The Quiet Collapse of Mid-Tier Logistics

 

Why Australia’s Mid-Tier Freight Market Is Unravelling

There’s been a lot of noise about resilience lately. Politicians love the word. So do procurement teams. But here’s the question no one’s answering: resilience from what? And more importantly, resilience with what?

Because if you look closely at Australia’s freight ecosystem, one critical layer is quietly disappearing, and we’re all about to feel the cost.

Not the multinationals. Not the one-man owner-drivers. The businesses in between – the ones too lean to absorb 90-day payment terms, too big to pivot overnight, too stretched to win with scale, and too expensive to compete with subcontractors undercutting on margins they’ll never sustain.

These operators have long been the backbone of domestic freight. Regionally embedded, often family-founded, and usually overlooked, but always turning up. They’ve carried this sector for decades with discipline, consistency, and commitment to service.

These are the businesses that make up the middle of the market,  the steady, regional, often family-founded providers who’ve carried this sector for decades. And one by one, they’re collapsing, merging, or quietly stepping away.

And we are not talking about poor performers here.

And let’s be clear: we are not talking about poor performers. We’re talking about good businesses with disciplined operations, experienced drivers, modern fleets. Businesses that have become unviable, not through failure, but through systemic imbalance.

The commercial model is breaking them.

 

The Impossible Math

You don’t need a spreadsheet to see the problem.

Fuel, insurance, compliance, wages – all up.
Credit terms, contract margins, customer tolerance – all down.

These operators are being asked to run on yesterday’s pricing, take on tomorrow’s risk, and deliver under today’s volatility. It doesn’t stack up. It never did. Meanwhile, larger operators are sweeping up market share, not necessarily because they offer better service, but because they can weather bad terms longer. That’s not competition. That’s attrition.

And when the middle collapses? So does competition, choice, and ultimately, supply chain diversity.

 

The Real Risk to Resilience

We keep talking about sovereign capability, decentralised supply, and building freight resilience.

But when your supply chain is dominated by a handful of players, running high-volume lanes on narrow margins, you don’t have resilience, you have exposure.

You have a brittle system that looks efficient… right until it breaks.

Without the middle tier, we lose:

• Redundancy
• Regional access
• Price competition
• Nimble service in second-tier freight lanes

And once they’re gone, they don’t come back easily.

 

This Isn’t Just a Freight Issue

It’s a capability issue.
It’s a policy issue.
It’s a national interest issue.

We can’t diversify our exports if we can’t move goods cost-effectively across our own country. We can’t strengthen manufacturing if domestic freight costs outpace production margins. We can’t talk about emergency preparedness when we’ve quietly allowed our domestic logistics base to hollow out.

And yet, that’s exactly what’s happening.

Mid-tier logistics is becoming unviable, not because it can’t perform, but because it’s being structurally priced out of participation.

The only ones that will survive are those that are diversified. That’s the edge when you’re not big enough to absorb the rising costs through another part of your business, and not small enough to scale back easily.

 

Where to From Here?

It’s time to stop romanticising “resilience” and start funding it. That means:

• Rebalancing risk: Payment terms that reflect real-world pressures.
• Rewarding performance: Contracts that value reliability, not just price.
• Rebuilding competition: Policy that supports mid-tier participation, not just consolidation.

Because when the middle disappears, we all lose not just operators, but exporters, retailers, consumers, and the economy itself.

If we’re serious about strengthening freight, we can’t just protect the top or prop up the bottom. We need to restore the middle before it’s gone for good.

We need to restore the middle – the layer that gives us flexibility, coverage, and competitive tension. The layer that doesn’t make headlines, but makes the system work.

Because if we don’t, we won’t be talking about resilience anymore. We’ll be talking about recovery.

Sue Tomic

SCLAA Chair  |  Board Advisor – Institute of Transport & Logistics Studies, University of Sydney Business School

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