Major blow for Coles and Woolworths supply chain

A trucking company supplying all the major Australian supermarkets has collapsed, sparking fears it could be the first of many amid the soaring cost of doing business.

Sydney-based Scott’s Refrigerated Logistics – which is the nation’s largest cold-chain logistics operator – went into voluntary administration on Monday.

The business is a key mover of goods for Coles, Woolworths, Aldi, IGA, and Foodbank Australia – with Scott’s management, administrators KordaMentha, and supermarket executives set to hold crisis talks this week.

Inflation, global supply-chain disruptions, wild weather, worker shortages and the Reserve Bank’s nine consecutive interest rate hikes have not only hit consumers but have also crippled many businesses. 

KordaMentha is now seeking a buyer for the distressed company, which has 1500 workers, with hopes its significant assets like its truck fleet and warehouses will make it an attractive purchase.

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Australia’s largest cold-chain logistics company Scott’s has gone into administration

‘It’s been a tricky couple of years in the logistics space for many companies and Scott’s one of them,’ KordaMentha’s Scott Langdon told Nine’s Today Show on Tuesday.

Mr Langdon indicated he was confident of finding a buyer for Scott’s is already ‘inundated with people that have got interest to buy it’.

Insolvency Australia, which produces the half-yearly Corporate Insolvency Index, says businesses are under strain.

‘We started 2023 just as we finished 2022, with rising interest rates, surging cost of living, labour and materials shortages and the tax office continuing its tougher debt collection stance,’ director Gareth Gammon said.

In the first half of 2022/23, external administrator and controller appointments rose by 62 per cent, compared to the same period last year, the index published on Tuesday shows.

Meanwhile, the Transport Workers’ Union says transport sector operators had been left to fend for themselves in a broken market.

‘Retailers are reaping the gains from razor-thin margins while operators and drivers collapse under the strain,’ National Secretary Michael Kaine said.

The TWU said it was working with KordaMentha to ensure workers are prioritised in what it hopes will end in a sale to a ‘responsible’ buyer.

Coles said it was working to minimise the impact to consumers.

‘We’re aware of the challenges being faced by one of our transport providers and we are working hard to provide support and minimise the impact this might have on customers and product suppliers,’ a spokesperson said.

The company supplies all the major supermarkets with grocery executives holding crises talks this week (pictured: shoppers struggle with empty shelves at a Sydney supermarket)

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Woolworths has delivered a sharp jump in first-half profit but warned of slower earnings growth in coming months as customers adjust their shopping behaviour amid high inflation.

Chief executive Brad Banducci noted consumers were switching to cheaper private label groceries and canned food.

‘Inflation is continuing to affect the way that customers shop but the overall impact on our business at this stage remains modest,’ he said on an investor call.

‘Inflation is coming down but not as quickly as we would like. We remain very focused on ensuring that customers can get their money’s worth through our various programs of prices drops, low-price specials, personalised offers and range curation.’

Australia’s top supermarket operator on Wednesday reported first-half net profit of $845 million from continuing operations, a 24.9 per cent increase from a year ago.