Certain terms agreed to during contract negotiations have the potential to cripple unsuspecting trucking firms, this year’s Trucking Australia conference has heard.
Border Express director Jon Luff’s address to the conference touched on areas that he believes can ruin a company if they are ignored.
Luff says ongoing financial stability and safety are the main priorities for trucking firms, but issues that arise during contract negotiations like contingent liability, extended payment terms and taking on risks that customers should bear are important.
"I think while you’re looking at the day to day financials, you’ve got to be aware of the one-off events that can effectively become company killers," he says.
"When we sit down with our customers we tend to be at a reasonably weak position at the bargaining table. We tend to be clinging desperately on to our margins and there is an inclination, I guess, to give up space or give up ground in other areas and I think there is a tendency in our industry to take on risk that belongs to the customers and take it on our as our own to protect our margin.
"I think about things in contract negotiations like taking on contingent liability and the inherent risk with contingent liability not knowing what there is, not knowing what you’re really possibly liable for."
Luff highlighted issues companies should consider before agreeing to extended payment terms in a contract.
"If you agree to extended payment terms that’s a commercial decision, but are you factoring in the sustainability of your business in the event the customer can’t or ultimately won’t pay the outstanding amount?" Luff says.
"And I think another one that has poked up its head recently is around customers looking for us to take on risk around chain of responsibility.
"I think it is one we might give ground in because obviously people here are very aware of their compliance responsibilities and may think they’re taking all reasonable steps, but the reality of it is taking reasonable steps doesn’t protect you from a chain of responsibility case and that can be extremely damaging to your business."
Luff made the comments during a panel discussion on business viability, which also featured former Mountain Industries boss Mike Almond and Simon National Carriers managing director David Simon.
Almond warned trucking operators against becoming hostages to debt, while Simon spoke of the need for the industry to sell itself better.
You can see the original article here http://www.fullyloaded.com.au/industry-news/1503/ata-2015-one-off-events-have-the-potential-to-kill-trucking-companies/