News & Insights

How can supply chain logistics providers stay competitive in Australia today?

Published 21 November 2018

Australia is falling behind the world on freight performance, and this is worse when it comes to trading across borders. No wonder overseas providers are looking to elbow in on the local sector.

supply chain logistics providers2Over three quarters of Australia’s non-bulk freight is carried on roads, dominating freight movements between Sydney, Melbourne, Brisbane and Adelaide. It’s critical to our economy so why are we slower and more expensive than most developed countries?

Along with the rest of the world, national road freight volumes are growing strongly, driven by major manufacturing economies and growing consumer markets such as China and India.

While reduction in trade barriers, growth of financial markets and improvements in communications technology have enabled this expansion of international commerce, last year Australia slipped to 19th place in the World Bank rankings for trade logistics, and ranked 95th for international trade specifically.

According to Infrastructure Australia, some of the issues are related to

  • congestion on road networks
  • constrained access to ports and rail terminals
  • ageing freight infrastructure
  • provision of last kilometre deliveries.

Others relate to resources, including

  • digitisation of operations, requiring capital investment in equipment
  • e-commerce transactions, tracking and communications demanding specialised skills
  • substantial costs of building fit for purpose facilities at ports and terminals.

The rise of integrated logistics providers

As logistics activities have evolved in response to globalisation, industry restructuring, new production processes and technological advances, increased outsourcing of services has encouraged the rise of a new class of providers.

Contractors, brokers, multi-service and integrated logistics providers have expanded their offerings through alliances, partnerships and mergers and acquisitions to offer seamless supply chain services that combine cost savings through economies of scale with timeliness of deliveries that cater to the trend for lean inventories.

Local players include Linfox Transport, Toll Holdings and Mayne Logistics, which have acquired other critical entities, such as port operations, negotiated strategic mergers or alternatively sold off functions that don’t contribute to logistics activities. Overseas operators include DB Schenker, DHL and SILA.

Tech entrants to the logistics space

Start-ups are also eyeing the logistics space and offering competitive services to or forming partnerships with logistics and supplier organisations.

Some services these disruptors offer include

  • digital freight forwarding
  • sensors and asset tagging
  • supply chain logistics and analytics
  • trucking marketplace and fleet management
  • micro-fulfilment warehousing
  • e-commerce logistics for small consignments.

Along with government investment in improved infrastructure and access to ports, rail terminals and airports, and solutions to congestion issues in urban and transport hubs, transport and logistics providers need to embrace new technologies and be strategic about acquiring the resources they need. Partnerships, outsourcing or changing the business structure may deliver answers to remaining competitive.

Want to know more about safeguarding your transport and logistics business?

Gallagher provides insurance protection to businesses of all sizes, from sole operators to some of the world’s most iconic brands. Talk to a Gallagher transport and logistics team insurance specialist in your area.

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