York Park Group Thoughts

A trade war between the world’s two largest economies ultimately defines this sector. The era of increasing globalisation appears to be over based on US protectionism and how other nations retaliate.

Australia is a trading nation that has benefited enormously from the ability to export its agriculture and resources. There is no threat of this coming to an immediate halt. There is however a risk of fractured global trade, a US recession and a Chinese slowdown that will impact the amount of goods requiring transportation within and out of Australia.

From a freight and logistics perspective, the sector gained political prominence during COVID, but has slowly slid back to a niche issue that it not a salient issue for Government. The reappointment of Cathrine King as the Minister responsible will ensure consistency, but the sector will have to be more creative to get the political cut through necessary in a larger Labor dominated Government.

Ministers

Don Farrell has been reappointed Minister for Trade and Tourism and Special Minister of State. He has been in both roles since 2022, trade negotiations with the US and the EU will be his priority in the years ahead. The AFR ranked him as number one on their list of the ’10 most covertly powerful people in Australia in 2024’. He is a central figure in maintaining relations between the Labor Right factions, whom he represents and the Labor Left, whom Prime Minister Albanese represents.

Catherine King remains the Minister for Infrastructure, Transport, Regional Development and Local Government. The Member for Ballarat since 2001, Minister King has served in this portfolio since 2022 and will provide continuity for the sector. Reacting to the news, Minister King said “lots of good and important work to get on with as we continue to build Australia’s future.” We can expect the ‘Building Australia’s Future’ which Labor fought the campaign on to feature heavily within her priorities.

Election Review

The operational components of the freight and logistics sector were not a major focus of the major parties in the Federal Election Campaign but challenges highlighted as part of the tariffs and global trade conversations.

The major shift in US trade policy that occurred when President Trump unveiled his tariffs is still to be properly understood. A long-term protectionist approach? A negotiating tool? Or simply revenue raising? Recent changes to the tariffs with China have highlighted the sporadic nature of US policy.

Prime Minister Albanese responded with the announcement of an Economic Resilience Program to support new export opportunities. This however, is focused on producers rather than freight and logistics.

The Economic Resilience Program was the major policy, targeted at exporters impacted by US tariffs. It provides a total of $1 billion of zero interest loans for firms to capitalise on new export opportunities. This is expected to have indirect effects on the freight and logistics industry should it increase the ability of producers to export their goods to new markets.

Labor also announced they would terminate the long-term lease of the Port of Darwin which has links to the Chinese state and would strengthen the anti-dumping regime to safeguard key sectors, including steel and aluminium.

The other major policy of relevance was the 25 per cent uplift in the rate of assistance for the Tasmanian Freight Equalisation Scheme for the next two years. This has a total cost of $95 million. The Select Committee into the scheme recommended in 2024 the rates of assistance be reviewed.

Policy Continuation

What impact US tariffs have on global trade patterns is the dominant question. Central to this is the Chinese economy; should it enter a slowdown, then this would have knock-on effects on its demand for Australian primary products (coal, iron and agriculture). The freight and logistics sector would be heavily impacted as a result.

The counterargument is that 70 per cent of the world (145 economies), now trade more with China than America according to The Lowy Institute. Many of these countries have since been hit with US tariffs, in theory trade with China will only increase as a result.

Truck driver shortages will remain an ongoing issue requiring a policy solution. In Australia 47 per cent of drivers are over 55 years old yet only 5.4 per cent are under 25, with 21 per cent of drivers expect to retire by 2029. This is a significant problem not just for the industry but an Australian economy reliant on road transportation of goods.

Stevedores across Australian ports are enacting automation plans. This has been met with opposition from workers and unions. There are also EBAs across Australian ports that are up for negotiation this year which will be closely watched across the industry.

Last but not least, Inland Rail, the cost of which doubled in two years to $30 billion as of 2023. This is critical to the sectors ability to decarbonise but moving freight by rail remains more expensive, more complicated and still reliant on trucks.

The heavy transport sector makes up 44 per cent of Australia’s total transport emissions. In 2024, the Transport and Infrastructure Net Zero Roadmap and Action Plan was consulted on. The policies that follow on from this will shape the priorities for the sector over the next three years.

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