Oil prices hit transport costs

Express Data managing director, Ross Cochrane, attributed its ability to wear higher transport costs to the rise and rise of the Australian dollar against the US greenback. At the time of press, the Australian dollar was trading at $US0.96.

Cochrane cited a 4-5 per cent rise in transport costs over the past year.

"The strength of the Australian dollar has helped to minimise the visibility of this change - it is increasing faster than the increase in the [fuel] surcharges. All the technology companies are bringing in stock from the US or dealing in US denominations, so prices have lowered as a result," he said.

Rapid commoditisation of hardware lines, such as plasma and LCD screens and flash memory, was also bringing prices down, Cochrane said. Express Data is now negotiating with its logistics providers to leverage its volumes and get the best possible buying breaks. Cochrane ruled out introducing a fuel levy.

"We are trying hard to absorb the cost, but in the end there's an increase in the cost of goods being launched and that ends up flowing through to the market place," he said.

Another indirect market factor affecting logistics was the rise in ebusiness transactions, Cochrane said.

"People are processing smaller orders and more often," he said. "That has an impact on freight. It's up to our customers to decide on the mode of delivery and if it's viable to pass those costs on to their customers."

Altech Computers managing director, Antony Sheen, agreed the strong Australian dollar was compensating for any increased costs in other areas and added his company was not paying more for transport. Cellnet managing director, Stephen Harrison, also hadn't seen any impact on its freight costs as yet but expected soaring oil prices would trigger higher transport costs down the line.

Harrison ruled out imposing a fuel levy further down the track but said if logistics charges rose signifi cantly it would consider passing those on to customers. ED's Cochrane predicted the real implications of higher fuel costs would depend on the dollar's performance.

"If oil goes up to $200 a barrel, and the Australian dollar starts to weaken, then we're going to feel it," he said.

While speculation could push the price of oil to $US150 a barrel, CommSec's Sebastian said it was not sustainable due to the global economic slow down.