Australia’s transport industry is under its greatest pressure in decades…

International expansion, acquisitions, consolidations, insolvencies, defaults, driver shortages, rising costs, and an intensifying race to the bottom on pricing are collectively reshaping the entire sector.

Australia’s road freight transport industry is the backbone of our economy, moving the goods that keep households, hospitals, construction sites, manufacturers and retail chains functioning. But new data shows the sector is now facing structural and financial pressure, unlike anything seen in the past decade

According to Credit Watch’s Running on Empty report, the sector is entering a period of sustained fragility, with business closures, defaults, and cash-flow stress rising sharply. For an industry built on tight margins and heavy capital requirements, the warning lights are flashing red.

A Sector Under Stain: The Numbers Tell the Story.

One in twelve transport businesses, 8.46% nationally, closed in the 12 months to November 2025. That’s a 40.31% year-on-year increase, putting transport closures on par with hospitality, long known as one of Australia’s most volatile sectors.

Business failures are no longer isolated to small, poorly-run operators. Even mid-tier operators with historically “normal” risk profiles are showing elevated failure probabilities. The risk is industry-wide.

State - by - state fragility

• ACT: 14.52% closure rate - the hardest hit market nationally

• Northern Territory: 12.68%

• WA: A relative positive outlier at 5.71%, though stress remains structurally elevated

These closures reflect not only financial pressure but structural vulnerabilities, small markets, reliance on key industries (e.g. mining), long-haul costs and intense competition

The Cost Spiral: Fuel, Finance, and Labour Pushing Carriers to the Edge.

Rising operating costs are the most immediate and damaging pressure for transport operators. The report highlights the combined impact of:

Fuel price volatility

Margins fluctuate violently when fuel surges, yet operators struggle to pass these increases through to customers quickly enough. Many smaller carriers have no fuel levy mechanisms in place.

Higher finance and insurance costs

Interest rates remain elevated, while insurance premiums for heavy transport continue trending upward due to risk profiles and claim environments. This creates an unavoidable cost base that squeezes operators regardless of freight volumes.

Labour shortages + rising wages

The driver workforce is ageing, and fewer new entrants are joining the industry, forcing wages upward and reducing available capacity. The shortage intensifies competition for talent, pushing costs even higher.

Defaults at Record Highs: A Clear Signal of Cash-Flow Crisis:

B2B invoice defaults in the transport sector hit record highs, rising 98.1% year-on-year.

This is the clearest indicator of financial distress:

• Defaults are often the first sign a business is running out of runway

• More than one-third of companies with two or more defaults in 2024 were insolvent within a year.

• The rapid escalation points to deep liquidity shortages and poor buffer capacity across the industry.

For freight customers, this represents risk far beyond unpaid invoices; it’s the risk of sudden service failure, stranded freight, and emergency carrier transitions.

The ATO Debt Bomb: Structural Weakness Exposed.

Transport businesses are increasingly carrying large ATO tax debt, with many exceeding $10,000. Nearly one in four of these businesses became insolvent within the following year.

This pattern highlights:

• Poor financial management

• Low capital reserves

• Inability to absorb shocks

• Growing dependence on delayed trex obligations to fund working capital

Once ATO pressures escalate, operators often delay payments to subcontractors or suppliers, amplifying risk throughout the supply chain.

Competitive Pressures: A Race to the Bottom.

Pricing competition is fiercer than ever. Transport operators now face:

Foreign-backed competitors

Some international carriers operate with lower cost structures or subsidised models, making it difficult for domestic mid-tier players to compete on rates alone.

National carriers are crowding out regional operators

Large players continue expanding into regional and “last-mile” markets traditionally serviced by small family-owned carriers.

Customer pressure for cheaper freight

Despite rising costs, customers continue seeking rate reductions, often unaware of how razor-thin margins already are.

Outcome: a damaging race to the bottom

Operators chase volumes to cover costs, but with margins collapsing, many find themselves trading insolvent without realising it.

Structural Headwins: Problems With No Quick Fix.

Beyond the immediate financial pressure, several structural challenges are reshaping the industry:

A shortage of drivers and skilled labour

The workforce shortage is chronic and worsening

Second-hand truck asset values are collapsing

Prices surged during COVID, then dropped more than 60%, destroying equity and leaving operators with assets worth far less than their financial obligations.

Growing compliance and environmental pressure

New emissions regulations, road user charges, fatigue rules, and safety obligations continue to tighten

Demand remains soft across retail & Manufacturing

Even wth pockets of strength in mining, freight volumes for most sectors remain muted, limiting revenue growth.

What This Means for Businesses that Rely on Transport.

According to Creditor Watch’s Chief Economist, insolvency pressure will remain high through 2026. Customers who rely on transport providers need to treat carrier stability as a critical supply chain risk, not an operational detail.

Key actions recommended:

• Increase monitoring of transport partners’ credit health

• Use invoice defaults and credit ratings as risk indicators

• Diversify carriers to avoid a single point of failure risk

• Ensure contracts include contingency pathways

Carriers collapsing suddenly can cause:

• Missed customer deliveries

• Lost inventory

• Emergency recovery freight (with premium cost)

• Significant reputational damage

The Road Ahead.

The Australian transport industry is navigating a “perfect storm” of financial pressure, compliance burden, labour shortages, and hyper-competition. The rise in insolvencies is not a blip: it reflects deep structural weaknesses.

But it also represents a reset moment

The industry is shifting toward:

• professionalised 4PL and orchestration models

• Technology-led optimisation

• Carrier collaboration networks

• Data-led risk management

• True cost-to-serve transparency

For businesses that depend on transport, now is the time to take a proactive, strategic approach to logistics partnerships

Why Customers Should Be Cautious of “Too Good to Be True” Freight Rates.

In today’s market, heavily discounted or below-market freight rates may look attractive, but they are one of the biggest red flags a customer can encounter. With transport operators facing record closure rates, rising cost bases, high insurance premiums, and escalating defaults, there is no sustainable way to offer ultra-low rates without cutting corners somewhere in the chain.

Often, these prices are propped up by operators delaying tax obligations, skipping maintenance, underinsuring assets, or relying on subcontractors paid so little that service quality deteriorates rapidly.

When these carriers inevitably collapse or walk away from the lane, it leaves the customer exposed, scrambling for emergency freight solutions, paying premium recovery costs, dealing with stranded stock, and facing reputational damage with their own customers.

If a price looks significantly lower than the market, the question isn’t “what’s the saving?” it’s “what risk am I inheriting?” High-performing, compliant, reliable carriers simply cannot operate at unsustainable rates.

The cheapest option often becomes the most expensive mistake when the partner fails.

This is exactly why Deliver Group’s 4PL model exists: to shield customers from unstable operators, monitor carrier health in real time, and ensure every rate is grounded in sustainability, compliance, and long-term performance, never short-term price wins that compromise your supply chain.

Why a 4PL Model Matters Most in Times Like These.

In an environment where carriers are facing unprecedented financial strain, capacity volatility, and rising compliance burdens, the traditional “single-provider” freight model is no longer fit for purpose. This is where a true 4PL orchestration model becomes the most resilient and future-proof solution.

A 4PL is not tied to any one asset base, fleet, or fixed network. Instead, it intelligently manages, coordinates, and optimises a diversified carrier ecosystem, ensuring continuity even when individual operators face pressure or exit the market. With data-led oversight, real-time performance visibility, national carrier redundancy, and proactive risk monitoring, a 4PL can absorb market shocks in a way asset-heavy operators simply cannot.

For Australian businesses navigating today’s fragile transport landscape, now is the right time to partner with a provider who can stabilise your supply chain, reduce risk exposure, and deliver performance certainty even as the industry shifts beneath us. Deliver Group’s next-generation 4PL model, powered by technology, deep industry insight, and a national network of vetted carriers, has been purpose-built for exactly this environment.

If your business is feeling the pressure of transport volatility, now is the time to talk to Deliver. We’re here to help you regain control, reduce cost-to-serve, and build a supply chain that stays strong, no matter what challenges the industry faces next.