‘Unsustainable contracts’ are reported to be a root cause for the collapse of Scott’s Refrigerated Logistics. So, what is industry and government doing about it?
The administrators, according to the Transport Workers Union (TWU), listed ‘uncommercial customer arrangements as a result of intense market competition’ as a key reason for Scott’s being placed into voluntary administration.
Other contributing factors are reported to include costs associated with fleet renewal, the operational impact of Covid-19 on the nation’s supply chain, floods and derailments.
Trailer has contacted advisory and restructuring firm, McGrathNicol, for comment.
In light of this disruption to the country’s cold chain, and the impact it might have on other businesses, the TWU has been calling for supply chain parties to sign on to principles for a safer, fairer and more sustainable transport industry.
Almost 200 companies in the sector became insolvent between the 2021-22 financial year.
TWU Secretary, Michael Kaine, said the Federal Government has indicated it will introduce legislation for a fairer way forward for transport.
“Federal Parliament must back in these life-saving reforms,” he said.
To maximise redeployment opportunities, the TWU is working with Global Express, Linfox, ACFS Port Logistics, Ron Finemore Transport, Pacific National and FBT Transwest.
The Australian Government has noted its disappointment with the liquidation of Scott’s Refrigeration Logistics.
“Our thoughts are with the workers and their families at this time of uncertainty,” Minister for Infrastructure, Transport, Regional Development and Local Government, Catherine King, said in a statement dated Sunday 5 March.
“We have been following the situation closely in recent days and are grateful to those supermarkets who have been working constructively with unions and with the administrators and receivers to help minimise the impacts of this situation on our cold supply chain.
“We urge those parties who remain involved in the liquidation to work together quickly to reach an agreement that keeps trucks on the road and food on the shelves.”
In the meantime, the industry is working together to maintain service continuity.
Scott’s Refrigerated Logistics is reported to have 24 warehouses across Australia that must be cleared.
Food is expected to go to waste as a spokesperson at McGrathNicol told Nationwide News that there is not enough storage capacity to relocate stock.
It is understood that creditor meetings in the weeks to follow will address this concern.
Will the Federal Government intervene to attempt to alleviate grocery shortages in this instance?
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