Why is it so Expensive and Time Consuming Moving a Vehicle Interstate?

You can almost understand the cost: humans are expensive, trucks need to be maintained, fuel isn’t getting cheaper and all parties need a slice of the profit etc., however, it’s almost unfathomable why or how the industry thinks taking 10 – 20 working days to move a vehicle 1,500kms is acceptable, when you can drive it in two.

It’s a really good question and it’s something we, ourselves, have questioned and attempted to improve upon a number of times.

Let’s start by saying that, at Car Transport Services, we don’t do the transport but work with carriers to drive efficiencies in their operations. There are always factors at play that are beyond a carrier’s control that, in all honesty, in some cases, we don’t fully understand and are as confused as many others seem to be.

The observations and opinions below come from the perspective of a technology service provider.

We could be wrong but working with one of the largest carriers for the better part of a decade, the rationale for high prices and lengthy timeframes is sometimes justified but often confusing.

Let’s use an example scenario from Bendalong (NSW) to Edinburgh Nth. (SA) as it might help build a picture of what can actually happen and how they contribute to both high prices and lengthy timeframes.

COVID-19 & Staff Shortages

We can’t talk about any form of transport and logistics today without taking into account the impact of the pandemic.

The reality is that, at any point in time, there is anywhere from 20-40 percent of staff in isolation and unable to work. And with the entire industry affected, it is extremely hard to find replacement drivers.

One company seeking to hire drivers (local transport only) is offering over 25% above industry standard rates. Not one person has turned up for interviews.

The lack of drivers is real and, justifiably, a risk that transport companies need to carry.

It affects both the cost and comes with associated delays in carrying out the transport.

Fuel Prices

We probably don’t need to say much more about this. The current price of diesel has added about 30% to the average cost of transport across the board and comes in the form of a fuel levy applied by many companies already running lean.

Regulatory Compliance

There are Laws in place that govern the extent to which drivers of large vehicles can continuously drive without taking a break, and even then, the length of the break is predetermined and proportional to the actual driving time. (See https://www.nhvr.gov.au/law-policies/heavy-vehicle-national-law-and-regulations.)

For long-distances, the Law requires that a driver not work for more than 14 hours in any 24 hour period and, in that 14 hours of work time, need to take at least 90 minutes break.

When you apply the regulatory compliance requirements, it means that 1,500km travel distance ends up taking three days.

It also means that the particular driver won’t get back “home” for another 3 days assuming there is an adequate load of vehicles to return with because the truck is unlikely to be returning with an empty load.

Based on this, if the company has allocated a single driver to do the entire trip (including return leg), it’ll be at least 6-7 business days before they’re able to do that trip again (assuming there is an adequate load for the return leg).

Loading/Unloading Compounds

Instead of allocating a single driver to the full trip and doing the trip as a direct, point-to-point transport, many transport companies will break that trip up into multiple segments or legs. Each leg could be around 500km and is allocated a separate driver so that the driver can complete the leg and return – all within the day.

Additionally, long-distance transport companies tend to operate on a hub-and-spoke model. I.e. Cars are picked up on smaller carriers (2-3 cars each) and delivered into depots. At the depots, they’re loaded on larger carriers (7-12 cars each) to be delivered along longer routes and carried approximately 700kms.

For that Bendalong to Edinburgh trip, the car could be going from Ulladalla to Wagga Wagga to Melbourne to Wingfield and then onto the final destination in Edinburgh. At each location, the car is potentially unloaded and reloaded onto another truck.

This is where the carriers look for opportunities to increase profits and is an area known as “yield management”.

On busy lanes, where the carriers know there is a steady and continuous volume of cars requiring transport, the cars are directly transferred from one truck to another and everything is relatively streamlined. In fact, in this scenario, it is often the trailer that switches truck without actually unloading/loading individual cars.

On less busy lanes, instead of loading a single car onto another truck and sending it directly onto the next stage of the trip, the carriers will look for ways to optimise things so that they’re not running at a loss. (Incidentally, the transport and logistics industries run on very lean margins and any opportunity to reduce costs in the network is always sought.)

This means that a car can sit in a depot until there is a sufficient volume that can be loaded onto a truck for it to be profitable. (For a long-distance leg, that used to be a minimum of about 3 cars but is probably more right now.)

The length of time a car sits in a depot is variable and will depend on the usual supply and demand factors.

If there are too few cars, it’s just not profitable to send the truck on its way. Conversely, if there are too many cars, there may not be enough trucks to carry out the transport.

Larger transport companies tend to have a pretty good handle on how long a car needs to sit in a compound and will automatically factor this additional time into the quote and estimates.

Whilst departures from the origin might happen more frequently, a two-stop route could add 2-3 additional days to the timeframe along the way – sometimes more.

Existing Contractual Commitments

We now get into an area that causes many to ask those hard questions that the carriers often don’t like to answer.

Larger transport companies provide services to more than just individuals looking to relocate a car from A to B.

They strive for consistent volumes that can only be provided by the car brands importing thousands of vehicles at a time, the dealer networks moving cars between dealerships, rental car companies needing to relocate cars to where demand is highest and, to some extent, auction houses.

These types of customers will guarantee volume and in return, the car carriers guarantee delivery timeframes and offer commercial customers preferential treatment.

As an example of the preferential treatment given to commercial automotive customers, we know of one carrier that was given one day’s notice of a ship’s arrival. The carrier had to find the resources to move more than 4,000 cars from the wharf and into a storage location less than 5 kms away.

Any cars left on the wharf for a prolonged period of time incurs a penalty and it is often the carrier that incurs the cost of that penalty.

The circumstances surrounding the short notice were unfortunate (supply chain issues caused by a number of factors) but the reality was that the carrier had to respond with all trucks servicing the greater Sydney area being redirected away from their normal routes or face large penalties from the wharf operators.