A transport company that supplied all of Australia’s major supermarkets is being wound up after a buyer could not be found for the floundering business – with 1,500 employees now laid off.
Sydney-based Scott’s Refrigerated Logistics – the country’s largest logistics provider – went into receivership on Monday and staff were told Friday afternoon that they had been laid off.
Investment and advisory firm KordaMentha informed staff that a buyer had not been found in time for the struggling company.
Scott’s now owes up to $50 million in workers’ rights, The Australian reported, which will be funded by the government’s severance package.
Scott’s is a major mover of goods for Coles, Woolworths, Aldi, IGA and Foodbank Australia.
The supermarket giants immediately launched contingency plans to minimize disruption to their customers.
Coles and Aldi, both of which make up about 18 percent of Scott’s sales, have arranged for other carriers to transport their products.
Scott’s Refrigerated Logistics, Australia’s largest cold chain logistics company, has been liquidated
The company’s fleet of 500 trucks and 24 cold stores will also be sold in the liquidation process.
It is believed Scott’s could have been sold before the collapse as a measure to stay afloat, with companies such as Lindsay Fox’s Linfox, ASX-listed Lindsay and Toll Global reportedly showing interest – but any potential sale fell through .
Inflation, global supply chain disruptions, stormy weather, labor shortages and the Reserve Bank’s nine consecutive rate hikes have reportedly weighed heavily on the company.
The Transport Workers’ Union says transport operators have been left to fend for themselves in a broken market.
“Retailers are benefiting from razor-thin margins, while operators and drivers are succumbing to the pressure,” National Secretary Michael Kaine said.
The TWU had hoped that the company would be sold to a “responsible” buyer and that employees would be given priority in a deal.
The company has laid off about 1,500 employees and will have to sell its fleet of 500 trucks
Scott’s supplies all major supermarkets across Australia either directly or through other distributors
An Aldi spokesperson said: ‘Our thoughts are with the employees directly affected.
“We are convinced that the high demand for talent in the logistics industry means that the employability of Scott’s employees is extremely high.”
Aldi said they had hoped the “challenges Scott’s faced could be overcome, saving jobs and maintaining competition in the road haulage industry.”
“Following the challenges presented by Scott’s Refrigerator Logistics this week, we have worked with our existing logistics partners to ensure that the 3 percent of Scott’s business managed for Aldi now moves to other logistics partners,” said the spokesman.
“As we transition volume, we will work to minimize the impact on Aldi customers in terms of product availability and to ensure continuity of product collection from our valued supplier partners.”
Last year, Scott’s used their truck fleet to take out nearly $100 million in loans, but it wasn’t enough to save the company.
Their most recent financial report, which covers a 16-month period ending June 2021, shows the company had revenues of $542 million but lost $7.3 million.
Coles and Aldi – which both account for about 18 percent of Scott’s business – have initiated contingency plans to deal with disruptions in their supply chain
Insolvency Australia, which publishes the semi-annual Corporate Insolvency Index, says companies are under pressure.
“We just started 2023 as we ended 2022, with rising interest rates, rising costs of living, shortages of labor and materials and the IRS continuing its tougher collection policy,” said director Gareth Gammon.
Coles said it was working to minimize the impact on consumers.
“We are rapidly transitioning to our other transportation partners and are closely monitoring deliveries in our supply chain. We are working hard to minimize disruption to customers and our farmers and suppliers as deliveries increase,” a spokesperson said.
Woolworths said it was working with inventories to “get key product into our distribution centers.”
