- National Transport Insurance
COVID-19 and transport outlook: Challenges and opportunities
The short- to medium-term outlook for the transport industry is good, with agriculture and resources continuing to perform strongly and online retail driving considerable delivery volumes.
We foresee three significant challenges from now until 2025–26: driver shortages, fuel prices and traffic flows.
This blog is the second in a two-part series. The first explored COVID’s impact on the transport industry to date. This part explores the trends that are likely to play out over the next few years.
Critical challenge 1: Driver shortages
“The shortage of drivers is the next big challenge,” says Marty Corry, NTI’s Transport and Risk Engineer. “How do businesses develop a people strategy to attract and retain good drivers? That’s going to be a key concern.”
There are currently more than 20,000 truck driving jobs on SEEK. Driver wages have increased – for example, tanker drivers’ pay has risen by around 30% over the last five years.
Many operators are focusing on licence class rather than experience. Some are even offering to pay for employees’ licence upgrades.
Doing so brings risks and opportunities. Less-experienced drivers are a greater insurance risk, and taking experienced drivers off the road to train or ‘buddy’ new drivers can reduce productivity in the short term.
The solution: fix your recruitment pipeline. Become involved in community and industry events, invest in training and demonstrate to your drivers that you want to help them build a career.
Critical challenge 2: Fuel prices
Early in the COVID pandemic, fuel prices in Australia were relatively low. No more. TransEco’s latest Road Freight Cost Outlook Report (Sept 2021) shows that prices will likely be volatile for the next five years.
Over that time, net cost to operator for diesel fuel is expected to increase to 107 cents/litre by 2025–26 (from 93 cents/litre in 2020–21). That’s a 2% average annual increase.
Yet prices surged in 2021, showing the market’s volatility. “The biggest challenge right now is higher energy prices,” Marty notes.
“There’s about 28 cents a litre difference from January 1 to now. For a line haul truck doing 4,000 kilometres a week, that’s about $560 off the bottom line [$29,120 per annum].”
The solution: Review your fuel procurement practices and procedures to ensure you’re buying at the right price, time and locations. Train your drivers to drive smoothly and keep all vehicles well maintained. Invest in more fuel-efficient vehicles and explore hybrid and electric options where feasible (i.e. for light vehicle and fleet upgrades).
Critical challenge 3: Traffic flows
The lockdown phases of our governments’ responses to COVID saw dramatic decreases in road traffic, with up to 50% fewer light vehicles on the road through mid-2020 compared to 2019.
“Efficiency rates went up because there was no one else on the road,” says Marty. “And incidents went down. But we’re going to see the end of lockdown, school holidays and one of the biggest harvests on record overlap.”
“So congestion will go up, and incidents will go up because you’re going to have people interacting with heavy vehicles on busier roads.”
Add to this traffic return the significant boost in spending on infrastructure projects, and our roads will likely become even more congested before they ease again.
The solution: maintain driver skills and invest in safety and fatigue management (training and equipment).
As noted, there are plenty more challenges facing the industry. Prudent operators will watch for opportunities around:
- Renewable energy to power depots and other facilities.
- Hybrid and electric vehicles as they become viable light vehicle and fleet options.
- Vehicle shortages resulting from disrupted global supply lines.
- Rising operational costs as a matter of business-as-usual management and optimisation.
Keep your eyes on the road
As the boom recedes, some businesses may cut corners on safety and maintenance, but that’s a false economy.
Put safety and driver wellbeing first. You’ll position your business to avoid the critical risks facing the industry and prosper in the years to come, no matter what comes down the road.
This blog is Part 2 of a two-part series. Part 1 explored COVID’s impact on the transport industry to date.