A garbage truck crash in Adelaide that killed two people on Monday has triggered nationwide delays to municipal rubbish collections after ASX listed waste services company Transpacific pulled its entire fleet of trucks off the road.

The company said it had voluntarily grounded its entire truck fleet, reported to be as many as 2800 vehicles, as it conducted its own internal investigation into “and satisfy ourselves, the police and regulators of the roadworthiness of our fleet and the adequacy of our maintenance program.”

Transpacific and its subsidiary Cleanaway provides collection services to around 100 councils in New South Wales, Queensland, South Australia, Victoria and Western Australia.

“This is not a decision we have taken lightly, however we believe it is the right thing to do given the serious nature of Monday’s accident,” said Transpacific chief executive Robert Boucher.

“The driver had undergone thorough safety training prior to being cleared to drive our truck. He remains in hospital in a critical condition. Again, we reiterate that our thoughts and sincere condolences are with the family and friends of the deceased.”

The tragedy and the scale of disruption to council waste collection services have cast a spotlight on the well-established practice of collective procurement by councils to keep down costs, which is generally green-lighted by the Australian Consumer and Competition Commission.

While the practice is supposed to benefit clients and suppliers by achieving discounts through economies of scale, unions have for years cautioned the mechanism could result in unsafe practices because of its effect in driving down costs.

“Local government are the top of the garbage collection supply chain,” said Tony Sheldon, National Secretary of the Transport Workers Union which represents truckies.

“They have a responsibility to reduce the economic pressure on companies and drivers, and help reduce the risks on our roads.

“It’s time all political leaders – from all parties and the independents – supported action to ease the economic pressure on drivers and cut the toll of deaths on our roads.”

Contracting out waste collection and management services has been a well-established part of council procurement for decades and is capable of driving down costs because local governments do not have to heavily invest in capital assets like truck fleets.

Although efficient, the practice has also allowed local governments to reduce the clout of unions in the sector because many councils no longer directly employ garbos.

However a number of inner metropolitan councils, like the City of Sydney, still retain their own fleets and collection staff because of sheer urban density of the inner city.

Transpacific now says it is gradually resuming services and “will be fully operational over the next week, following discussions with the regulator.”