’’.
‘‘They have no intention of remaining in business. They take as much cash as they can and run the truck until it breaks down.’’
Operators say the industry could be made more efficient by greater collaboration between carriers and the meat works when they have part-loads.
Opportunities exist for greater efficiencies, says Beef + Lamb New Zealand chairman Mike Petersen. ‘‘There are a lot of empty trucks on the roads. I know of people carting store lambs down to the South Island and coming back empty, while other people are sending empty trucks to the South Island to bring back bulls. That doesn’t make sense.’’
He suggests a website be set up, where empty trucks could be paired with customers.
Road Transport Forum chief executive Ken Shirley says the industry’s self-destructive behaviour must change.
The forum does not like to get involved in commercial activities, but ‘‘if our members wanted us to enter into negotiations with the meat companies, we would’’.
‘‘The meat companies have to look at the sustainability of a sector they depend on. If it falls over, it will not help them.’’