Transport operators need to take a close look at their pricing strategies if they are to survive in the current market. Leading transport and business turnaround specialist, Trevor Thornton, says although fuel prices are falling, transport costs are rising faster than the cost of inflation. “The reality is that transport costs actually need to increase. There has been a focus on the fuel price but other costs have been rising and are now not being offset by the declining fuel price.”

Rising costs across the board. Transport operators have been accepting lower margins for some time but it is not viable to keep doing this. “They have been absorbing higher costs for a long time already, and now their businesses are becoming unsustainable. They can’t do that forever.” He warns transport operators are facing rising costs across the board. “Current business conditions require transport operators, who mostly have been unable to recover the full impact of fuel prices, to manage their business closely.”

Targets must be met. He says companies need to recognise the effects of not pricing properly and recovering their increased cost of doing business. Naturally, it is much harder to increase prices in a market with stagnant or reducing demand when customers look at declining diesel prices and think transport costs should also be falling. “Missing targets for a month or two is not usually fatal but action needs to be taken to remedy the problems.” Thornton advises transport operators to gain a closer understanding of their monthly business results using Road Transport Forum benchmarking information to assist.

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