Australian fuel price hikes concern transport operators

The rising diesel prices are starting again to be a real concern for the viability road transport operators according to Victorian Transport Association CEO Philip Lovel.

“The average price for diesel in February 2011 was 136.76 cents per litre (cpl), compared to 124.19 cpl in March 2010 – an increase of 12.57 cpl or just over 10% in 12 months.” Lovel warned.

“We have all had experience with fluctuating fuel prices and the big effect this has on cash flow. Transport operators rarely recover it from their customers fast enough, and this has resulted in many transport companies going bankrupt. Expect this trend to escalate unless transport companies manage these fluctuations well in their rates and fuel levies,” Lovel said.

“The current diesel price as at 1 March 2011 has hit 142.41 cpl, so we are now starting to see a return to very high fuel prices,” he said.

Lovel urged companies to revisit the way they are recovering rising fuel costs: “Don’t just sit back and think it will go away - it won’t!”

The reduction in the Fuel Tax Credit rate for on-road diesel use is another factor to consider on top of the rising price of diesel at the pump.

The National Transport Commission (NTC) has recommended a reduction in the Fuel Tax Credit rate from the current level of 15.543 cpl to 15.043 cpl from 1 July 2011.

“In January 2009, the Fuel Tax Credit rate for on-road diesel use was 18.51 cpl. So, the rebate available to transport operators will have fallen 18.73% in two years when the latest reduction takes effect,” Lovel observed.

“I strongly suggest that transport operators allow for cost indices to recover this ever-reducing diesel Fuel Tax Credit rate.”

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