A transport industry body says labour and fuel are pushing up the cost of doing business and operators must lift their prices or risk collapse.

The Victorian Transport Association (VTA) has used its latest annual cost index to call on operators to increase their rates, with the price of business in the trucking industry increasing by 2.04 per cent this year.

Tough times are being felt across the industry, according to VTA CEO Neil Chambers. He says now is the time to tighten the belt, as even the bigger players feel the strain.

“Freight customers must accept that justifiable transport cost increases need to be passed on in the supply chain,” Mr Chambers says.

“If this isn’t accepted, I’m afraid that we will witness more transport company financial failures in the industry in 2014, a reduction in the quality of transport services and diminished competition in the marketplace.”

He says labour costs may be even higher than the VTA estimated.

“We acknowledge that labour rates for individual companies may have risen even more than reflected on the VTA cost index due to more generous enterprise agreement outcomes,” he says.

“Monitoring by the VTA of enterprise agreements ratified by Fair Work Australia in 2013 shows an average increase in labour rates of over 3 per cent per annum, and some being recorded over 4 per cent.”

The chief of the transport association said several more factors have combined to paint a stormy horizon for some firms.

Chambers says an increase in WorkCover premiums, a 13.55 per cent fuel price increase in one year and a reduction in the fuel tax credit are all compounding the issue.