Food supply delays possible after trucking company’s collapse

Scott's collapse creates potential supply limbo

Shoppers face the threat of empty shelves in some supermarkets after the collapse of one of Australia’s biggest trucking companies.

Major freight company Scott’s Refrigerated Logistics entered voluntary administration a week ago, and collapsed on Friday after failing to find a buyer.

About 1500 people will lose their jobs as the company is wound up.

Sydney-based Scott’s was a key mover of goods to major supermarkets, including Coles, Woolworths, Aldi and IGA. The company has depots in all mainland Australian states and had moved about 8000 pallets a day to major retailers, independent supermarkets, food manufacturers and exporters.

Insolvency firm KordaMentha has warned of possible disruptions for Scott’s contracted supermarkets including Coles, Woolworths and Aldi.

KordaMentha partner Scott Langdon told The Australian Financial Review on Sunday that the company’s receivers could not “provide customers and the public with an assurance that there will not be any disruption to services provided by Scott’s and the continuity of food supply”.

A Coles spokesperson said the big retailer was working to minimise disruption for customers, farmers, and suppliers after Scott’s collapse.

“Our focus remains on the continued availability of refrigerated products in stores and online for customers,” the spokesperson said.

“We are working quickly to transition to our other transport partners and are closely monitoring deliveries across our supply chain.”

Coles started making contingency plans for deliveries last week, after Scott’s went into administration.

Aldi said it had used Scott’s for 3 per cent of its deliveries.

“The supermarket supply chains rely on many interdependent partnerships. Following the challenges presented this week from Scott’s Refrigerator Logistics, we have worked with our existing logistics partners to ensure the 3 per cent of Scott’s business managed for ALDI now transitions to other logistics partners,” a spokesperson said.

“As we transition the volume, we will work to minimise any impact to Aldi customers with regard to product availability, and to ensure continuity of product collection from our valued supplier partners.”

Mr Langdon said KordaMentha could not work towards a typical sale process because of Scott’s fragile financial position.

He said the company could start to wind up as early as Monday afternoon, unless there was financial support from the federal government or other stakeholders.

“This is a very unique situation in my 20 years at KordaMentha,” he told the ABC.

“This is definitely probably the most intense situation that we’ve found.

“Our heart sinks for the employees, the situation they find themselves in, the uncertainty they find themselves in.”

He said, given the financial situation, the company would enter into an “uncontrolled wind-down”.

“That means that in all likelihood we will not be able to produce our services to customers, and the customers ultimately won’t be able to deliver to retailers on a business-as-usual basis.”

But he expected keen interest in snapping up the business.

“We anticipate a high level of interest in this business and its assets, given its significance in the cold chain supply system in Australia,” Langdon said.

“Right now we are seeking support from all customers to give the business the best chance of being sold to a new long-term owner.”

The Transport Workers’ Union said the Scott’s collapse was “a tragedy of a supply chain crisis caused by wealthy clients like Aldi squeezing transport contracts and profiting off the razor-thin margins of operators”.

“There will be 1500 devastated families today as workers stare down the direct consequences of wealthy companies like Aldi squeezing the life out of transport contracts. Scott’s Refrigerated Logistics is a major casualty of an industry-wide crisis that’s pushing operators and drivers to the brink, which will have an enormous impact on our essential grocery supply chains,” national secretary Michael Kaine said.

“Scott’s is not the first transport company to be pushed out of the market by profit-hungry clients at the top of supply chains, and it won’t be the last unless we enact reform to ensure those clients are accountable for fair, safe and sustainable transport contracts.”

Mr Kaine said the federal government had committed to setting enforceable minimum standards in transport.

“The transport industry is at crisis point – we need the federal parliament to urgently pass this reform to save businesses and lives,” he said.

-with AAP

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