How transport can combat rising costs like a pro

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There have been many challenges for transport operations during a prolonged period of rising costs, but NTI understands how to support businesses to keep them moving

RISING COSTS in the transport industry are a fact of life for commercial operators, and it seems clear that things like the price of fuel and labour, and the cost of parts and equipment, will remain high for the foreseeable future. As a specialist in transport and logistics insurance, NTI is keenly aware of how these challenges can undermine the pursuit of best practice for some operators. Ben Johnson, NTI manager – repair management and assessing, says higher operating costs can interrupt investment, for example in labour, technology or new equipment. “Higher operating costs can hinder investments in things like technology and company culture, which can act as a roadblock to businesses looking to implement safety initiatives,” Johnson says.

The vehicles, vessels and equipment NTI’s customers rely on have become safer, faster and cleaner. The cargoes they carry are now more delicate and time-sensitive than ever before. With over 50 years’ experience in the insurance industry, NTI has always been successful in finding new ways to keep its customers moving, across the heavy vehicle, mobile plant and equipment, and marine industries. Its combination of tailored products, experienced people, accredited repair and recovery networks and industry advocacy has seen NTI ranked as Australia’s #1 specialist insurer. Yet insurance is just a piece of paper, a promise. It’s not until you really need an insurer that you understand its point of difference – the NTI Difference.

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Value of used truck resales skyrockets in three years

Feb 2023

“We’re proud of our long-established relationships with manufacturers. On some occasions we have even worked with them to source parts from a brand-new vehicle waiting to be sold”

Ben Johnson, NTI

“Higher operating costs can also affect the borrowing capacity for these businesses to purchase new vehicles as well.” This perpetuates a negative cycle as older vehicles break down more, increasing risk and decreasing capacity if they are out of action. They also cost more to operate. The ever-present skills shortage across the transport and logistics sector also impacts the bottom line as businesses bear the cost of wear and tear on equipment and additional training to ensure the safety and competence of employees. “Whilst training and upskilling drivers is an investment, it’s exacerbated by the current economy, especially for smaller to midsized operators,” Johnson says.

NTI, as Australia’s largest specialist insurance provider, offers some of its own distinct advantages. Its NTI Accident Assist program gets vehicles back on the road faster as well as reduces the stress of a crash and its aftermath for insureds. “Our national authorised Premium Repairer Network has automatic authority to commence work on vehicles that aren’t a total loss,” Johnson says. NTI is rare among insurance companies in terms of its in-house capabilities, and those include the supply of parts for a large percentage of repairs, he explains. “It’s another differentiator when it comes to containing cost. “We’re proud of our long-established relationships with manufacturers. On some occasions we have even worked with them to source parts from a brand-new vehicle waiting to be sold.” These methods get around the problem of waiting for a part or an assessor report that can take days or even weeks, resulting in major losses for commercial motor operators that only make money when their vehicles are on the road working for them. It’s just one of the advantages of partnering with an industry specialist. “We are able to offer customers a range of repair options to help get them back on the road sooner, from our Premium Repairers through to our Local Repairers and Concierge service for driveable repairs,” Johnson says. Independent research has shown the use of such systems as automatic authority and centralised parts procurement through an NTI Premium Repairer results in average time savings of around nine days in the repair process compared what industry competitors can offer.

This keeps second-hand prices high due to irreplaceability. Historically, brokers could automatically depreciate the value of older vehicles when renewing an insurance contract, but much more attention needs to be paid to the market value these days to avoid underinsurance. Johnson sees underinsurance as having peaked last year in the transport industry as brokers learned to adapt. Now, as used vehicle prices fluctuate, the danger of overinsurance is a possibility. “It’s crucial for brokers to look at the market, the make and specifications of the vehicle and make sure they're putting an accurate sum insured on it,” he says. While Datium Insights Monthly Used Truck & Equipment data shows the average cost of a used truck more than doubled from January 2020 to March 2023, the increase in cost of repairs at NTI has been much more subdued over a similar period, significantly adding value to its proposition to transport companies looking to control costs.

NTI policies also have a number of features that contribute more indirectly to the bottom line. “We provide a range of important driver assistance services, like trauma counselling and medical support, after an incident,” Johnson says. “We can also engage our crisis communications team to manage reputational risk and provide external brand management support, essentially, to help a business protect their reputation after an accident.”

This aspect of genuine concern for the industry and its people is one of the things that make NTI such an enjoyable company to work for, he says. “Insurance is like a promise. At NTI we go above and beyond to deliver on that promise, as much for our brokers as our customers. “Our level of genuine care and concern goes beyond just the operational claims side. As part of the industry, we have an intimate understanding of what the person on the other end of the phone may have experienced, especially when there’s trauma involved.” As a large company with access to a wide range of data, there are many examples of how NTI gives back by making this intellectual property available to the industry to improve various practices. “We’re always delivering stats back on how incidents occur, and we use the data that we capture to go back to industry and offer insight into how we can work together to make industry safer and more sustainable,” Johnson says. He cites NTI’s recent dairy tanker safety initiative in which NTI used its own data to improve accident rates for statistical outliers such as milk tankers. “We want to make the transport industry, as a whole, a better place to work in and roads safer for all users.”

Trucks passing through tunnels. Transport cost.

The NTI extra mile

NTI delivers beyond the bottom line

Published 04 Dec 2023

“It’s crucial for brokers to look at the market, the make and specifications of the vehicle and make sure they’re putting an accurate sum insured on it”

Ben Johnson, NTI

Used truck resale value growth in Australia

Value growth since January 2020

Month-on-month growth

Mar 2023

Apr 2023

May 2023

Jun 2023

Jul 2023

Aug 2023

Sept 2023

20%

40%

60%

80%

100%

120%

-20%

Source: Datium Insights Monthly Used Truck & Equipment Update

Rising cost of commercial vehicle repair (parts and labour)

Cost increase:

Source: NTI

End June 2023 vs end June 2022

+6%

End June 2023 vs end June 2019

+22%

Making sense of mixed signals in commercial motor

There is no doubt that some costs have increased more than others, and markets are operating at different speeds in terms of price rises. The prices of used commercial vehicles skyrocketed during the pandemic and are still high due to the long wait times for new vehicles. “Across many manufacturers, we’re seeing waiting times of up to 2025 and beyond for a new truck,” says Johnson. The issue is magnified with specialist vehicles as it’s more difficult to source components for these. “It’s not just about buying a new vehicle; it might actually [involve] getting the body built as well – it might be a rigid truck with a fridge body on the back. The customer might be waiting for the fridge body to be built as well,” Johnson says.

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“It’s crucial for brokers to look at the market, the make and specifications of the vehicle and make sure they’re putting an accurate sum insured on it”

Ben Johnson, NTI

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About us

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People

Specialty

Best in Insurance

Resources

Risk Management

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