The logging industry has always been one of the most capital intensive industries around and banks have continually complained about high gearing levels and low return on equity for logging clients.
The facts remain that whilst specialised logging machines are not getting any cheaper even with the strong Australian dollar, that the cost of transport assets have remained relatively steady over the past couple of years. Great news for the logging transport operator……… perhaps not. There are still many obstacles to contend with on a daily basis that continue to erode profit margins in the logging transport industry which is already notorious for its tight margins. Other than the obvious fixed costs like fuel, wages, cost of capital, it seems the increasing compliance issues are causing more issues for operators.
To ensure maximum returns, operators requires maximum payloads, maximum trips, quick loading and unloading of freight and limited down time. Unfortunately it’s the increasing compliance on these operators that is making these tasks difficult to achieve. Some of these compliance issues hindering the operators include fatigue management, mass management, school bus curfews, day light curfews, the use of central dispatch systems, and mill opening and closing times. Whilst we all want to see the job done safely, these issues have impacted on the returns of the Transport Operator. The industry has and continues to be cutting edge with technological advances and adopting best practices where appropriate. Introductions of optimisation in harvesting machines and emission control systems and central tyre inflation systems into the transport fleets have been a few such developments. All of these compliance and technology advances have come at a cost to the transport operator and in most cases out of their control.
One of the major areas where an operator can “save money” and enhance efficiencies, is via the soft products associated with a transport fleet, namely finance and insurance. Having competitive and well structured finance and insurance products can often be the difference between making money or losing money. It is very important your finance and insurance broker or banker has access to the most competitive forms of funding, and insurance markets possible. These people must have an extensive industry and client knowledge in order to help articulate a client’s business to a prospective funder/underwriter which in turn will ensure the best products are obtained, every time.
Linx Australia Group, have been heavily entrenched in the logging industry for over 20 years and are well versed with all types of logging, different machine applications, specific timber species and associated logging practices, haul practices and distances, and the many other facets of logging.
Working closely with the major industry bodies, machinery suppliers and dealing with the specialist divisions within the major financiers and underwriters, Linx has developed the ability to secure the “right” finance and insurance products for its clients.
“Whilst the asset finance products are relatively simple, the different structures, conditions, rates we obtain can make a huge difference. We have invested a lot of time into “Lender Education”, taking many of the appropriate lenders on field trips to better understand the industry, which has ultimately benefited our clients enormously. ”…..Rohan Ford.