Farmers fear the collapse of a national freight company could impact fresh produce delivery across the country.
- Scott’s Refrigerated Logistics entered voluntary administration on Monday
- The National Farmers Federation has raised concerns the collapse could impact fresh produce delivery
- It’s Australia’s largest cold chain refrigerated logistics company and employs about 1,500 workers
Scott’s Refrigerated Logistics, which has depots in every mainland Australian state and employs about 1,500 workers, entered voluntary administration on Monday.
It’s Australia’s largest cold chain refrigeration logistics company that delivers for supermarket giants Coles and Aldi.
National Farmers Federation chief executive Tony Mahar said news of its closure came as a shock.
He said he was concerned about the potential impacts on the transport and delivery of fresh produce.
“The fact the collapse of a single company can disrupt such a large component of Australia’s food supply chain demonstrates the severe issues Australia has with increasing market concentration in our supply chains,” he said.
“We hope the receivership process can resolve this company collapse quickly to allow a return to the transport and delivery of fresh produce from farmer to consumer.”
KordaMentha has been appointed receivers.
Freight industry impacts
National Road Transport Association chief executive Warren Clark said the flow-on effects would be felt across the whole transport sector, right down to the consumer.
“People will pick up the work but there is still going to be disruptions to the freight chain and it’s those disruptions that the consumers will feel right through the whole system,” Mr Clark said.
“It just shows the amount of pressure that’s on the transport and freight sector, and that pressure is coming from the top.”
He said the industry operated on an average profit margin of 2.5 per cent which, combined with other factors, was hurting business.
Along with a driver shortage and outdated infrastructure, the biggest concern raised by drivers is fuel costs after the government’s decision to halve fuel tax last year.
“Freight just can not absorb any more cost but the pressure keeps coming,” Mr Clark said.
“They’ve highlighted reasons like COVID, floods, roads, driver shortages, wage costs, and fuel costs.
“Where does it stop?”
The collapse has also created uncertainty for the sub-contractors the company used, including small drivers and other companies from which it hired equipment.
“There will be people jostling for contracts,” Mr Clark said.
“There will be sub-contractors that will be worried about what the future is for them, do they stick with that contract or do they move into another area?
“Do Coles come in and take it up and run it itself and kick everyone out of work?”
Support for workers
Transport Workers Union secretary Michael Kaine said the industry was under incredible pressure.
Mr Kaine said the contracts being offered to transport companies to deliver product around the nation weren’t financially viable.
He said transport companies were being squeezed on their contracts to the point they became difficult maintain viability.
Mr Kaine said there were “very high” levels of liquidations in the industry and that transport operators were not in a position of commercial equality.
He said supportive public statements from retailers since Scott’s folded couldn’t “wipe out years of commercial pressuring”.
“Aldi has been pressuring supply chains for years, it’s been the quiet underachiever, the quiet contributor to some of these commercial pressures,” he said.
Mr Kaine said Aldi had not met with the union to discuss making their supply chain safer, unlike Coles and Woolworths.
He said Coles had been constructive since Scott’s folded, offering two weeks of financial support for workers.
In response, an Aldi spokesperson said the comments were “untrue, baseless and damaging.”
“We refute this commentary from the TWU in its entirety,” the spokesperson said.