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The latest Business Risk Index report from CreditorWatch reveals that diesel prices have surged by 36% within a fortnight, now reaching as high as $3 per liter.
This sharp increase poses a significant challenge for the road transport industry, a sector heavily dependent on fuel.
The report highlights that the trucking industry’s profit margins are under immediate strain because fuel expenses account for 40% of their operating costs.
“Larger transport companies might mitigate this impact through fuel surcharges,” the report notes, “but smaller companies, which are the majority in this sector, often lack the leverage or contractual leeway to do the same.”
Consequently, many of these smaller firms might have to absorb some of the increased costs directly, potentially leading to a decline in their cash flow.
The industry is quickly emerging as a “critical pressure point” after already experiencing pressures from fuel and insurance costs, driver shortages, compliance and increased competition from low-cost foreign companies before the global conflict, the report said. 
CreditorWatch’s latest data found trucking is one of the most stressed sectors in the economy with 7.1 per cent of all businesses going under last year, up from 6.2 per cent the year before.
Many businesses are expected to become insolvent this year, with more to come if high fuel prices remain.
The National Road Transport Association warned businesses were already shutting their doors under the weight of rising fuel costs.
“Some of our members are telling us they simply cannot keep going,” chief executive Warren Clark said.
“We are seeing long-term operators parking their trucks and walking away from businesses they’ve spent years building.”
Clark said the full impact of rising fuel costs will not be felt until April 21, when the fuel card bills for this month start landing.
“That will be the moment many operators realise they simply can’t absorb these costs any longer,” he said.
This is expected to create flow-on effects across many other sectors that trickle down to the consumer.
“The road freight sector’s centrality to the broader economy, underpinning agriculture, construction, manufacturing and retail, means stress in this sector has implications far beyond its own balance sheets,” the CreditorWatch report said.
Clark said this could lead to higher prices for groceries, fuel and essential goods.
“When trucking businesses collapse, supply chains suffer, and Australian households pay the price,” he said.
The federal government has been urged to temporarily remove the road user charge for heavy vehicles and activate disaster recovery funding arrangements.
“The time for talk is done. What we need now is immediate, decisive action,” Clark said.
“This is not something small operators can absorb or pass on. It is an external crisis, and it requires a government response.”
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