Making customers pay is part of breaking through the pain barrier

Read time: 3 mins

By Warren Clark

Original Article seen in Power Torque May/June 2023 Edition

Most of us first heard the term “no pain, no gain” as youngsters.

It was probably uttered by a sports coach or physical education teacher at the end of a lung-busting training session, or after the team we’d been thrown into had been flogged by a margin of nightmare proportions.

If you’re a heavy vehicle operator in 2023, the last person you want to hear delivering that ‘no pain no gain’ phrase is your accountant or business manager.

Like it or not, financial pain is a constant and deep-seated feature of the current business environment.

It’s a measure of the industry’s resilience and professionalism that most operators are still in business, given today’s cost pressures.

Most of us understand the term viability to mean the ability to live, grow and develop.

Viability should be the word on everybody’s lips right now – particularly our industry where profit margins for many are so thin.

Coming to terms with the so-called “pain points” is a starting point for any business that’s looking to make itself viable.

NatRoad recently commissioned research by economists to better understand what needs to change to ensure road transport can sustain itself as industry in Australia now and into the future. 

Our research project tapped into more than 170 firms, most of them employing five drivers or fewer and turning over up to $2 million per annum.

Those operators told us – unsurprisingly – that the cost of fuel is their number-one pain point right now.

Some 93 percent rated it as “very important” or “important” – well ahead of compliance with regulation (69 percent) and labor costs (59 percent).

Of course, the relatively low rating for labour costs was likely because our respondents were mostly owner-operators.

But large or small, nobody is immune to high fuel prices.

It’s just that the smaller operators feel that pain the most.

According to the price of diesel fuel in Australia in mid-March was $1.81 per litre, a significant drop from $2 at the start of 2023.

It topped $2.20 in mid-2022 and it’s an issue that’s not going away soon, given the state of the global economy and the ongoing war in Kyiv.

Of course, those financial pain points can be addressed and operators were asked what were the factors in play if they were to succeed.

The top-rated was the ability to pass through costs (such as fuel and tolls) to customers. Some 78 percent of respondent ranked it important or very important.

Others were effective cost control (72 percent), winning/retaining customers through non price factors (59 percent) and having an appropriate pricing policy (58 per cent).

Again, it was no surprise to learn that only eight percent of operators say reducing their carbon footprint is “very important” for them to be viable.

It’s not that they don’t care; these businesses are simply too busy trying to keep their heads above water.

The vast majority of businesses do not even measure their emissions at this stage of the game.

That may have to change – but the ball is very much in the court of the government policymakers.

And the driver shortage? The ability to retain or hire drivers was the second-highest pain point for businesses turning over more than $10m per annum, but rated 11th for smaller businesses, probably again because most of them are owner-drivers.

All this sends a message to government that our industry is at a critical point. We are an essential service and a cornerstone of this country’s economic wellbeing.

Surely we deserve some sort of practical relief in this year’s Federal Budget.