Be ready to take advantage of transport logistics opportunities
Published 02 September 2021
Changes brought by the pandemic have created new problems but they have also opened up new opportunities. Recent survey results show that medium-sized Australian logistics and warehousing businesses have expanded both the size of their operations and in profitability.
The BDO Growth Index 2021 records that in the most recent reporting year businesses in the transport, postal and warehousing sector with annual turnovers between 10 million and 1 billion achieved revenue growth of around 27% each, nearly 3.5 times faster than the market average. These results are likely to be linked to a similar boom in retail sector, via online shopping.
Taking advantage of the increased business opportunities isn’t always just about better utilisation of fleet or buying more vehicles. Take the opportunity make sure any additional work you take on is profitable, and also review all existing work so you can make an informed decision about whether you want to continue servicing some customers.
You should also scrutinise contract agreements to ensure your business doesn’t get stuck with demurrage fees because capacity problems are often due to shipping companies’ deliveries. Delays are common and unpredictable, and when the cargo vessel docks logistics providers may have to move – and warehouse – a high volume of containers in a matter of days. Check your carriers’ liability insurance terms so you are clear about what is and isn’t covered.
To handle this you may increase the size of your fleet and your premises. Current low interest rates and terms of purchase are favourable to growing your assets by accessing low cost funding and interest rates. If you do this be sure to conduct asset audits to make sure you’re insured for the right values.
How your insurance can support business growth
To free up capital for investment and take advantage of favourable terms for buying plant and equipment, as well as enabling your business to ride out lumpy revenue flow resulting from delays, premium funding Is a low cost option and easily handled by your broker.
Business growth also means additional pressure for your staff. You might also have to recruit and train new people, and update operational safety systems. It’s important to continue to meet employment practice requirements and adhere to workplace safety regulations, and consider what will be the right insurance cover to underpin this.
If you expand your business through attracting investment your financier might also stipulate certain insurance cover as a prerequisite, such as management liability and public liability policies.
Alternatively you might expand by buying another business or being bought out yourself. In either case consider arranging for mergers and acquisitions cover to guarantee the value of the purchase and enable a clean exit for buyers or sellers.
To find out more about what our transport industry broking specialists can do to enable your business to keep moving in the right direction get in touch.
Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective.