Description
Human induced climate change is real or not, an issue not to be discussed here, one cannot ignore the effects of man on the environment and the global pressures placed on large companies in regards to environmental responsibility.
AUSTRALIAN LOGISTICS CHALLENGES AND
SOLUTIONS TO OVERCOME THEM
Neil Stewart
Bachelor’s Thesis
November 2011
Degree Programme in Logistics Engineering
Technology, communication and transport
DESCRIPTION
Author(s)
STEWART, Neil
Type of publication
Bachelor´s Thesis
Date
16.11.2011
Pages
60
Language
English
Confidential
( ) Until
Permission for web
publication
( X )
Title
AUSTRALIAN LOGISTICS CHALLENGES AND SOLUTIONS TO OVERCOME THEM
Degree Programme
Degree Programme in Logistics Engineering
Tutor(s)
SEPPÄLÄ, Ami
Assigned by
-
Abstract
Logistics challenges are present around the world in many different areas ranging from transportation
and legislation to weather phenomena and demographical issues. Obstacles that face logistics processes
and functions result in the additional loss of resources, money and time. The country of Australia
presents a unique logistics environment, and as a result, unique logistics challenges.
The method of qualitative research was used. The aims were to define the current logistics
environment in Australia, identify the existing logistics challenges and present different solutions to
overcome them.
The Internet was relied heavily upon in order to obtain information on the topic. Several practical
examples further illustrate the challenges. An interview was also conducted with a courier from
Australia’s largest city, Sydney, in order to give a special insight into the logistics challenges faced by an
everyday Australian within the transportation industry.
Many different logistics challenges that are present in Australia were identified. The challenges range
from the ‘tyranny of distance’ and the presence of wild animals on the road to increasing security risks
and the pressures of sustainable development.
In response to the identified challenges, some potential solutions are presented. The solutions include
ideas such as increased driver training, better forecasting and planning, improving transport networks
and infrastructure and looking at different production methods.
Keywords
Logistics, Australia, challenges, transport, interview
Miscellaneous
1
CONTENTS
1. Introduction ..................................................................................................... 4
1.1 Overview .................................................................................................. 4
1.2 Aim of the Thesis ...................................................................................... 4
1.3 Research Methods ................................................................................... 5
2. Definition of Logistics Challenges ................................................................... 6
3. Australia as a Nation ....................................................................................... 7
3.1 Geography................................................................................................ 7
3.2 Demography ............................................................................................. 8
3.3 Climate ................................................................................................... 10
3.4 Government............................................................................................ 12
4. Logistics in Australia ..................................................................................... 13
4.1 Overview ................................................................................................ 13
4.2 Transport Networks in Australia ............................................................. 14
4.2.1 Roads .............................................................................................. 14
4.2.2 Railways .......................................................................................... 16
4.2.3 Airports ............................................................................................ 18
4.2.4 Ports ................................................................................................ 20
4.2.5 Pipelines .......................................................................................... 22
4.3 Legislation .............................................................................................. 22
4.4 Types of Material Transported................................................................ 24
4.5 Technology ............................................................................................. 26
5. Australian Logistics Challenges .................................................................... 27
5.1 Geographical Challenges ....................................................................... 27
5.1.1 Urban Challenges ............................................................................ 27
5.1.2 Regional Challenges ........................................................................ 31
5.2 Demographical Challenges .................................................................... 33
5.3 Environmental Challenges ..................................................................... 34
5.3.1 Climate Change and Green Logistics .............................................. 34
5.3.2 Seasonal Problems .......................................................................... 35
5.4 Legislative Challenges ........................................................................... 36
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5.5 Technological Challenges ...................................................................... 38
5.6 Other Challenges ................................................................................... 40
6. Case Study: Interview with a Sydney Courier ............................................... 43
6.1 Background ............................................................................................ 43
6.2 Method ................................................................................................... 44
6.3 Results ................................................................................................... 44
6.4 Discussion .............................................................................................. 44
7. Potential Solutions to Challenges and Conclusion ........................................ 47
References .......................................................................................................... 55
Appendices .......................................................................................................... 58
Appendix 1: Interview Questions ...................................................................... 58
Appendix 2: Interview Answers ........................................................................ 58
FIGURES
FIGURE 1. Map of Australia .................................................................................. 8
FIGURE 2. Map of Australia’s population distribution ............................................ 9
FIGURE 3. Map of Australia’s major seasonal rainfall zones .............................. 11
FIGURE 4. Map of the Australia’s Major Highways ............................................. 15
FIGURE 5. Map of the Australian Rail Network ................................................... 17
FIGURE 6. Map of Australian Airports ................................................................. 19
FIGURE 7. Map of Australian Ports ..................................................................... 20
FIGURE 8. An Australian Road Train in Northern Territory ................................. 23
FIGURE 9. Map of Sydney’s Orbital Network ...................................................... 29
FIGURE 10. Trip from Penrith to Hurstville using the Sydney Orbital Network .... 30
OTHER GRAPHS AND TABLES
TABLE 1. Leading Australian Ports in Imports and Exports ................................ 21
GRAPH 1. Types of Freight Movements in Australia April 2000 – March 2001 ... 25
3
Throughout this thesis there are several mentions of monetary values given in
dollars ($). In the case of this thesis, the Australian dollar is the used currency
unless otherwise stated. This is due to the nature of the thesis topic. The table
below shows how the Australian dollar (A$1) faired against other major
currencies during September 2011, the time at which the majority of this thesis
was completed.
Currency Lowest Value Highest Value Average Value
Euro (€) 0.71770 0.76938 0.74354
American Dollar ($) 0.96249 1.07618 1.01934
British Pound (£) 0.62298 0.66668 0.64483
4
1. Introduction
1.1 Overview
Australia is a unique country with a relatively short history. Demographical,
geographical and political conditions combine to create a unique logistics
environment subject to varying challenges.
The following research work describes the logistics environment in Australia
before moving on to define the challenges that are present. Several examples are
used to further illustrate the challenges. The thesis concludes with potential
solutions to overcome the challenges.
The focal point of the thesis is domestic logistics in Australia, but international
logistics, including imports and exports, and some of the challenges associated
with them, are also briefly covered. Australia’s remoteness and isolation from
other countries presents additional challenges in international logistics that need
to be covered.
Due to the sheer size of the Australian logistics industry, however, this paper
alone cannot completely cover the challenges of both domestic and international
logistics. There is also the matter of when international logistics related to
Australia is no longer solely an Australian issue. Australian domestic logistics is
filled with challenges and therefore, this is the main focus of the thesis.
1.2 Aim of the Thesis
This thesis is a personal research project. It is not a study or research project that
is being commissioned by a company. The purpose of this thesis is to inform
others about logistics challenges facing companies and businesses in Australia. It
may also give an insight into how the challenges faced compare to those faced in
other countries around the world. A discussion about the potential solutions to
these challenges is also covered.
5
As an Australian student in Finland, this topic is one of great interest for the
author. It gives the opportunity to further describe life in Australia. Perhaps the
information presented here may also be useful in the classroom. Few people
outside of Australia truly understand the nature of Australian logistics and this
may help to educate others.
The three main aims of this thesis are:
1. Define the current logistics environment in Australia
2. Identify the existing logistics challenges
3. Present potential solutions to overcome the identified challenges
1.3 Research Methods
This work is based on the method of qualitative research. Qualitative research is
the best method available for this particular topic, as numerical data associated
with quantitative research cannot adequately describe the challenges present.
The research was completed in Finland. Due to the foreign nature of the topic,
Australian logistics, the majority of the research was carried out on the Internet as
it was difficult to acquire textbooks that were relevant to the topic. Articles found
online are also used to back up certain pieces of information.
In order to reinforce some of the ideas presented throughout this thesis, a one on
one interview was also conducted. The interview was held with an employee of a
small courier company in Sydney’s Eastern Suburbs. The answers are published
and discussed further in the latter part of this work.
6
2. Definition of Logistics Challenges
Logistics is defined in the Council of Supply Chain Management Professionals’
Supply Chain Management Terms and Glossary (2010, 114) as:
The process of planning, implementing, and controlling procedures for the
efficient and effective transportation and storage of goods including
services, and related information from the point of origin to the point of
consumption for the purpose of conforming to customer requirements.
Waters (2003, 5) also describes logistics as ‘the function responsible for the flow
of materials from suppliers into an organisation, through operations within an
organisation, and then out to customers’.
Logistics is present in everything around us, whether it be the production and
delivery of a case of beer to a store or the delivery of several hundred heads of
cattle from the Australian outback to abattoirs in Indonesia. It is not limited to
transportation, or storage, but encompasses everything related to a process.
Other activities of logistics include, but are not limited to, purchasing, receiving,
stock control and recycling.
A challenge is defined by Oxford Advanced Learner’s Dictionary (2000, 192) as ‘a
new or difficult task that tests somebody’s ability and skill’. Challenges are faced
by people every day in all aspects of life.
If the two definitions are combined, a logistics challenge can be seen as an
obstacle or something difficult that is facing logistics processes and functions.
The ever increasing pressure of limiting our negative effects on the environment
can be seen as a global logistics challenge, whereas the effect that winter
weather has on a city airport can be seen as a local logistics challenge.
Logistics challenges are faced by companies every day, whether their business
focus is logistics orientated or not. They can be continuing challenges or new
ones. Some challenges may be overcome in time while others may just have to
7
be dealt with. It is up to each government, company, group or individual on how
they should combat these challenges in the most effective and efficient way.
3. Australia as Nation
The history of Australia is relatively short compared to most other countries
around the world. When it was originally settled by the British as a penal colony in
1778, only local groups of the native Australians, Aborigines, were present. It
served as a colony within the British Empire until 1901 when Australia became a
sovereign nation. The following section describes the geographical,
demographical, climatic and political conditions of Australia.
3.1 Geography
In terms of land area, Australia is the sixth largest country in the world with a total
of 7,692,024 square kilometres (United Nations Statistics 2009). It is also the
world’s smallest continent. It is a very flat country with the highest peak being
Mount Kosciuszko at 2,228m (Australian Rocks and Mountains 2011), dominated
by vast areas of desert. Australia is commonly known to be made up of six states
and two territories with the city of Canberra, located in the Australian Capital
Territory, as the capital. Figure 1 is a map of Australia showing the states and
territories and their respective capitals.
8
FIGURE 1. Map of Australia (Street-directory.com.au 2011)
There are also several smaller external territories under the control of the
Australian government including Norfolk Island, Christmas Island and Cocos
(Keeling) Islands among others. These islands, however, do not have large
populations and have little impact on the overall running of the country as well as
logistics issues.
3.2 Demography
The population of Australia as of 27 October 2011 stands at 22,744,608 with an
average growth of one person every 1 min 31 seconds (Australia Bureau of
Statistics 2011). The majority of Australians live in the large coastal cities.
According to Chen and McAneney (2006, 2), 30% of Australian addresses are
9
located within 2 km and 50% are located within 7 km of the shoreline. Figure 2
shows Australia’s population distribution.
FIGURE 2. Map of Australia’s population distribution (Australian Bureau of
Statistics Census 2006)
The south east of Australia is where most of the population is concentrated. The
temperate climate and the initial settlement of Australia are reasons for this. The
Australian Capital Territory has the highest population density, followed by the
state of Victoria, while Western Australia has the lowest (Australian Bureau of
Statistics 2010a). Sydney has the highest population of any city followed by
Melbourne, Brisbane, Perth and Adelaide (Australian Bureau of Statistics 2010b).
As with most developing countries, Australia’s population is ageing due to lower
birth rates and advances in technology that lead to increased life expectancy
10
rates. Using information provided by the Australian Bureau of Statistics (2010c),
the median age of the Australian population has increased from 32.1 years at 30
June 1990 to 36.9 years at 30 June 2010.
3.3 Climate
Australia is the second driest continent on Earth, behind Antarctica, making it the
driest inhabited continent (The Australian Continent 2011). The inland parts of
Australia are particularly dry and much land is almost uninhabitable. The climate
conditions again reinforce the reasons for coastal settlements. The conditions
inland lead to low fresh water levels and non-arable land that is not sustainable
for large cities. The nation’s capital Canberra is the largest inland city with a
population of around 350,000, significantly less than most of the other capitals
around Australia. Even then, Canberra is approximately only 150 km inland
(Geoscience Australia 2011).
Rainfall
Figure 3 shows how different parts of Australia are subjected to varying levels of
rainfall. As mentioned above, the interior of Australia is very dry and receives
very little rain throughout the year. The northern parts in the tropics receive heavy
rainfall during the summer season, while other parts of Australia receive varying
levels of rain due to prevalent weather patterns.
11
FIGURE 3. Map of Australia’s major seasonal rainfall zones (Australian Bureau of
Meteorology 2011a)
Seasonal Variations
Due to the large size of Australia, many different types of weather are
experienced. It should be noted that Australia experiences its seasons at the
opposite time of the year when comparing to locations in the Northern
Hemisphere. During the summer the temperature can rise to over 45C in inland
regional centres. Even the coastal cities, including Sydney and Melbourne, are
capable of reaching temperatures above 40C several times a year. It is also
possible for high temperatures to occur during spring and autumn.
The northern parts of Australia have a typical tropical climate, including a wet
season. The winter months are hot and dry, while the summer is hot, humid and
wet.
12
The winter is quite cool in the southern states of South Australia, Tasmania,
Victoria and New South Wales. A prevailing southerly wind bringing cold weather
from Antarctica and the Southern Ocean helps to keep temperatures cool during
winter.
The Great Dividing Range is a mountain range which runs from Victoria up into
southern Queensland. The Snowy Mountains, located on the southern end of this
range, receive snow each winter. Tasmania and other inland parts of the
mainland, particularly in the south east, are also capable of receiving snow.
Temperatures very rarely go to extremely low levels, the lowest ever recorded
temperature in Australia is -23C (Australian Bureau of Meteorology 2011b), but
icy conditions are still encountered in different parts of the country.
El Niño
In addition to seasonal fluctuations, Australia also experiences long-term
variations (Australian Bureau of Meteorology 2011c). El Niño is a natural event
that takes place in the Pacific Ocean. While it can affect many countries not just
on the Pacific Rim, it can lead to drought conditions in eastern parts of Australia
for several years. Its opposite, La Niña, can bring heavy rainfall and flooding. The
floods in south eastern Queensland in late 2010 and early 2011 are an example
of this. Australians need to plan ahead in order to deal with these conditions
which, to some degree, can be forecast.
3.4 Government
Australia gained independence in 1901 and since then has remained a part of the
British Commonwealth. While this has little impact on the general day to day
running of the country, the Queen of England is still Australia’s head of state and
is represented in Australia by the Governor-General. A prime minister and their
cabinet run the country with federal elections held at least every three years.
13
There are two main political parties in Australia; Liberal and Labor. Not since the
1960s has a party other than these two been in power.
In addition to the Federal government, each state and territory also has a
government. The state and territory governments must work in cooperation with
the Federal government on many different issues, even if the ruling parties are
not the same. This can create problems due to different party policies.
At an even lower level, there is the local government which governs small
regional areas. For example, in New South Wales there are 152 local
governments.
4. Logistics in Australia
4.1 Overview
As with any country in the world, logistics plays an important role in assisting the
running of the nation’s economy. The Australian Logistics Council (2011) states
that ‘while overseas experience provides some examples, Australia’s situation as
a remote, sparsely populated island continent largely dependent on the export of
raw material, poses unique challenges for transport and logistics’. According to
Estrada-Flores (2008, 3), Little (2007) stated that the cost of logistics activities in
2007 equated to approximately 9% of Australia’s Gross Domestic Product (GDP)
for that year, a figure well into the billions of dollars. The following section of this
paper describes the current logistics environment in Australia.
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4.2 Transport Networks in Australia
The transport network in Australia covers a wide range of modes of
transportation. Due to the large size of the country, road, rail and air freight all
have a share in transportation activities while shipping is extremely important for
international freight.
4.2.1 Roads
The Australian road network is made up of three road categories: Federal
highways, state highways and local roads. Federal highways are large roads that
connect capital cities. The funding for these roads is provided by the Federal
Government, although state governments also have some input when necessary.
State highways and local roads make up the remaining roads and funding comes
from the respective state government.
Figure 4 shows the road network in Australia. The nation’s major highways are
illustrated.
15
FIGURE 4. Map of the Australia’s Major Highways (Australian Travel & Tourism
Network 2011)
Road conditions in Australia are generally very good with multi-lane freeways
connecting the larger cities with each other. Regional centres are connected by
highways that are continually being upgraded and improved. Different types of
road and warning signs are abundant and several types of safety features, such
as barriers, road reflectors and guard rails, are in place.
An example of a road being upgraded is the Pacific Highway. It connects
Newcastle to Tweed Heads on the east coast of Australia and acts as one of two
major routes between Sydney and Brisbane. It has undergone many
improvements over the last 15 years. A progress report by the New South Wales
Roads and Traffic Authority (2011a, 1) stated that at the end of August 2011,
about 51% of the 664 km highway was dual carriageway. An additional 195 km is
16
also either under construction or in the planning phase. Improvements like this
greatly increase road safety and decrease journey times.
There are also speed limits in force throughout the country to ensure the safety of
drivers. In remote areas there are long stretches of straight road, while winding
roads are encountered elsewhere, both of which can be dangerous to drivers for
different reasons.
4.2.2 Railways
The passenger rail network in Australia is not as extensive as other countries
around the world, although freight rail transportation is an integral part of
Australia’s logistics network.
Australia did not experience a large rail boom like Great Britain and the United
States did during the mid to late 1800s. This was due to a small population and
the fact that Australia was still made up of individual colonies that did not make
decisions with the whole population in mind. Despite this, at the time of
Federation in 1901 there was more than 20,000 km of track. However, three
different track gauges had been built. In fact, the three different gauges are still in
use in different parts of the country, although each capital city on the mainland is
connected by a fourth uniform gauge. (Australian Department of Infrastructure
and Transportation 2011a.)
In 1997, the Australian government created the Australian Rail Track Corporation
(ARTC). It is a government owned corporation that controls a large share of
Australian railways. It mainly controls the uniform gauge lines, but also smaller
regional lines. There are also many other operators, such as state government
corporations and large mining companies, that control rail lines in Australia.
Figure 5 shows the rail network in Australia. The yellow line shows the uniform
gauge track that connects the major cities. Tasmania also shows a small rail
network, although this is limited to freight traffic. The network in the south eastern
area of the mainland is quite extensive and the east coast is fairly well connected.
17
Elsewhere though, only one rail line connects the east to the west, and the mid
south (South Australia) to the mid north (Northern Territory). Railways that
service mines in the north west are also isolated.
FIGURE 5. Map of the Australian Rail Network (Freight Rail Operators Group
2011)
The majority of lines are not electrified. All freight and the majority of long
distance passenger traffic operates under the power of diesel, while the majority
of metropolitan public rail systems use electricity. A large number of lines have
been built purely for the transportation of raw materials such as iron ore, coal,
copper and sugar cane.
18
While the network itself is comparatively smaller than others around the world,
rail plays an important role in the movement of goods throughout Australia.
4.2.3 Airports
Each capital city in Australia, of both state and territory, is serviced by a main
airport. Other large airports include Gold Coast and Cairns, both located in the
state of Queensland. The majority of Australian airports are quite close to the city
and have good road connections, while some are also connected by rail.
Figure 6 shows the location of Australian airports. The larger airports are defined
by name. Even though it can be seen that the majority of the coastline is lined
with airports, supporting the population centres, there is a surprising number of
airports in regional Queensland. These airports serve regional centres that are
home to mining operations.
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FIGURE 6. Map of Australian Airports (Skyscanner 2011)
In terms of cargo and goods, each airport has the facilities to cater for a variety of
shipments. Again, Sydney is the largest airport for incoming goods. In 2010,
Sydney’s Kingsford-Smith airport received 304,938 flight movements, inclusive of
passenger flights, of which 73,908 were aircraft over 136 tonnes (Airservices
Australia 2010). Many airports are mainly used for cargo shipments or small
passenger transports, particularly those inland.
Air cargo is especially important for goods that must be transported in a short
period of time. Overnight deliveries are achievable throughout Australia thanks to
air transportation. High end goods also rely greatly on air transportation.
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4.2.4 Ports
Like airports, each capital city, except Canberra, is serviced by a main shipping
port. There are also many other important ports around Australia. Sea
transportation is very important to Australia’s exports industry. Australia relies on
this form of transportation for 99% of its exports (Australian Department of
Infrastructure and Transport 2011b). While inland water transportation is not very
common due to the small number of lakes and inland waterways, domestic
shipping along the coast also exists.
Figure 7 illustrates the location of Australian ports. The majority are located in the
south east and up along the eastern coastline, although those located on the
western coastline are also important.
FIGURE 7. Map of Australian Ports (Australian Quarantine and Inspection
Service 2011)
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Table 1 below shows the leading ports in imports and exports during the
2008/2009 financial year in terms of weight and value. International shipping
trade accounts for 89% of the total trade. The remaining 11% is accounted for by
domestic trade.
TABLE 1. Leading Australian Ports in Imports and Exports (Bureau of
Infrastructure, Transport and Regional Economics (BITRE) 2010a, 17-18)
Imports Exports
Weight
(tonnes)
Sydney (Port Botany) (NSW)
15,403,757
Port Hedland (WA)
154,854,419
Value
($ thousands)
Melbourne (VIC)
46,272,024
Dampier (WA)
25,734,700
From the table and the location of the ports listed, it can be surmised that the
Western Australian ports of Port Hedland and Dampier deal exclusively in heavy
and valuable raw materials such as iron ore and coal, while Sydney and
Melbourne, as the largest population centres in Australia, receive large quantities
of imported manufactured and consumer goods.
Foreign Trade
According to BITRE (2010b, 21), China and Japan are the leading import and
export partners in terms of value. As mentioned above, international shipping is
responsible for 99% of international trade. Air freight represents the other 1%.
Exports are extremely important to Australia. Australia’s abundance of valuable
raw materials such as iron ore and coal results in high demand from many
countries around the world. China’s continually growing industry, for example,
relies greatly on materials sourced in Australia. Australia also relies on China for
22
many imported consumer goods that are not economically viable to produce
within Australia.
4.2.5 Pipelines
Another less common form of transportation is the use of pipelines. Pipelines are
used to transport natural gas, oil, ethane and slurry. Natural gas is the most
common substance to be transported by pipeline and there is a fairly extensive
network of pipes throughout Australia. Many of these pipelines are privately
owned by large corporations such as BHP Billiton.
4.3 Legislation
There are many different types of legislation that affect logistics operations in
Australia. Some key regulations are described below.
Transport Regulations
There are strict sets of guidelines for transportation in Australia. All Australian
states have their own regulations, while there are also regulations that cover the
whole country. Regulations cover, but are not limited to, vehicle size, maximum
loads, packaging, speed limits and the different types of goods carried. The
dangerous goods code, for example, complies with standards laid down by the
United Nations and is enforced nationwide.
Vehicle size is an important regulation throughout Australia, particularly for the
large ‘road trains’ that operate in remote areas. Figure 8 shows an Australian
road train.
23
FIGURE 8. An Australian Road Train in Northern Territory (Trotman 2006)
Road trains are large, multi-trailer vehicles that operate in Australia. They are
also used in other countries including Mexico and Canada. Their main purpose is
to carry a large amount of goods across a large distance, while eliminating the
need for rail transportation. They are very useful in remote areas that cannot be
accessed by rail. Road trains can carry many types of cargo including fuel,
animals, wood and coal. Road trains are only permitted in certain areas in
Australia. For example, they are not permitted in the state of Victoria and other
states limit their activity to regional areas. Lower speed limits are also enforced.
Road trains can be as long as 53.5 metres (Northern Territory Department of
Lands and Planning 2011, 5).
24
Quarantine
Quarantine laws in Australia are extremely strict due to its fragile ecosystem.
Australia’s biodiversity is unlike any other place in the world and the smallest
foreign substance can greatly impact the environment. Since the introduction of
Quarantine Act 1908, incoming goods have been subject to stringent checks and
many items are prohibited from entering the country. Foods, plant and animal
materials are the highest risk items. There are strict guidelines set out by the
Australian Quarantine and Inspection Service (AQIS), a branch of the Australian
Government. These guidelines define what can and cannot enter the country.
Items of particular mention that are subject to restrictions include food
substances such as meat and fruits and organic material such as seeds, leaves
and untreated wood.
The movement of goods within Australia is also monitored. Particular items such
as fruits, vegetables and animals should not cross state borders without the
required permits.
Work Safety
Workers unions have long been campaigning for better work safety in a variety of
job sectors. As a result, the Australian government has implemented several
work safety laws over the last decade or two. For example, warehouse
environments require high visibility safety vests, steel capped boots, and
depending on the goods stored, may also require protective eyewear or hardhats
among other items.
4.4 Types of Material Transported
There are many different types of material transported in Australia, both
domestically and internationally, ranging from food and animals to iron ore and
wood. Different regions in Australia specialise in different raw materials while
25
different materials require different types of transportation modes. Vehicles must
be modified in order to carry certain loads. In terms of rail transportation, certain
rail cars must be used for certain types of material. Some loads also require
special permits (as mentioned in section 4.3.1), such as a dangerous goods
permit, and vehicles carrying those loads must display special warning signs.
The Australian Bureau of Statistics gives four classification categories for the
types of material being transported. They are listed below.
1. Solid bulk – Large amounts of unpackaged material in solid form such as
coal, iron ore or sugar cane.
2. Liquid bulk – Large amounts of unpackaged materials in liquid/gas form
such as fuel, liquid petroleum gas or milk.
3. Containerised – Materials/cargo transported in containers.
4. Other – Anything that does not fit in with the above categories or is
undefined.
Graph 1 shows the percentages of each category in freight movements from April
1 2000 to March 31 2001. While this data is a decade old, it still gives a fair
indication of today’s percentages in Australia.
GRAPH 1. Types of Freight Movements in Australia April 2000 – March 2001
(Australian Bureau of Statistics 2002)
63% 9% 8% 20%
0 % 20 % 40 % 60 % 80 % 100 %
Solid Bulk
Liquid Bulk
Containerised
Other
26
4.5 Technology
Technology in logistics is continually improving throughout the world and it is no
different in Australia. Information technology (IT) is a necessity in logistics.
According to Hammant (1995, 32), Christopher (1992) stated that ‘information
has always been central to the efficient management of logistics but now,
enabled by technology, it is providing the driving force for competitive logistics
strategy’.
Warehouse systems are becoming more advanced through the use of radio-
frequency identification (RFID) and barcode scanners. The task of eliminating
paperwork has increased efficiency and effectiveness in the workplace. The
introduction of automated sorting facilities has also greatly increased the sorting
capacity of warehouses and, in turn, improved lead times.
Warehouses, equipment and other pieces of property have much improved
security systems in place to prevent theft and vandalism. Advanced IT systems,
such as enterprise resource planning (ERP) systems, also a hold a larger amount
of information and provide faster and more convenient access than ever before.
Global positioning system (GPS) and RFID technology allow for real-time tracking
throughout Australia. Items sent abroad can also be tracked. GPS and other
navigational technologies provide the ability to calculate the most efficient
transportation routes by road as well as helping to monitor traffic conditions.
Other route planning systems are also in place.
Companies using advanced technology in their logistics operations have a
competitive advantage over those that do not. Australian companies continually
update their systems to stay in line with the world’s best available technology.
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5. Australian Logistics Challenges
The following section defines different logistics challenges faced by companies in
Australia. It covers challenges related to geography, demography, the
environment, legislation and technology as well as other challenges that are
present. Examples are used to illustrate the challenges in order to give a better
understanding of how relevant and realistic they are.
5.1 Geographical Challenges
Many different geographical conditions can be encountered around Australia.
Urban and regional areas offer different logistics challenges to different
companies. They are described below.
5.1.1 Urban Challenges
Traffic Congestion
The large coastal cities of Australia, particularly Sydney and Melbourne,
experience traffic congestion every weekday. The morning and afternoon peak
hours lead to a much larger volume of traffic on the roads leading in and out of
the city area. Freeways and motorways have been constructed in multiple
directions but even those are heavily congested.
New plans and solutions to decrease congestion are continually developed but as
the ownership of cars and urban sprawl continue to increase, they are likely to
fail. The transportation of goods is likely to be affected if their routes take them
through these congested areas at peak hour times.
As mentioned above, one solution to overcome congestion has been to build
motorways. These avoid smaller arterial roads with traffic lights and are generally
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wider in terms of the number of lanes. In Australia many of these motorways are
built by a private company under contract with the local state government.
Having a warehouse located in the city may also lead to traffic congestion being a
daily challenge.
Toll Roads
An example of a road built by a private contractor is the Lane Cove Tunnel,
situated in Sydney’s inner north-west. It is a four kilometre tunnel built to connect
the Gore Hill Freeway to the M2 motorway. The project has been considered by
many to be a disaster with the initial contractor, Connector Motorways, going into
receivership in 2010, just under three years after the tunnel opened. The tunnel
itself is a toll road.
There are many toll roads in Sydney and they can be considered to be
challenges themselves, despite them being built to overcome the initial challenge
of traffic congestion. The Sydney Orbital Network, shown in Figure 9, is a 110
kilometre collection of motorways and freeways designed to connect different
parts of the city. The majority of this network includes toll roads. In addition to this
network, the M4, which was previously a toll road, connects the inner west of
Sydney to the Blue Mountains (as shown in Figure 9). The toll roads are paid for
by using an electronic tag, or ‘E-tag’, assigned to individual vehicles. When
passing through a toll gate the tag registers electronically and the cost of the toll
is deducted from a special account.
29
FIGURE 9. Map of Sydney’s Orbital Network (New South Wales Roads and
Traffic Authority 2011b)
The Sydney Motorways website provides a toll calculator for motorists to use
when planning a trip. Using the calculator provided on their website, a one way
trip from Penrith to Hurstville covering 56 kilometres of the M7 and M5 motorways
(illustrated in Figure 10) would incur a cost for a heavy vehicle of $15.80. A trip in
the opposite direction would cost $10.80, leading to a return trip cost of $26.60.
30
FIGURE 10. Trip from Penrith to Hurstville using the Sydney Orbital Network
(Google Maps 2011)
Assuming a heavy vehicle uses this return route once daily, 5 times a week for 52
weeks a year, the total annual cost from tolls alone totals $6916.
This monetary figure just goes to show the effect tolls can have on the operations
of a transportation company in one of Australia’s larger cities. Several thousands
of dollars might be required by a company for tolls if they want to use the most
efficient route possible. These costs are a challenge to companies when
conducting route planning and must be taken into account, especially when it
comes to a large fleet of vehicles where travel costs are incurred by the
company.
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Road Changes
It is quite common in Australia for local roads to be adjusted and modified in
order to help control the flow of traffic in certain local areas. There are highway
upgrades that bypass local towns improving travel times and pedestrian safety
while reducing traffic congestion on smaller roads. On the other hand there are
times when roads are closed and blocked off to encourage vehicles to use
available motorways. These motorways, however, often have a toll, as mentioned
above. There are also suburban streets, particularly those on which schools are
located, that forbid heavy vehicles from entering them. These changes may
create confusion and increase travelling times.
5.1.2 Regional Challenges
Distance
The most obvious challenge in Australia for logistics companies is the ‘tyranny of
distance’; the great distances between cities. Currently there is a road distance of
880 kilometres between Sydney and Melbourne and another 930 kilometres
between Sydney and Brisbane. A road trip from Sydney to Melbourne equates to
over 10 hours of travel time. Sydney and Perth are a massive 3,950 kilometres
apart by road. Rail journeys also take a considerable amount of time.
Many remote roads have very few petrol stations and it may be necessary to
carry additional fuel. In any case, senders of goods need to be aware of the time
taken to travel these distances and the costs involved and plan ahead
accordingly.
The geographical location of some places can be a challenge to logistics
providers. Mining sites, in particular, are in remote locations and the process of
getting goods to them often involves complex, long distance transportation that
needs to be carefully planned beforehand.
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The March 2011 edition of Tolltoday (2011, 9), a magazine published quarterly by
Australia’s largest logistics services provider Toll Holdings, describes a project
that involved transporting ‘218 loads of cargo from seven vessels from Port
Hedland to the BHP Billiton Yandi mine site’. Large, oversized items up to 14
metres wide, 28 metres long and 7 metres high were part of the cargo. A road
distance of 482 kilometres needed to be traversed in one of Australia’s most
remote areas in the state of Western Australia. A complex logistics program was
developed to carry out the operation. Operations similar to this one occur fairly
regularly in Australia.
Road trains (see section 4.3) are a common site in the remote areas of Australia.
This form of transportation is very helpful at overcoming the issue of goods
carried per kilometre by road.
Another issue faced due to travelling long distances is driver fatigue. Driver
fatigue is a big issue in Australia as many drivers are overworked and pressured
to complete deliveries within short timeframes. Fatigue on the road is an
extremely important safety issue. It can lead to severe injury or even death.
Drivers may struggle to deal with the pressures of their job and may feel forced to
use drugs to stay awake. Drivers may also break speed limits over long journeys
to ensure deliveries are made on time.
Animals
Animals, most commonly kangaroos, are considered to be a great hazard on the
road. They can be encountered in suburban areas or in the middle of nowhere,
throughout the country. Not only are they a threat to equipment but, more
importantly, they are a threat to human life.
According to Rowden, Steinhardt and Sheehan (2008, 6-7), Australian insurance
company AAMI (2007) reported ‘a 25% increase in animal-related crash claims
from 2005 to 2006’ and that the costs of vehicle repairs totalled $10.2 million in
2005 and $15.3 million in 2006. While insurance can cover the damage costs,
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injuries to drivers can be serious or even fatal. In terms of costs, the downtime of
a vehicle in repair or the time lost following an accident can be extremely high.
Bullbars are commonly used in Australia to protect vehicles in regional areas but
sometimes even they are not enough to prevent vehicle damage.
Road Conditions
As mentioned in section 4.2.1, road conditions in Australia are generally quite
good. However, due to the large size of Australia and its relatively small
population, the maintenance of the extensive road network is a large and
daunting task. Some roads, particularly regional roads, may be in a state of
disrepair. Potholes can be particularly dangerous. These problems may lead to
longer journey times or even damage to equipment.
5.2 Demographical Challenges
Australia’s ageing population is continuing to place a strain on the nation’s social
welfare system. Many people are forced to continue working past the traditional
retirement age of 65 years old to ensure they have enough money to survive later
in life. In terms of logistics, an ageing population may create problems. It is
commonly said that the older one gets, the harder it is to learn new things, and
with the current advances in technology many workers in the older generation
may find it hard to keep up. It could also be argued that older workers are not
capable of working at the same level physically for as long as younger
employees.
The growing concentration of populations in Australia’s large coastal cities may
also create problems. The need to ensure efficient and effective logistics
processes in these areas will continue to increase. While the population of
regional centres increase at a slower rate, it is necessary to ensure that their
needs are also met. The increased attention in the cities should not compromise
34
the needs of the regional centres. Logistics companies need to adjust and adapt
to the different growths in demand.
5.3 Environmental Challenges
Australia’s climate and environmental conditions present different kinds of
challenges to logistics operations. Global awareness of climate change and the
associated pressures also create different challenges.
5.3.1 Climate Change and Green Logistics
Whether human induced climate change is real or not, an issue not to be
discussed here, one cannot ignore the effects of man on the environment and the
global pressures placed on large companies in regards to environmental
responsibility. Green logistics has become a topic of much discussion in the last
few years and is one that is becoming increasingly important for companies who
operate both locally and globally.
Minimising waste and pollution has been on the agenda for many companies that
wish to ensure their business operations are seen by the public in a good light.
Green logistics has become an integral part of a company’s planning processes.
Not only is minimising waste better for the environment, it can also save money
by using only what is necessary.
Operating efficiently with the environment in mind has become a challenge for
logistics providers and will continue to be in the next few decades. Renewable
energy sources need to be developed on a large scale and the act of preparing
for their implementation in the coming years needs to be seriously taken into
account.
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5.3.2 Seasonal Problems
Winter
In the winter snow can fall in The Great Dividing Range, the geographical feature
that runs from eastern Victoria up the coast to southern Queensland. This can
cause chaos on the roads. In the Blue Mountains, approximately 100 kilometres
west of Sydney, road closures are often enforced a couple of times each winter if
the roads are too dangerous due to snowfalls. This can also occur in other parts
of Australia, particularly Victoria, Tasmania and southern New South Wales.
The winter of 2004 saw a severe storm front cross through the southern half of
New South Wales and north eastern Victoria in mid-July. The Sydney Morning
Herald (2004) reported that ‘authorities were forced to close major roads in both
states, while they laid down sand and salt to reduce the danger’. The Great
Western Highway, the main road through the Blue Mountains connecting Penrith
in Sydney’s west to the mid-west of New South Wales, was affected by this
closure.
Studded tyres are rare and at some times during the year places may only be
accessible with the use of tyre chains. Large vehicles such as semi-trailers and
three or more axle trucks must avoid these areas. Road closures can last for
several days in severe conditions and, as a result, goods may not be able to
reach their destinations on time if alternative routes cannot be used.
In terms of rail traffic, snow can also affect goods movement. This is, however,
fairly rare due to the location of railway lines and the small chance of heavy falls
in places of low altitude. Again, the Blue Mountains are a good example of a
place where snow can interrupt rail traffic.
Snowfalls can also disrupt air traffic, as is the case in other parts of world,
although this is rare in Australia due to the fact that most large airports are
located on the coast where snow is extremely rare.
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Summer
Hot weather is prevalent throughout Australia from late September to late April,
and all year round in the northern parts. High temperatures can cause all kinds of
problems when it comes to logistics and it affects many different areas. Railway
lines are commonly affected with rails sometimes buckling due to the conduction
of metal. Electricity lines also have to deal with a great level of stress as a result
of higher temperatures.
Road transportation is also affected. There are many types of perishable items
that need cooler temperatures to ensure their longevity. Meat and fish products
that travel from abattoirs to city centres need to be properly refrigerated. High
temperatures can affect the running of cooling systems on trucks. Warehouses
that act as cross-docking points must also ensure that their cooling systems can
withstand the added pressure placed on them during hotter days.
It may sound simple but hot weather can also affect employees. Heat exhaustion
is a serious issue that needs to be considered and many people can be at risk if
their work takes place outdoors.
Natural Disasters
Australia is a country that is often affected by natural disasters. The most
common are bushfires, floods and cyclones. These disasters can cause a
considerable amount of damage, both to infrastructure and equipment. Costs and
time delays can result. Natural disasters usually also lead to an increase in the
demand for supplies. It may be difficult to ensure goods reach their destination
during these times.
5.4 Legislative Challenges
National legislation poses different kinds of logistics challenges. These
challenges can be in varying levels of business, from operational to strategic. The
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following section presents some logistics challenges faced in Australia as a result
of legislation.
Funding Disagreements
Funding disagreements are a common problem in Australia. State governments
and the Federal Government have responsibilities to provide funding to certain
areas such as education, infrastructure and health. Sometimes there is a
disagreement over who should be paying. Each level of government has a strict
budget that they try to adhere to and occasionally funds become thin in different
areas.
In terms of logistics, it can be detrimental to operations if roads or railways are
not built on time as a result of these disagreements. The logistics industry
requires functioning and useable infrastructure such as roads and railways in
order to operate.
Transport Regulations
Regulations that govern the movement of goods can affect logistics operations. If
special transportation is required it may be necessary to have additional permits
or specially modified vehicles. The modification of vehicles or obtaining required
permits may take time and almost certainly will incur additional costs.
Quarantine
If a company wishes to import goods to Australia as part of their business they
must obtain permission from AQIS (see section 4.3). Even after obtaining
permission there are specific measures that must be taken to ensure that foreign
and unwanted materials do not cross the border. AQIS inspects all incoming
materials to Australia whether it is passenger luggage, mail items, shipping
containers or people themselves. Random quarantine inspections also take place
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as an extra measure of security. Exports are closely monitored and permits are
required for this practice also.
Companies that undertake import activities need to be aware of the required
permits. Additional planning is also needed.
Work Safety
As mentioned in section 4.3, work safety is a continually growing issue in
Australia. The pressures to ensure a safe workplace may lead to increases in
costs for businesses. A relatively recent law that was introduced and can be seen
in the logistics industry, among others, is the introduction of compulsory high
visibility safety vests for all workers. These vests are not only limited to
operational level warehouse workers, but drivers and upper level management
employees must also wear the vest in designated areas. Hardhats, safety
glasses and steel capped boots may also be required. Workers and/or employers
will also end up footing the bill for these safety items.
5.5 Technological Challenges
The current level of technology in the world presents special challenges to the
logistics industry and as technology continues to advance, additional challenges
may arise.
Additional Costs
New technology can be extremely costly. Having the most up-to-date technology
may give a company a strategic and competitive advantage, but the required
levels of investment must be seriously taken into account. Additional detailed
budgeting and forecasting must be done to ensure the additional costs that would
be incurred are feasible.
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Lack of Integrated Systems
Ensuring that different suppliers and their customers have the same computer
and ERP systems can be quite difficult. Companies and their primary, or largest,
suppliers may use the same system, but smaller suppliers may have different
systems in use. System clashes can lead to time delays and disrupt the flow of
information.
Dependence on Technology
Every day more companies go digital. An increasing amount of information is
stored on computers and internet servers. In fact, it would be very difficult to even
find a company in Australia that does not use some kind of electronic technology
to store information. If technology fails, however, it can create problems. It is
necessary to back-up information to a second, or even third, source to ensure it is
not lost. This may lead to additional costs.
Regional Issues
Due to Australia’s large size and low population density, some regional areas
may find it difficult to accommodate new technologies. Particular infrastructure
may not be available. For example, internet speeds are commonly known to be
slower and mobile phone reception can be weaker in regional centres than the
major cities in Australia. These issues may present challenges to logistics
operators in smaller inland cities.
Resistance to Change
A simple, yet ongoing challenge is the traditional resistance to change. Many
employees may feel change is difficult and perhaps not necessary. Technological
changes can be especially disturbing to a workplace. In logistics, the
40
implementation of a new ERP system may take several weeks. Employees must
undergo training and need to quickly adjust to new systems in as minimal time as
possible. Companies need to manage such a change effectively to ensure their
employees understand why the change is taking place and that they have any
support they may find necessary.
Adjusting to New Systems
Not only are employees at risk of falling behind following the implementation of a
new system, but whole companies and their operations are. Transferring old
information to new systems takes time and can be a confusing process.
Companies may require additional external assistance to help them cope with the
changes. This may lead to delays in production or distribution.
5.6 Other Challenges
There are also several other challenges that companies may come across that do
not fit into any of the above categories. They are described below.
Rising Fuel Prices
Using statistics from BITRE (2008), Estrada-Flores (2008, 3) stated that road and
freight rates in Australia increased by 9% and 5% respectively from 2001 to mid-
2008. A large amount of this increase was due to rising fuel prices. Every country
around the world has experienced additional strain on transport and the resulting
costs from higher fuel prices. While Australia is not alone, the challenge of
keeping other costs down to accommodate for these increases is still present.
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Security Issues
Theft and property damage is an increasing risk in goods movement and storage.
Items that are most at risk include high value electronic goods such as computer
equipment, laptops and mobile phones, as well as other goods such as cigarettes
and jewellery. Security systems are now a must and they are continually being
upgraded to prevent theft.
According the Mayhew (2001, 1), Salkin (1999) claimed that worldwide losses
from cargo theft totalled US$30 billion a year at the turn of the century. This figure
has surely increased during the last decade.
Mayhew (2001, 3-5) gives some tips for improving the security for goods, both in
transit and in storage. These strategies are widely used in the logistics industry
today. They can include the following.
Additional surveillance systems
Additional seals on packaging
Additional locks on windows, doors etc.
Supervised loading/unloading
Strict controls over access to warehouses and dockyards
Random security checks
Additional fraud prevention measures
Use of enclosed trucks so goods cannot be seen
Each of these measures taken to improve security comes at a cost. Meanwhile,
criminals are improving their techniques and are discovering new ways to get
around the newly implemented security measures. Australian logistics companies
need to take these measures into account.
Different Rail Gauges
The initial construction of three different rail gauges (see section 4.2.2) has led to
a challenge also seen in Europe. The three gauges mean trains cannot continue
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travelling on different tracks and that cargo must be unloaded. The present
uniform gauge provides some relief to this problem, and it may not be as severe
as in the early 1900s, but it still creates a challenge on smaller regional lines.
Maintenance Work
Maintenance work on infrastructure such as roads and rail may result in
transportation delays. Additional planning prior to journeys must be done.
Individual Oversized Shipments
Oversized shipments are quite common, as in many countries around the world.
The transportation of large items such as those used in construction and large
pieces of machinery need additional planning (see example in section 5.1.2).
Australia’s geography may create additional problems that need to be overcome.
Market Entrance/Competition
Large Australian logistics companies like Toll Holdings and Linfox hold a large
percentage of the market share. Their operations also cover a wide range of
logistics solutions. A new company looking to enter the market, or an established
company looking to diversify their operations, may run into barriers. Toll Holdings
itself has acquired many smaller companies during the last decade or two.
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6. Case Study: Interview with Sydney Courier
6.1 Background
Sydney is the largest Australian city with a population of over 4.5 million people.
As a result of urban sprawl the city has expanded to cover just over 4000 square
kilometres. This is almost equal in size to London and is double that of New York
City despite having a much lower population density. The city area itself, known
locally as the Central Business District (CBD), is approximately 26 square
kilometres. (Sydney Media 2011)
As with any large city there is a need for local courier and transportation services.
While Australia Post is capable of delivering these services, the sheer number of
goods and the urgent need for them to be delivered quickly has led to an
increase in the number of courier companies in Sydney over the last 20 years.
Inside the CBD one will find hundreds of local cyclist couriers who deliver small
envelopes from one business to another. On a city scale there are thousands of
vans and small trucks available to transport and deliver envelopes, parcels,
boxes, pallets and other small goods to their destination with the added value of
personal customer service.
One man has been delivering goods in Sydney by van for 15 years as a local
courier. His job has taken him to Newcastle (160 kilometres away) and Canberra
(290 kilometres). The knowledge gained throughout the years has made him a
more than competent employee in a small courier company in Sydney’s eastern
suburbs.
An interview was conducted with this courier in order to give a different and
realistic view on the logistics challenges faced by an everyday Australian working
within the logistics industry in the country’s largest city.
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6.2 Method
In keeping with the theme of this thesis, the interview and the resulting analysis
are based on the method of qualitative research. In order to obtain the most
comprehensive results it was decided that the best way to approach the interview
was to give the interviewee time to think about his answers. Twelve questions
(refer to Appendix 1) were devised and sent by email to the interviewee. The
interviewee then wrote his answers to the given questions separately on a piece
of paper before they were then returned for analysis.
6.3 Results
The answers given to the interview questions pointed out several challenges that
the courier has faced in his job. They include:
The weight of items and the influence from the Transport Workers Union
(TWU)
Security lockouts in CBD buildings
Security of goods
Rising fuel prices
Traffic congestion as a result of increased cycleways and bus only lanes
6.4 Discussion
The results given in the interview shed some light on the logistics challenges
faced at an operational level. While this is only a small part of the process of
logistics, the courier brings up some interesting points.
The challenges mentioned by the courier further reinforce the ideas presented
earlier in this thesis. Traffic congestion (see section 5.1.1) and security issues
(see section 5.6) are notable mentions.
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Weight of Items
The courier states that ‘the major logistics challenge today is the weight of items’.
He goes on to explain that any item weighing over 20 kg must be transported or
lifted by two men, as stipulated by the TWU. While the TWU has the best
interests of workers in mind, in this case their wellbeing, sometimes this is not
practical. There may be times when there is no other option than for one worker
to lift an item weighing more than 20 kg. As the courier points out, even a
television can weigh approximately 28 kg. Obeying this rule may lead to time
delays. Despite that, the reason the rule is in place is obvious and, if possible,
should be followed at all times to avoid personal injury.
Security Lockouts
A daily challenge faced by the courier is the issue of security lockouts in the CBD;
‘deliveries in the city can be a challenge because a lot of buildings have a
security lockout on certain floors’. In order to get around this, building staff such
as the concierge or security personnel must be contacted. This incurs lost time
and extends time delays for items that are to be delivered later in the day. If a job
cannot be performed, as stated by the courier, it requires rebooking. This extends
time delays even further as well as increases the costs.
Security Issues
A logistics challenge that was not as evident previously, but is one of large
concern today, is the security of goods. The courier states ‘my van has a
compulsory alarm and central locking system as well as tinted windows’ and that
‘the company I subcontract (for) requires that my van has no company logos’.
This is something that has changed dramatically in the last 10 years. Theft and
the damage of goods through vandalism is something that companies are
becoming more aware of and the realisation of needing to protect goods is more
widespread.
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Although it is not mentioned in the interview answers, the courier drives together
with an ‘offsider’. One stays with the van and goods at all times while the other
makes the deliveries. This procedure only came into force a few years ago. If
security issues were not of such huge concern, then each courier could drive
separate vehicles and complete far more work in the same period of time.
Rising Fuel Prices
Rising fuel prices is a concern around the world. As companies battle to combat
the rising costs of fuel, many individuals who need to pay for fuel to carry out their
work are suffering. As a result the courier has needed to adjust his driving habits
to save fuel. His driving habits now include ‘using lower revs, higher gears and
higher tyre pressures’. These all help to improve fuel economy and therefore
reduce associated costs.
Traffic Congestion
As mentioned in section 5.1.1, traffic congestion is a major logistics challenge in
Australian cities. In the courier’s experience, ‘the number of vehicles travelling in
the CBD has remained basically the same for the past five years’. However, due
to the introduction of cycleways and bus only lanes in an effort by the local
government to reduce personal car traffic in the CBD and to promote greener
alternatives, traffic congestion has increased. It is not practical to think that
motions to decrease personal car traffic will also decrease goods traffic. There
will always be goods traffic coming into the city. In fact, goods traffic will probably
increase as more businesses are established in the CBD area. Transit times will
be affected if the city does not provide the necessary space and allowances.
The courier also mentions poor traffic light synchronisation as a logistics
challenge. This leads to increased traffic jams and time delays.
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Solution Suggestions
The courier only provides a couple of suggestions to solve the issues he faces;
‘get rid of the cycle lanes and better synchronise traffic lights to maximise traffic
flow’, he says. As with many large cities around the world, in Sydney there is a
feeling of resentment between drivers and cyclists. While cyclists can be a
nuisance to drivers, it is necessary for both to share the road. Cyclists should
also understand the need for at least some cars on the road and respect them.
One suggestion to overcome traffic congestion during the day is to promote
delivery times outside of regular daytime hours. Early morning deliveries, for
example, at 4am could reduce traffic congestion during the day.
7. Potential Solutions to Challenges and Conclusion
After looking at the content of this thesis, it is easy to see that there are many
logistics challenges facing companies in Australia. While there are some
challenges that simply exist and have no solution, such as work safety legislation,
there are other challenges that could be addressed in different ways. The
following tables examine some of the challenges mentioned earlier and put forth
some potential solutions to overcome them.
While some solutions may overcome one particular problem, they may, in turn,
create additional challenges. The solutions are solely for the challenge mentioned
and do not take into account any additional challenges that may arise.
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Urban Challenges
Challenge Potential Solutions
Traffic congestion
Road changes to improve traffic flow
Encourage public transport to reduce the
number of road vehicles
Consider warehouse relocation away from
congested areas
City lockouts/special entry times for certain
vehicles
Better route planning
Toll roads
Consider different routes that do not include
tolls
Minimise trip numbers by having bigger loads
Road changes
Better route planning to avoid trouble spots
Ensure most recent information is used
Many of these suggestions, if not all, are viable. City lockouts and special entry
times for certain vehicles may be the most difficult to implement. This would
involve giving certain vehicles, such as large trucks and vans, certain times when
they can enter the CBD. It could be enforced, for example, in the early hours of
the morning on weekdays from 3am to 5am. It would almost definitely face
opposition from many transportation workers and unions simply because some
workers would be forced to work at different times. A driver completing a set run
of deliveries may also be unable to deliver to destinations outside of the CBD in
the early morning.
State and local governments could be more lenient on drivers in attempting to
force them to use toll roads by creating additional routes and modifying roads.
Road changes may also include widening existing motorways to allow for
additional traffic.
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Regional Challenges
Challenge Potential Solutions
Distance
Bigger loads to ensure greater capacity per trip
(e.g. use of road trains)
Consider different transport modes such as rail
Source different local suppliers eliminating
need for distant transportation
Better planning
Better driver management and forced breaks
to decrease fatigue
Animals
Better awareness of animals
Driver training
Protective equipment for vehicles
Fencing to prevent animals from crossing the
road
Signs to warn drivers
Road conditions
Better/more warnings signs
Open feedback channels allowing community
members to request upgrades or inform local
government of problems
Improve older roads
Distance is a challenge that will simply not go away in Australia. However,
companies could consider using different transportation modes. Using rail, for
example, could ‘kill two birds with one stone’ by eliminating the need for trucks as
well as the need for additional drivers on the roads, eliminating driver fatigue.
However, as mentioned earlier some places are not accessible by rail.
Improving roads is an ongoing effort. Increased signage, more safety features
and upgrading roads is the responsibility of the Government. If feedback
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channels were created for members of the public to inform the local governments
about the need for road upgrades, trouble spots may be identified and rectified
more quickly.
Environmental Challenges
Challenges Potential Solutions
Climate change/green
logistics
New transport technologies that are
environmentally friendly
Minimise waste
Look at different production methods and/or
materials
Bigger loads to ensure greater capacity per trip
(e.g. use of road- trains) while minimising trips
Look at green and environmentally friendly
technologies for other processes (e.g. green
warehouse technologies)
Seasonal problems
Look at alternative routes and transport modes
to overcome poor weather conditions
Monitor weather forecasts in planning
Better cooling technologies in warehouses and
vehicles
Good employee management to avoid heat
exhaustion
Governments need to show more support for green technologies such as solar
and wind power. Increasing the awareness of these technologies would allow
companies to better consider these options. Minimising waste, especially by
considering different production methods and materials would go far in reducing
costs.
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Being prepared for different types of weather is something transportation
companies must consider. Alternative routes must be identified in order to avoid
possible delays. Improving employee management on hot days by providing
more breaks or installing cooling systems could help to avoid heat exhaustion.
Demographical Challenges
Challenges Potential Solutions
Ageing population
Good employee management
Job rotation (i.e. moving older employees to
different work areas)
Additional training
Adapting to Australia’s ageing population is becoming increasingly important
every year. Reservations must be made for older employees as the trend of a
later retirement age continues to impact companies. Job rotation and additional
training can help older employees adjust to different jobs without being forced to
leave.
Legislative Challenges
Challenges Potential Solutions
Funding disagreements
Lobbying groups to ensure infrastructure
projects are carried out with minimal disruption
Quarantine
Better planning
Ensure most recent information is available
Be aware of regulations
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Lobbying the government to ensure projects are completed is a difficult task and
something that has failed on some occasions in the past. However, the efforts of
lobbyists can make a difference.
Quarantine restrictions can be overcome purely by knowing what the restrictions
are. Being well prepared for importing goods and being aware of the regulations
would help companies greatly.
Technological Challenges
Challenges Potential Solutions
Additional costs
Better forecasting/planning
Look at different technological options
Joint/cooperative purchases with other
companies (e.g. suppliers)
Lack of integrated
systems
Ensure systems are compatible
Better collaboration within the supply chain
Dependence on
technology
Use back-up systems
Resistance to change
Better employee management
Provide support and training
Adjusting to new
technologies
Better planning
Take implementation in stages
Additional support and training
While collaboration in the supply chain may be difficult, it can reap many rewards.
Good relationships between suppliers and customers help speed up business
processes, increase trust and lead to economic savings. Integrated systems
would be extremely beneficial.
53
Good planning when implementing new technology is a must. Good employee
management by providing the necessary amount of training and support also
helps in the adjustment phase.
Other Challenges
Challenges Potential Solutions
Rising fuel prices
Improved driver training to improve fuel
economy
Partnering with fuel companies to reduce costs
Determine the most economical transport
modes (e.g. rail, shipping)
Improve/increase vehicle maintenance to
improve fuel economy
Maintenance work
Additional planning
Be aware of changes, road closures as a result
of maintenance works
Oversized shipments
Improved planning
Consider different transport modes
Improved driver training to help improve fuel economy and vehicle maintenance
can lead to significant financial savings in the long run. Investment and ongoing
costs are reduced. The courier mentioned in the interview that the use of lower
revs, higher gears and higher tyre pressures have helped to improve fuel
economy. These strategies are relatively easy to implement. Considering
different transportation modes may also help to reduce costs.
The solutions mentioned above could be implemented by different entities
including governments, companies, employees and the general public. In the end
it is up to each one to determine whether implementing the different solutions is
going to be worthwhile.
54
This thesis has given a special insight into Australian logistics and presented
many different logistics challenges. It has also used many different examples to
illustrate them. The case study, in particular, gives a good, practical
understanding of the challenges facing an individual in Australia’s largest city.
The solutions mentioned may provide some answers to the problems
encountered.
There will always be challenges facing the logistics industry in Australia.
Domestic logistics alone is filled with challenges, while international logistics
presents companies with even more. Some challenges will be overcome over
time while new challenges will continue to present themselves. It is important to
remember that each challenge presents a different problem and there may be
one or more ways to overcome it. This may involve a long and costly procedure
or there may be a simple fix. It is necessary to be aware of the challenges faced
and continually look for new ways to overcome them.
55
References
Airservices Australia. 2010. Movements at Australian Airports. PDF File.
Accessed on 10 August 2011.
http://www.airservicesaustralia.com/projectsservices/reports/movements/calytd20
10.pdf
Australian Associated Press (AAP). 2004. Snow storms worst in several years.
The Sydney Morning Herald 18 July 2004. Accessed 20 September 2011.
http://www.smh.com.au/articles/2004/07/18/1090089030982.html
Australian Bureau of Meteorology. 2011a. Australia Climate of Our Continent.
Accessed on 30 August 2011.
http://www.bom.gov.au/lam/climate/levelthree/ausclim/zones.htm
Australian Bureau of Meteorology. 2011b. Rain and Temperature Records.
Accessed on 1 September 2011.
http://reg.bom.gov.au/climate/extreme/records.shtml
Australian Bureau of Meteorology. 2011c. Climate Variability and El Niño.
Accessed 20 September 2011.
http://www.bom.gov.au/lam/climate/levelthree/analclim/elnino.htm
Australian Bureau of Statistics. 2002. Freight Movements. Graph created with
Microsoft Excel using information provided by the Bureau of Statistics. Accessed
20 October 2011.
http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/9220.0Main+Features1Mar
%202001%20(Reissue)?OpenDocument
Australian Bureau of Statistics. 2006. Census 2006 – Population distribution of
Australia. Accessed on 10 August 2011.
http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/4102.0Chapter3002008
Australian Bureau of Statistics. 2010a. Regional Population Growth, 2009-2010.
Accessed 20 September 2011.
http://www.abs.gov.au/ausstats/[email protected]/Products/3218.0~2009-
10~Main+Features~Main+Features?OpenDocument#PARALINK7
Australian Bureau of Statistics. 2010b. Australian Demographic Statistics,
December 2010. Accessed 20 September 2011.
http://www.abs.gov.au/ausstats/[email protected]/mf/3101.0
Australian Bureau of Statistics. 2010c. Population by Age and Sex, Australian
States and Territories, June 2010. Accessed 1 September 2011.
http://www.abs.gov.au/Ausstats/[email protected]/mf/3201.0
Australian Bureau of Statistics. 2011. Population Clock. Accessed 27 October
2011.
http://www.abs.gov.au/ausstats/abs%40.nsf/94713ad445ff1425ca25682000192af
2/1647509ef7e25faaca2568a900154b63?OpenDocument
56
Australian Department of Infrastructure and Transport. 2011a. History of Rail in
Australia. Accessed 21 September 2011.
http://www.infrastructure.gov.au/rail/trains/history.aspx
Australian Department of Infrastructure and Transport. 2011b. Maritime
Transport. Accessed 27 September 2011. http://infrastructure.gov.au/maritime/
Australian Quarantine and Inspection Service. 2011. Various pages accessed
during September 2011. http://www.daff.gov.au/aqis
Australian Rocks and Mountains. 2011. Australian Government website
Australia.gov.au. Accessed 20 September 2011. http://australia.gov.au/about-
australia/australian-story/austn-rocks-and-mountains
Australian Tourism & Travel Network. 2011. Map of Australian Highways and
Holiday Destinations. Modified from original using Microsoft Paint. Accessed 23
September 2011. http://www.atn.com.au/mapofaustralia.html
Bureau of Infrastructure, Transport and Regional Economics (BITRE). 2010a&b.
Australian sea freight 2008–09. PDF File. Accessed 29 September 2011.
http://www.bitre.gov.au/publications/71/Files/Australian_Sea_Freight.pdf
Chen K. & McAneney J. 2006. High-resolution Estimates of Australia’s Coastal
Population. Geophysical Research Letters 33, L16601, 2. Accessed 20
September 2011.
http://minerva.mq.edu.au:8080/vital/access/services/Download/mq:1898/SOURC
E1?view=true
Council of Supply Chain Management Professionals’ Supply Chain Management
Terms and Glossary. 2010. Accessed 25 August 2011.
http://cscmp.org/digital/glossary/glossary.asp
Estrada-Flores S. 2008. Emerging Trends in US Logistics. Accessed 5 October
2011. http://www.laa.asn.au/pdf/ldaarticles/SE1.pdf
Freight Rail Operators Group. 2011. Map of Australian Rail Network. Modified
from original using Microsoft Paint. Accessed 21 September 2011.
http://www.frog.org.au/rail_information.html
Geoscience Australia. 2011. Canberra – Australian Capital Territory, Australia.
Accessed 21 September 2011. http://www.ga.gov.au/earth-
observation/basics/gallery/australian-urban-expansion/act/canberra.html
Google Maps. 2011. Accessed 6 September 2011. http://maps.google.com/
Hammant J. 1995. Information Technology Trends in Logistics. Logistics
Information Management 8, 6, 32-37.
Mayhew C. 2001. The Detection and Prevention of Cargo Theft. Trends and
Issues in Crime and Criminal Justice, 214. Accessed 13 October 2011.
http://www.aic.gov.au/documents/B/B/0/%7BBB0D4DB9-5290-46E5-8438-
486632808090%7Dti214.pdf
57
New South Wales Roads and Traffic Authority. 2011a. Pacific Highway Upgrade,
Monthly Achievement Report, August 2011. Accessed 5 October 2011.
http://www.rta.nsw.gov.au/roadprojects/projects/pac_hwy/documents/august_mo
nthly_achievement_report_2011.pdf
New South Wales Roads and Traffic Authority. 2011b. Sydney Orbital Network.
Accessed 6 September 2011.
http://www.rta.nsw.gov.au/usingroads/motorwaysandtolling/index.html
Northern Territory Department of Lands and Planning. 2011. Motor Vehicle
Registry Bulletin. Accessed 20 October 2011.
http://www.nt.gov.au/transport/mvr/licensing/infobulletins/ibl11.pdf
Oxford Advanced Learner’s Dictionary. 2000. 6
th
Edition. Oxford: Oxford
University Press.
Rowden P., Steinhardt D. & Sheehan M. 2008. Road Crashes Involving Animals
in Australia. Accident Analysis and Prevention 40, 2. Accessed 21 September
2011. PDF File. http://eprints.qut.edu.au/15299/1/15299a.pdf
Skyscanner. 2011. Airports in Australia – Route Map. Modified from original using
Microsoft Paint. Accessed 21 September 2011.
http://www.skyscanner.com.au/airports/au/airports-in-australia.html
Street-directory.com.au. 2011. Map of Australia. Modified from original using
Microsoft Paint. Accessed 1 September 2011. http://www.street-
directory.com.au/sd_new/home.cgi
Sydney Media. 2011. City of Sydney – A snapshot. Accessed 25 August 2011.
http://www.sydneymedia.com.au/html/2280-city-of-sydney---a-snapshot.asp
Sydney Motorways. 2011. Road Toll Calculator. Accessed 6 September 2011.
http://sydneymotorways.com/rta_map.html
The Australian Continent. 2011. Australian Government website Australia.gov.au.
Accessed 20 September 2011. http://australia.gov.au/about-australia/our-
country/the-australian-continent
Trotman K. 2006. Australian Road Train. Accessed 20 October 2011.
http://www.flickr.com/photos/kt/210011264/
United Nations Statistics. 2009. Environment Statistics Country Snapshot:
Australia. PDF File. Accessed on 9 August 2011.
http://unstats.un.org/unsd/environment/envpdf/Country_Snapshots_Sep%202009
/Australia.pdf
Waters, K. 2003. Logistics – An Introduction to Supply Chain Management. New
York: Palgrave McMillan.
58
Appendices
Appendix 1: Interview Questions
1. How would you describe your job?
2. What kind of tasks do you carry out?
3. How long have you been working in this field?
4. Where does your work take place?
5. Has your job changed over the years? In what way has it changed?
6. What kinds of logistics challenges do you face in your job?
7. How has the advancement of information technology affected your job? Has it
created additional challenges?
8. Are there any particular challenges that you face daily? Describe them.
9. What challenges are there currently that were not evident previously?
10. Is there a challenge you can think of that you have reacted to in recent times?
11. Can you think of some challenges that you might expect to arise in the coming
years?
12. Can you think of any possible solutions to the challenges you have
mentioned?
Appendix 2: Interview Answers
1. I work as a contract courier (self employed) for a small courier company at
Mascot (suburb of Sydney). I work an eight hour day, usually from 8 am to 4
pm, delivering high risk freight; mainly mobile phones. My vehicle is a
Mitsubishi 1 tonne van.
2. My day consists of a loosely based set run which takes most of the day. I
usually do deliveries only, although pick-ups can occur.
59
3. I commenced the job as a courier on 28/3/1996, so 15 years of experience,
having had no prior experience. It took about 12 months to get into a rhythm.
4. I pick up the goods for my run from a warehouse at Alexandria before sorting
them out in order of delivery. 80% of my work is in the CBD of Sydney, the
remaining 20% on Sydney’s lower North Shore (North Sydney, Cremorne,
Neutral Bay and Mosman).
5. For the first 6 years of being a courier I worked “ad hoc”, which means I
picked up goods from point A and delivered them to point B. It involved a lot of
kilometres travelled, longer working hours and I was paid per job only. For the
past 9 years I have worked on an hourly hire basis.
6. The major logistics challenge today is the weight of items. The Transport
Workers Union (TWU), of which I am not a member, states that the delivery of
any item weighing more than 20kg must be performed by 2 men. This is
somewhat impractical, for example, a television weighing approximately 28
kg. Having worked in the industry for so long I have developed special
techniques of doing this without injuring myself.
7. The difference using information technology as compared to, say, 10 years
ago, is that there is very little paperwork involved now. All deliveries and pick-
ups are recorded on a hand held barcode scanner. Originally the scanners
were quite large and heavy and nicknamed "bricks". They are now small and
light enough to fit in your pocket. A mobile phone is still a necessity for certain
jobs, e.g. private addresses.
8. Deliveries in the city can be a challenge because a lot of buildings have a
security lockout on certain floors. When using the lift a swipe card is required
for access. This means contacting the concierge, security personnel, dock
master etc. This results in lost time. In some instances a job cannot be
performed at all and requires rebooking.
60
9. The main challenge today is the security of goods. My van has a compulsory
alarm and central locking system as well as tinted windows. Carrying high risk
freight for the company I subcontract requires that my van has no company
logos, i.e. it is plain white and I do not have a uniform with a logo.
10. To keep costs down! The rising price of fuel (approximately $1.60/L for 98
octane) required a change of driving style. This included using lower revs,
higher gears and higher tyre pressures (less rolling resistance).
11. Traffic congestion. Although the number of vehicles travelling in the CBD has
remained basically the same for the past 5 years, the introduction of
cycleways and bus only lanes has hampered traffic flow. Poor traffic light
synchronisation has also resulted in more traffic jams.
12. Get rid of the cycle lanes and better synchronise traffic lights to maximise
traffic flow.
doc_534871624.pdf
Human induced climate change is real or not, an issue not to be discussed here, one cannot ignore the effects of man on the environment and the global pressures placed on large companies in regards to environmental responsibility.
AUSTRALIAN LOGISTICS CHALLENGES AND
SOLUTIONS TO OVERCOME THEM
Neil Stewart
Bachelor’s Thesis
November 2011
Degree Programme in Logistics Engineering
Technology, communication and transport
DESCRIPTION
Author(s)
STEWART, Neil
Type of publication
Bachelor´s Thesis
Date
16.11.2011
Pages
60
Language
English
Confidential
( ) Until
Permission for web
publication
( X )
Title
AUSTRALIAN LOGISTICS CHALLENGES AND SOLUTIONS TO OVERCOME THEM
Degree Programme
Degree Programme in Logistics Engineering
Tutor(s)
SEPPÄLÄ, Ami
Assigned by
-
Abstract
Logistics challenges are present around the world in many different areas ranging from transportation
and legislation to weather phenomena and demographical issues. Obstacles that face logistics processes
and functions result in the additional loss of resources, money and time. The country of Australia
presents a unique logistics environment, and as a result, unique logistics challenges.
The method of qualitative research was used. The aims were to define the current logistics
environment in Australia, identify the existing logistics challenges and present different solutions to
overcome them.
The Internet was relied heavily upon in order to obtain information on the topic. Several practical
examples further illustrate the challenges. An interview was also conducted with a courier from
Australia’s largest city, Sydney, in order to give a special insight into the logistics challenges faced by an
everyday Australian within the transportation industry.
Many different logistics challenges that are present in Australia were identified. The challenges range
from the ‘tyranny of distance’ and the presence of wild animals on the road to increasing security risks
and the pressures of sustainable development.
In response to the identified challenges, some potential solutions are presented. The solutions include
ideas such as increased driver training, better forecasting and planning, improving transport networks
and infrastructure and looking at different production methods.
Keywords
Logistics, Australia, challenges, transport, interview
Miscellaneous
1
CONTENTS
1. Introduction ..................................................................................................... 4
1.1 Overview .................................................................................................. 4
1.2 Aim of the Thesis ...................................................................................... 4
1.3 Research Methods ................................................................................... 5
2. Definition of Logistics Challenges ................................................................... 6
3. Australia as a Nation ....................................................................................... 7
3.1 Geography................................................................................................ 7
3.2 Demography ............................................................................................. 8
3.3 Climate ................................................................................................... 10
3.4 Government............................................................................................ 12
4. Logistics in Australia ..................................................................................... 13
4.1 Overview ................................................................................................ 13
4.2 Transport Networks in Australia ............................................................. 14
4.2.1 Roads .............................................................................................. 14
4.2.2 Railways .......................................................................................... 16
4.2.3 Airports ............................................................................................ 18
4.2.4 Ports ................................................................................................ 20
4.2.5 Pipelines .......................................................................................... 22
4.3 Legislation .............................................................................................. 22
4.4 Types of Material Transported................................................................ 24
4.5 Technology ............................................................................................. 26
5. Australian Logistics Challenges .................................................................... 27
5.1 Geographical Challenges ....................................................................... 27
5.1.1 Urban Challenges ............................................................................ 27
5.1.2 Regional Challenges ........................................................................ 31
5.2 Demographical Challenges .................................................................... 33
5.3 Environmental Challenges ..................................................................... 34
5.3.1 Climate Change and Green Logistics .............................................. 34
5.3.2 Seasonal Problems .......................................................................... 35
5.4 Legislative Challenges ........................................................................... 36
2
5.5 Technological Challenges ...................................................................... 38
5.6 Other Challenges ................................................................................... 40
6. Case Study: Interview with a Sydney Courier ............................................... 43
6.1 Background ............................................................................................ 43
6.2 Method ................................................................................................... 44
6.3 Results ................................................................................................... 44
6.4 Discussion .............................................................................................. 44
7. Potential Solutions to Challenges and Conclusion ........................................ 47
References .......................................................................................................... 55
Appendices .......................................................................................................... 58
Appendix 1: Interview Questions ...................................................................... 58
Appendix 2: Interview Answers ........................................................................ 58
FIGURES
FIGURE 1. Map of Australia .................................................................................. 8
FIGURE 2. Map of Australia’s population distribution ............................................ 9
FIGURE 3. Map of Australia’s major seasonal rainfall zones .............................. 11
FIGURE 4. Map of the Australia’s Major Highways ............................................. 15
FIGURE 5. Map of the Australian Rail Network ................................................... 17
FIGURE 6. Map of Australian Airports ................................................................. 19
FIGURE 7. Map of Australian Ports ..................................................................... 20
FIGURE 8. An Australian Road Train in Northern Territory ................................. 23
FIGURE 9. Map of Sydney’s Orbital Network ...................................................... 29
FIGURE 10. Trip from Penrith to Hurstville using the Sydney Orbital Network .... 30
OTHER GRAPHS AND TABLES
TABLE 1. Leading Australian Ports in Imports and Exports ................................ 21
GRAPH 1. Types of Freight Movements in Australia April 2000 – March 2001 ... 25
3
Throughout this thesis there are several mentions of monetary values given in
dollars ($). In the case of this thesis, the Australian dollar is the used currency
unless otherwise stated. This is due to the nature of the thesis topic. The table
below shows how the Australian dollar (A$1) faired against other major
currencies during September 2011, the time at which the majority of this thesis
was completed.
Currency Lowest Value Highest Value Average Value
Euro (€) 0.71770 0.76938 0.74354
American Dollar ($) 0.96249 1.07618 1.01934
British Pound (£) 0.62298 0.66668 0.64483
4
1. Introduction
1.1 Overview
Australia is a unique country with a relatively short history. Demographical,
geographical and political conditions combine to create a unique logistics
environment subject to varying challenges.
The following research work describes the logistics environment in Australia
before moving on to define the challenges that are present. Several examples are
used to further illustrate the challenges. The thesis concludes with potential
solutions to overcome the challenges.
The focal point of the thesis is domestic logistics in Australia, but international
logistics, including imports and exports, and some of the challenges associated
with them, are also briefly covered. Australia’s remoteness and isolation from
other countries presents additional challenges in international logistics that need
to be covered.
Due to the sheer size of the Australian logistics industry, however, this paper
alone cannot completely cover the challenges of both domestic and international
logistics. There is also the matter of when international logistics related to
Australia is no longer solely an Australian issue. Australian domestic logistics is
filled with challenges and therefore, this is the main focus of the thesis.
1.2 Aim of the Thesis
This thesis is a personal research project. It is not a study or research project that
is being commissioned by a company. The purpose of this thesis is to inform
others about logistics challenges facing companies and businesses in Australia. It
may also give an insight into how the challenges faced compare to those faced in
other countries around the world. A discussion about the potential solutions to
these challenges is also covered.
5
As an Australian student in Finland, this topic is one of great interest for the
author. It gives the opportunity to further describe life in Australia. Perhaps the
information presented here may also be useful in the classroom. Few people
outside of Australia truly understand the nature of Australian logistics and this
may help to educate others.
The three main aims of this thesis are:
1. Define the current logistics environment in Australia
2. Identify the existing logistics challenges
3. Present potential solutions to overcome the identified challenges
1.3 Research Methods
This work is based on the method of qualitative research. Qualitative research is
the best method available for this particular topic, as numerical data associated
with quantitative research cannot adequately describe the challenges present.
The research was completed in Finland. Due to the foreign nature of the topic,
Australian logistics, the majority of the research was carried out on the Internet as
it was difficult to acquire textbooks that were relevant to the topic. Articles found
online are also used to back up certain pieces of information.
In order to reinforce some of the ideas presented throughout this thesis, a one on
one interview was also conducted. The interview was held with an employee of a
small courier company in Sydney’s Eastern Suburbs. The answers are published
and discussed further in the latter part of this work.
6
2. Definition of Logistics Challenges
Logistics is defined in the Council of Supply Chain Management Professionals’
Supply Chain Management Terms and Glossary (2010, 114) as:
The process of planning, implementing, and controlling procedures for the
efficient and effective transportation and storage of goods including
services, and related information from the point of origin to the point of
consumption for the purpose of conforming to customer requirements.
Waters (2003, 5) also describes logistics as ‘the function responsible for the flow
of materials from suppliers into an organisation, through operations within an
organisation, and then out to customers’.
Logistics is present in everything around us, whether it be the production and
delivery of a case of beer to a store or the delivery of several hundred heads of
cattle from the Australian outback to abattoirs in Indonesia. It is not limited to
transportation, or storage, but encompasses everything related to a process.
Other activities of logistics include, but are not limited to, purchasing, receiving,
stock control and recycling.
A challenge is defined by Oxford Advanced Learner’s Dictionary (2000, 192) as ‘a
new or difficult task that tests somebody’s ability and skill’. Challenges are faced
by people every day in all aspects of life.
If the two definitions are combined, a logistics challenge can be seen as an
obstacle or something difficult that is facing logistics processes and functions.
The ever increasing pressure of limiting our negative effects on the environment
can be seen as a global logistics challenge, whereas the effect that winter
weather has on a city airport can be seen as a local logistics challenge.
Logistics challenges are faced by companies every day, whether their business
focus is logistics orientated or not. They can be continuing challenges or new
ones. Some challenges may be overcome in time while others may just have to
7
be dealt with. It is up to each government, company, group or individual on how
they should combat these challenges in the most effective and efficient way.
3. Australia as Nation
The history of Australia is relatively short compared to most other countries
around the world. When it was originally settled by the British as a penal colony in
1778, only local groups of the native Australians, Aborigines, were present. It
served as a colony within the British Empire until 1901 when Australia became a
sovereign nation. The following section describes the geographical,
demographical, climatic and political conditions of Australia.
3.1 Geography
In terms of land area, Australia is the sixth largest country in the world with a total
of 7,692,024 square kilometres (United Nations Statistics 2009). It is also the
world’s smallest continent. It is a very flat country with the highest peak being
Mount Kosciuszko at 2,228m (Australian Rocks and Mountains 2011), dominated
by vast areas of desert. Australia is commonly known to be made up of six states
and two territories with the city of Canberra, located in the Australian Capital
Territory, as the capital. Figure 1 is a map of Australia showing the states and
territories and their respective capitals.
8
FIGURE 1. Map of Australia (Street-directory.com.au 2011)
There are also several smaller external territories under the control of the
Australian government including Norfolk Island, Christmas Island and Cocos
(Keeling) Islands among others. These islands, however, do not have large
populations and have little impact on the overall running of the country as well as
logistics issues.
3.2 Demography
The population of Australia as of 27 October 2011 stands at 22,744,608 with an
average growth of one person every 1 min 31 seconds (Australia Bureau of
Statistics 2011). The majority of Australians live in the large coastal cities.
According to Chen and McAneney (2006, 2), 30% of Australian addresses are
9
located within 2 km and 50% are located within 7 km of the shoreline. Figure 2
shows Australia’s population distribution.
FIGURE 2. Map of Australia’s population distribution (Australian Bureau of
Statistics Census 2006)
The south east of Australia is where most of the population is concentrated. The
temperate climate and the initial settlement of Australia are reasons for this. The
Australian Capital Territory has the highest population density, followed by the
state of Victoria, while Western Australia has the lowest (Australian Bureau of
Statistics 2010a). Sydney has the highest population of any city followed by
Melbourne, Brisbane, Perth and Adelaide (Australian Bureau of Statistics 2010b).
As with most developing countries, Australia’s population is ageing due to lower
birth rates and advances in technology that lead to increased life expectancy
10
rates. Using information provided by the Australian Bureau of Statistics (2010c),
the median age of the Australian population has increased from 32.1 years at 30
June 1990 to 36.9 years at 30 June 2010.
3.3 Climate
Australia is the second driest continent on Earth, behind Antarctica, making it the
driest inhabited continent (The Australian Continent 2011). The inland parts of
Australia are particularly dry and much land is almost uninhabitable. The climate
conditions again reinforce the reasons for coastal settlements. The conditions
inland lead to low fresh water levels and non-arable land that is not sustainable
for large cities. The nation’s capital Canberra is the largest inland city with a
population of around 350,000, significantly less than most of the other capitals
around Australia. Even then, Canberra is approximately only 150 km inland
(Geoscience Australia 2011).
Rainfall
Figure 3 shows how different parts of Australia are subjected to varying levels of
rainfall. As mentioned above, the interior of Australia is very dry and receives
very little rain throughout the year. The northern parts in the tropics receive heavy
rainfall during the summer season, while other parts of Australia receive varying
levels of rain due to prevalent weather patterns.
11
FIGURE 3. Map of Australia’s major seasonal rainfall zones (Australian Bureau of
Meteorology 2011a)
Seasonal Variations
Due to the large size of Australia, many different types of weather are
experienced. It should be noted that Australia experiences its seasons at the
opposite time of the year when comparing to locations in the Northern
Hemisphere. During the summer the temperature can rise to over 45C in inland
regional centres. Even the coastal cities, including Sydney and Melbourne, are
capable of reaching temperatures above 40C several times a year. It is also
possible for high temperatures to occur during spring and autumn.
The northern parts of Australia have a typical tropical climate, including a wet
season. The winter months are hot and dry, while the summer is hot, humid and
wet.
12
The winter is quite cool in the southern states of South Australia, Tasmania,
Victoria and New South Wales. A prevailing southerly wind bringing cold weather
from Antarctica and the Southern Ocean helps to keep temperatures cool during
winter.
The Great Dividing Range is a mountain range which runs from Victoria up into
southern Queensland. The Snowy Mountains, located on the southern end of this
range, receive snow each winter. Tasmania and other inland parts of the
mainland, particularly in the south east, are also capable of receiving snow.
Temperatures very rarely go to extremely low levels, the lowest ever recorded
temperature in Australia is -23C (Australian Bureau of Meteorology 2011b), but
icy conditions are still encountered in different parts of the country.
El Niño
In addition to seasonal fluctuations, Australia also experiences long-term
variations (Australian Bureau of Meteorology 2011c). El Niño is a natural event
that takes place in the Pacific Ocean. While it can affect many countries not just
on the Pacific Rim, it can lead to drought conditions in eastern parts of Australia
for several years. Its opposite, La Niña, can bring heavy rainfall and flooding. The
floods in south eastern Queensland in late 2010 and early 2011 are an example
of this. Australians need to plan ahead in order to deal with these conditions
which, to some degree, can be forecast.
3.4 Government
Australia gained independence in 1901 and since then has remained a part of the
British Commonwealth. While this has little impact on the general day to day
running of the country, the Queen of England is still Australia’s head of state and
is represented in Australia by the Governor-General. A prime minister and their
cabinet run the country with federal elections held at least every three years.
13
There are two main political parties in Australia; Liberal and Labor. Not since the
1960s has a party other than these two been in power.
In addition to the Federal government, each state and territory also has a
government. The state and territory governments must work in cooperation with
the Federal government on many different issues, even if the ruling parties are
not the same. This can create problems due to different party policies.
At an even lower level, there is the local government which governs small
regional areas. For example, in New South Wales there are 152 local
governments.
4. Logistics in Australia
4.1 Overview
As with any country in the world, logistics plays an important role in assisting the
running of the nation’s economy. The Australian Logistics Council (2011) states
that ‘while overseas experience provides some examples, Australia’s situation as
a remote, sparsely populated island continent largely dependent on the export of
raw material, poses unique challenges for transport and logistics’. According to
Estrada-Flores (2008, 3), Little (2007) stated that the cost of logistics activities in
2007 equated to approximately 9% of Australia’s Gross Domestic Product (GDP)
for that year, a figure well into the billions of dollars. The following section of this
paper describes the current logistics environment in Australia.
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4.2 Transport Networks in Australia
The transport network in Australia covers a wide range of modes of
transportation. Due to the large size of the country, road, rail and air freight all
have a share in transportation activities while shipping is extremely important for
international freight.
4.2.1 Roads
The Australian road network is made up of three road categories: Federal
highways, state highways and local roads. Federal highways are large roads that
connect capital cities. The funding for these roads is provided by the Federal
Government, although state governments also have some input when necessary.
State highways and local roads make up the remaining roads and funding comes
from the respective state government.
Figure 4 shows the road network in Australia. The nation’s major highways are
illustrated.
15
FIGURE 4. Map of the Australia’s Major Highways (Australian Travel & Tourism
Network 2011)
Road conditions in Australia are generally very good with multi-lane freeways
connecting the larger cities with each other. Regional centres are connected by
highways that are continually being upgraded and improved. Different types of
road and warning signs are abundant and several types of safety features, such
as barriers, road reflectors and guard rails, are in place.
An example of a road being upgraded is the Pacific Highway. It connects
Newcastle to Tweed Heads on the east coast of Australia and acts as one of two
major routes between Sydney and Brisbane. It has undergone many
improvements over the last 15 years. A progress report by the New South Wales
Roads and Traffic Authority (2011a, 1) stated that at the end of August 2011,
about 51% of the 664 km highway was dual carriageway. An additional 195 km is
16
also either under construction or in the planning phase. Improvements like this
greatly increase road safety and decrease journey times.
There are also speed limits in force throughout the country to ensure the safety of
drivers. In remote areas there are long stretches of straight road, while winding
roads are encountered elsewhere, both of which can be dangerous to drivers for
different reasons.
4.2.2 Railways
The passenger rail network in Australia is not as extensive as other countries
around the world, although freight rail transportation is an integral part of
Australia’s logistics network.
Australia did not experience a large rail boom like Great Britain and the United
States did during the mid to late 1800s. This was due to a small population and
the fact that Australia was still made up of individual colonies that did not make
decisions with the whole population in mind. Despite this, at the time of
Federation in 1901 there was more than 20,000 km of track. However, three
different track gauges had been built. In fact, the three different gauges are still in
use in different parts of the country, although each capital city on the mainland is
connected by a fourth uniform gauge. (Australian Department of Infrastructure
and Transportation 2011a.)
In 1997, the Australian government created the Australian Rail Track Corporation
(ARTC). It is a government owned corporation that controls a large share of
Australian railways. It mainly controls the uniform gauge lines, but also smaller
regional lines. There are also many other operators, such as state government
corporations and large mining companies, that control rail lines in Australia.
Figure 5 shows the rail network in Australia. The yellow line shows the uniform
gauge track that connects the major cities. Tasmania also shows a small rail
network, although this is limited to freight traffic. The network in the south eastern
area of the mainland is quite extensive and the east coast is fairly well connected.
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Elsewhere though, only one rail line connects the east to the west, and the mid
south (South Australia) to the mid north (Northern Territory). Railways that
service mines in the north west are also isolated.
FIGURE 5. Map of the Australian Rail Network (Freight Rail Operators Group
2011)
The majority of lines are not electrified. All freight and the majority of long
distance passenger traffic operates under the power of diesel, while the majority
of metropolitan public rail systems use electricity. A large number of lines have
been built purely for the transportation of raw materials such as iron ore, coal,
copper and sugar cane.
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While the network itself is comparatively smaller than others around the world,
rail plays an important role in the movement of goods throughout Australia.
4.2.3 Airports
Each capital city in Australia, of both state and territory, is serviced by a main
airport. Other large airports include Gold Coast and Cairns, both located in the
state of Queensland. The majority of Australian airports are quite close to the city
and have good road connections, while some are also connected by rail.
Figure 6 shows the location of Australian airports. The larger airports are defined
by name. Even though it can be seen that the majority of the coastline is lined
with airports, supporting the population centres, there is a surprising number of
airports in regional Queensland. These airports serve regional centres that are
home to mining operations.
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FIGURE 6. Map of Australian Airports (Skyscanner 2011)
In terms of cargo and goods, each airport has the facilities to cater for a variety of
shipments. Again, Sydney is the largest airport for incoming goods. In 2010,
Sydney’s Kingsford-Smith airport received 304,938 flight movements, inclusive of
passenger flights, of which 73,908 were aircraft over 136 tonnes (Airservices
Australia 2010). Many airports are mainly used for cargo shipments or small
passenger transports, particularly those inland.
Air cargo is especially important for goods that must be transported in a short
period of time. Overnight deliveries are achievable throughout Australia thanks to
air transportation. High end goods also rely greatly on air transportation.
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4.2.4 Ports
Like airports, each capital city, except Canberra, is serviced by a main shipping
port. There are also many other important ports around Australia. Sea
transportation is very important to Australia’s exports industry. Australia relies on
this form of transportation for 99% of its exports (Australian Department of
Infrastructure and Transport 2011b). While inland water transportation is not very
common due to the small number of lakes and inland waterways, domestic
shipping along the coast also exists.
Figure 7 illustrates the location of Australian ports. The majority are located in the
south east and up along the eastern coastline, although those located on the
western coastline are also important.
FIGURE 7. Map of Australian Ports (Australian Quarantine and Inspection
Service 2011)
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Table 1 below shows the leading ports in imports and exports during the
2008/2009 financial year in terms of weight and value. International shipping
trade accounts for 89% of the total trade. The remaining 11% is accounted for by
domestic trade.
TABLE 1. Leading Australian Ports in Imports and Exports (Bureau of
Infrastructure, Transport and Regional Economics (BITRE) 2010a, 17-18)
Imports Exports
Weight
(tonnes)
Sydney (Port Botany) (NSW)
15,403,757
Port Hedland (WA)
154,854,419
Value
($ thousands)
Melbourne (VIC)
46,272,024
Dampier (WA)
25,734,700
From the table and the location of the ports listed, it can be surmised that the
Western Australian ports of Port Hedland and Dampier deal exclusively in heavy
and valuable raw materials such as iron ore and coal, while Sydney and
Melbourne, as the largest population centres in Australia, receive large quantities
of imported manufactured and consumer goods.
Foreign Trade
According to BITRE (2010b, 21), China and Japan are the leading import and
export partners in terms of value. As mentioned above, international shipping is
responsible for 99% of international trade. Air freight represents the other 1%.
Exports are extremely important to Australia. Australia’s abundance of valuable
raw materials such as iron ore and coal results in high demand from many
countries around the world. China’s continually growing industry, for example,
relies greatly on materials sourced in Australia. Australia also relies on China for
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many imported consumer goods that are not economically viable to produce
within Australia.
4.2.5 Pipelines
Another less common form of transportation is the use of pipelines. Pipelines are
used to transport natural gas, oil, ethane and slurry. Natural gas is the most
common substance to be transported by pipeline and there is a fairly extensive
network of pipes throughout Australia. Many of these pipelines are privately
owned by large corporations such as BHP Billiton.
4.3 Legislation
There are many different types of legislation that affect logistics operations in
Australia. Some key regulations are described below.
Transport Regulations
There are strict sets of guidelines for transportation in Australia. All Australian
states have their own regulations, while there are also regulations that cover the
whole country. Regulations cover, but are not limited to, vehicle size, maximum
loads, packaging, speed limits and the different types of goods carried. The
dangerous goods code, for example, complies with standards laid down by the
United Nations and is enforced nationwide.
Vehicle size is an important regulation throughout Australia, particularly for the
large ‘road trains’ that operate in remote areas. Figure 8 shows an Australian
road train.
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FIGURE 8. An Australian Road Train in Northern Territory (Trotman 2006)
Road trains are large, multi-trailer vehicles that operate in Australia. They are
also used in other countries including Mexico and Canada. Their main purpose is
to carry a large amount of goods across a large distance, while eliminating the
need for rail transportation. They are very useful in remote areas that cannot be
accessed by rail. Road trains can carry many types of cargo including fuel,
animals, wood and coal. Road trains are only permitted in certain areas in
Australia. For example, they are not permitted in the state of Victoria and other
states limit their activity to regional areas. Lower speed limits are also enforced.
Road trains can be as long as 53.5 metres (Northern Territory Department of
Lands and Planning 2011, 5).
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Quarantine
Quarantine laws in Australia are extremely strict due to its fragile ecosystem.
Australia’s biodiversity is unlike any other place in the world and the smallest
foreign substance can greatly impact the environment. Since the introduction of
Quarantine Act 1908, incoming goods have been subject to stringent checks and
many items are prohibited from entering the country. Foods, plant and animal
materials are the highest risk items. There are strict guidelines set out by the
Australian Quarantine and Inspection Service (AQIS), a branch of the Australian
Government. These guidelines define what can and cannot enter the country.
Items of particular mention that are subject to restrictions include food
substances such as meat and fruits and organic material such as seeds, leaves
and untreated wood.
The movement of goods within Australia is also monitored. Particular items such
as fruits, vegetables and animals should not cross state borders without the
required permits.
Work Safety
Workers unions have long been campaigning for better work safety in a variety of
job sectors. As a result, the Australian government has implemented several
work safety laws over the last decade or two. For example, warehouse
environments require high visibility safety vests, steel capped boots, and
depending on the goods stored, may also require protective eyewear or hardhats
among other items.
4.4 Types of Material Transported
There are many different types of material transported in Australia, both
domestically and internationally, ranging from food and animals to iron ore and
wood. Different regions in Australia specialise in different raw materials while
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different materials require different types of transportation modes. Vehicles must
be modified in order to carry certain loads. In terms of rail transportation, certain
rail cars must be used for certain types of material. Some loads also require
special permits (as mentioned in section 4.3.1), such as a dangerous goods
permit, and vehicles carrying those loads must display special warning signs.
The Australian Bureau of Statistics gives four classification categories for the
types of material being transported. They are listed below.
1. Solid bulk – Large amounts of unpackaged material in solid form such as
coal, iron ore or sugar cane.
2. Liquid bulk – Large amounts of unpackaged materials in liquid/gas form
such as fuel, liquid petroleum gas or milk.
3. Containerised – Materials/cargo transported in containers.
4. Other – Anything that does not fit in with the above categories or is
undefined.
Graph 1 shows the percentages of each category in freight movements from April
1 2000 to March 31 2001. While this data is a decade old, it still gives a fair
indication of today’s percentages in Australia.
GRAPH 1. Types of Freight Movements in Australia April 2000 – March 2001
(Australian Bureau of Statistics 2002)
63% 9% 8% 20%
0 % 20 % 40 % 60 % 80 % 100 %
Solid Bulk
Liquid Bulk
Containerised
Other
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4.5 Technology
Technology in logistics is continually improving throughout the world and it is no
different in Australia. Information technology (IT) is a necessity in logistics.
According to Hammant (1995, 32), Christopher (1992) stated that ‘information
has always been central to the efficient management of logistics but now,
enabled by technology, it is providing the driving force for competitive logistics
strategy’.
Warehouse systems are becoming more advanced through the use of radio-
frequency identification (RFID) and barcode scanners. The task of eliminating
paperwork has increased efficiency and effectiveness in the workplace. The
introduction of automated sorting facilities has also greatly increased the sorting
capacity of warehouses and, in turn, improved lead times.
Warehouses, equipment and other pieces of property have much improved
security systems in place to prevent theft and vandalism. Advanced IT systems,
such as enterprise resource planning (ERP) systems, also a hold a larger amount
of information and provide faster and more convenient access than ever before.
Global positioning system (GPS) and RFID technology allow for real-time tracking
throughout Australia. Items sent abroad can also be tracked. GPS and other
navigational technologies provide the ability to calculate the most efficient
transportation routes by road as well as helping to monitor traffic conditions.
Other route planning systems are also in place.
Companies using advanced technology in their logistics operations have a
competitive advantage over those that do not. Australian companies continually
update their systems to stay in line with the world’s best available technology.
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5. Australian Logistics Challenges
The following section defines different logistics challenges faced by companies in
Australia. It covers challenges related to geography, demography, the
environment, legislation and technology as well as other challenges that are
present. Examples are used to illustrate the challenges in order to give a better
understanding of how relevant and realistic they are.
5.1 Geographical Challenges
Many different geographical conditions can be encountered around Australia.
Urban and regional areas offer different logistics challenges to different
companies. They are described below.
5.1.1 Urban Challenges
Traffic Congestion
The large coastal cities of Australia, particularly Sydney and Melbourne,
experience traffic congestion every weekday. The morning and afternoon peak
hours lead to a much larger volume of traffic on the roads leading in and out of
the city area. Freeways and motorways have been constructed in multiple
directions but even those are heavily congested.
New plans and solutions to decrease congestion are continually developed but as
the ownership of cars and urban sprawl continue to increase, they are likely to
fail. The transportation of goods is likely to be affected if their routes take them
through these congested areas at peak hour times.
As mentioned above, one solution to overcome congestion has been to build
motorways. These avoid smaller arterial roads with traffic lights and are generally
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wider in terms of the number of lanes. In Australia many of these motorways are
built by a private company under contract with the local state government.
Having a warehouse located in the city may also lead to traffic congestion being a
daily challenge.
Toll Roads
An example of a road built by a private contractor is the Lane Cove Tunnel,
situated in Sydney’s inner north-west. It is a four kilometre tunnel built to connect
the Gore Hill Freeway to the M2 motorway. The project has been considered by
many to be a disaster with the initial contractor, Connector Motorways, going into
receivership in 2010, just under three years after the tunnel opened. The tunnel
itself is a toll road.
There are many toll roads in Sydney and they can be considered to be
challenges themselves, despite them being built to overcome the initial challenge
of traffic congestion. The Sydney Orbital Network, shown in Figure 9, is a 110
kilometre collection of motorways and freeways designed to connect different
parts of the city. The majority of this network includes toll roads. In addition to this
network, the M4, which was previously a toll road, connects the inner west of
Sydney to the Blue Mountains (as shown in Figure 9). The toll roads are paid for
by using an electronic tag, or ‘E-tag’, assigned to individual vehicles. When
passing through a toll gate the tag registers electronically and the cost of the toll
is deducted from a special account.
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FIGURE 9. Map of Sydney’s Orbital Network (New South Wales Roads and
Traffic Authority 2011b)
The Sydney Motorways website provides a toll calculator for motorists to use
when planning a trip. Using the calculator provided on their website, a one way
trip from Penrith to Hurstville covering 56 kilometres of the M7 and M5 motorways
(illustrated in Figure 10) would incur a cost for a heavy vehicle of $15.80. A trip in
the opposite direction would cost $10.80, leading to a return trip cost of $26.60.
30
FIGURE 10. Trip from Penrith to Hurstville using the Sydney Orbital Network
(Google Maps 2011)
Assuming a heavy vehicle uses this return route once daily, 5 times a week for 52
weeks a year, the total annual cost from tolls alone totals $6916.
This monetary figure just goes to show the effect tolls can have on the operations
of a transportation company in one of Australia’s larger cities. Several thousands
of dollars might be required by a company for tolls if they want to use the most
efficient route possible. These costs are a challenge to companies when
conducting route planning and must be taken into account, especially when it
comes to a large fleet of vehicles where travel costs are incurred by the
company.
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Road Changes
It is quite common in Australia for local roads to be adjusted and modified in
order to help control the flow of traffic in certain local areas. There are highway
upgrades that bypass local towns improving travel times and pedestrian safety
while reducing traffic congestion on smaller roads. On the other hand there are
times when roads are closed and blocked off to encourage vehicles to use
available motorways. These motorways, however, often have a toll, as mentioned
above. There are also suburban streets, particularly those on which schools are
located, that forbid heavy vehicles from entering them. These changes may
create confusion and increase travelling times.
5.1.2 Regional Challenges
Distance
The most obvious challenge in Australia for logistics companies is the ‘tyranny of
distance’; the great distances between cities. Currently there is a road distance of
880 kilometres between Sydney and Melbourne and another 930 kilometres
between Sydney and Brisbane. A road trip from Sydney to Melbourne equates to
over 10 hours of travel time. Sydney and Perth are a massive 3,950 kilometres
apart by road. Rail journeys also take a considerable amount of time.
Many remote roads have very few petrol stations and it may be necessary to
carry additional fuel. In any case, senders of goods need to be aware of the time
taken to travel these distances and the costs involved and plan ahead
accordingly.
The geographical location of some places can be a challenge to logistics
providers. Mining sites, in particular, are in remote locations and the process of
getting goods to them often involves complex, long distance transportation that
needs to be carefully planned beforehand.
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The March 2011 edition of Tolltoday (2011, 9), a magazine published quarterly by
Australia’s largest logistics services provider Toll Holdings, describes a project
that involved transporting ‘218 loads of cargo from seven vessels from Port
Hedland to the BHP Billiton Yandi mine site’. Large, oversized items up to 14
metres wide, 28 metres long and 7 metres high were part of the cargo. A road
distance of 482 kilometres needed to be traversed in one of Australia’s most
remote areas in the state of Western Australia. A complex logistics program was
developed to carry out the operation. Operations similar to this one occur fairly
regularly in Australia.
Road trains (see section 4.3) are a common site in the remote areas of Australia.
This form of transportation is very helpful at overcoming the issue of goods
carried per kilometre by road.
Another issue faced due to travelling long distances is driver fatigue. Driver
fatigue is a big issue in Australia as many drivers are overworked and pressured
to complete deliveries within short timeframes. Fatigue on the road is an
extremely important safety issue. It can lead to severe injury or even death.
Drivers may struggle to deal with the pressures of their job and may feel forced to
use drugs to stay awake. Drivers may also break speed limits over long journeys
to ensure deliveries are made on time.
Animals
Animals, most commonly kangaroos, are considered to be a great hazard on the
road. They can be encountered in suburban areas or in the middle of nowhere,
throughout the country. Not only are they a threat to equipment but, more
importantly, they are a threat to human life.
According to Rowden, Steinhardt and Sheehan (2008, 6-7), Australian insurance
company AAMI (2007) reported ‘a 25% increase in animal-related crash claims
from 2005 to 2006’ and that the costs of vehicle repairs totalled $10.2 million in
2005 and $15.3 million in 2006. While insurance can cover the damage costs,
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injuries to drivers can be serious or even fatal. In terms of costs, the downtime of
a vehicle in repair or the time lost following an accident can be extremely high.
Bullbars are commonly used in Australia to protect vehicles in regional areas but
sometimes even they are not enough to prevent vehicle damage.
Road Conditions
As mentioned in section 4.2.1, road conditions in Australia are generally quite
good. However, due to the large size of Australia and its relatively small
population, the maintenance of the extensive road network is a large and
daunting task. Some roads, particularly regional roads, may be in a state of
disrepair. Potholes can be particularly dangerous. These problems may lead to
longer journey times or even damage to equipment.
5.2 Demographical Challenges
Australia’s ageing population is continuing to place a strain on the nation’s social
welfare system. Many people are forced to continue working past the traditional
retirement age of 65 years old to ensure they have enough money to survive later
in life. In terms of logistics, an ageing population may create problems. It is
commonly said that the older one gets, the harder it is to learn new things, and
with the current advances in technology many workers in the older generation
may find it hard to keep up. It could also be argued that older workers are not
capable of working at the same level physically for as long as younger
employees.
The growing concentration of populations in Australia’s large coastal cities may
also create problems. The need to ensure efficient and effective logistics
processes in these areas will continue to increase. While the population of
regional centres increase at a slower rate, it is necessary to ensure that their
needs are also met. The increased attention in the cities should not compromise
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the needs of the regional centres. Logistics companies need to adjust and adapt
to the different growths in demand.
5.3 Environmental Challenges
Australia’s climate and environmental conditions present different kinds of
challenges to logistics operations. Global awareness of climate change and the
associated pressures also create different challenges.
5.3.1 Climate Change and Green Logistics
Whether human induced climate change is real or not, an issue not to be
discussed here, one cannot ignore the effects of man on the environment and the
global pressures placed on large companies in regards to environmental
responsibility. Green logistics has become a topic of much discussion in the last
few years and is one that is becoming increasingly important for companies who
operate both locally and globally.
Minimising waste and pollution has been on the agenda for many companies that
wish to ensure their business operations are seen by the public in a good light.
Green logistics has become an integral part of a company’s planning processes.
Not only is minimising waste better for the environment, it can also save money
by using only what is necessary.
Operating efficiently with the environment in mind has become a challenge for
logistics providers and will continue to be in the next few decades. Renewable
energy sources need to be developed on a large scale and the act of preparing
for their implementation in the coming years needs to be seriously taken into
account.
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5.3.2 Seasonal Problems
Winter
In the winter snow can fall in The Great Dividing Range, the geographical feature
that runs from eastern Victoria up the coast to southern Queensland. This can
cause chaos on the roads. In the Blue Mountains, approximately 100 kilometres
west of Sydney, road closures are often enforced a couple of times each winter if
the roads are too dangerous due to snowfalls. This can also occur in other parts
of Australia, particularly Victoria, Tasmania and southern New South Wales.
The winter of 2004 saw a severe storm front cross through the southern half of
New South Wales and north eastern Victoria in mid-July. The Sydney Morning
Herald (2004) reported that ‘authorities were forced to close major roads in both
states, while they laid down sand and salt to reduce the danger’. The Great
Western Highway, the main road through the Blue Mountains connecting Penrith
in Sydney’s west to the mid-west of New South Wales, was affected by this
closure.
Studded tyres are rare and at some times during the year places may only be
accessible with the use of tyre chains. Large vehicles such as semi-trailers and
three or more axle trucks must avoid these areas. Road closures can last for
several days in severe conditions and, as a result, goods may not be able to
reach their destinations on time if alternative routes cannot be used.
In terms of rail traffic, snow can also affect goods movement. This is, however,
fairly rare due to the location of railway lines and the small chance of heavy falls
in places of low altitude. Again, the Blue Mountains are a good example of a
place where snow can interrupt rail traffic.
Snowfalls can also disrupt air traffic, as is the case in other parts of world,
although this is rare in Australia due to the fact that most large airports are
located on the coast where snow is extremely rare.
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Summer
Hot weather is prevalent throughout Australia from late September to late April,
and all year round in the northern parts. High temperatures can cause all kinds of
problems when it comes to logistics and it affects many different areas. Railway
lines are commonly affected with rails sometimes buckling due to the conduction
of metal. Electricity lines also have to deal with a great level of stress as a result
of higher temperatures.
Road transportation is also affected. There are many types of perishable items
that need cooler temperatures to ensure their longevity. Meat and fish products
that travel from abattoirs to city centres need to be properly refrigerated. High
temperatures can affect the running of cooling systems on trucks. Warehouses
that act as cross-docking points must also ensure that their cooling systems can
withstand the added pressure placed on them during hotter days.
It may sound simple but hot weather can also affect employees. Heat exhaustion
is a serious issue that needs to be considered and many people can be at risk if
their work takes place outdoors.
Natural Disasters
Australia is a country that is often affected by natural disasters. The most
common are bushfires, floods and cyclones. These disasters can cause a
considerable amount of damage, both to infrastructure and equipment. Costs and
time delays can result. Natural disasters usually also lead to an increase in the
demand for supplies. It may be difficult to ensure goods reach their destination
during these times.
5.4 Legislative Challenges
National legislation poses different kinds of logistics challenges. These
challenges can be in varying levels of business, from operational to strategic. The
37
following section presents some logistics challenges faced in Australia as a result
of legislation.
Funding Disagreements
Funding disagreements are a common problem in Australia. State governments
and the Federal Government have responsibilities to provide funding to certain
areas such as education, infrastructure and health. Sometimes there is a
disagreement over who should be paying. Each level of government has a strict
budget that they try to adhere to and occasionally funds become thin in different
areas.
In terms of logistics, it can be detrimental to operations if roads or railways are
not built on time as a result of these disagreements. The logistics industry
requires functioning and useable infrastructure such as roads and railways in
order to operate.
Transport Regulations
Regulations that govern the movement of goods can affect logistics operations. If
special transportation is required it may be necessary to have additional permits
or specially modified vehicles. The modification of vehicles or obtaining required
permits may take time and almost certainly will incur additional costs.
Quarantine
If a company wishes to import goods to Australia as part of their business they
must obtain permission from AQIS (see section 4.3). Even after obtaining
permission there are specific measures that must be taken to ensure that foreign
and unwanted materials do not cross the border. AQIS inspects all incoming
materials to Australia whether it is passenger luggage, mail items, shipping
containers or people themselves. Random quarantine inspections also take place
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as an extra measure of security. Exports are closely monitored and permits are
required for this practice also.
Companies that undertake import activities need to be aware of the required
permits. Additional planning is also needed.
Work Safety
As mentioned in section 4.3, work safety is a continually growing issue in
Australia. The pressures to ensure a safe workplace may lead to increases in
costs for businesses. A relatively recent law that was introduced and can be seen
in the logistics industry, among others, is the introduction of compulsory high
visibility safety vests for all workers. These vests are not only limited to
operational level warehouse workers, but drivers and upper level management
employees must also wear the vest in designated areas. Hardhats, safety
glasses and steel capped boots may also be required. Workers and/or employers
will also end up footing the bill for these safety items.
5.5 Technological Challenges
The current level of technology in the world presents special challenges to the
logistics industry and as technology continues to advance, additional challenges
may arise.
Additional Costs
New technology can be extremely costly. Having the most up-to-date technology
may give a company a strategic and competitive advantage, but the required
levels of investment must be seriously taken into account. Additional detailed
budgeting and forecasting must be done to ensure the additional costs that would
be incurred are feasible.
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Lack of Integrated Systems
Ensuring that different suppliers and their customers have the same computer
and ERP systems can be quite difficult. Companies and their primary, or largest,
suppliers may use the same system, but smaller suppliers may have different
systems in use. System clashes can lead to time delays and disrupt the flow of
information.
Dependence on Technology
Every day more companies go digital. An increasing amount of information is
stored on computers and internet servers. In fact, it would be very difficult to even
find a company in Australia that does not use some kind of electronic technology
to store information. If technology fails, however, it can create problems. It is
necessary to back-up information to a second, or even third, source to ensure it is
not lost. This may lead to additional costs.
Regional Issues
Due to Australia’s large size and low population density, some regional areas
may find it difficult to accommodate new technologies. Particular infrastructure
may not be available. For example, internet speeds are commonly known to be
slower and mobile phone reception can be weaker in regional centres than the
major cities in Australia. These issues may present challenges to logistics
operators in smaller inland cities.
Resistance to Change
A simple, yet ongoing challenge is the traditional resistance to change. Many
employees may feel change is difficult and perhaps not necessary. Technological
changes can be especially disturbing to a workplace. In logistics, the
40
implementation of a new ERP system may take several weeks. Employees must
undergo training and need to quickly adjust to new systems in as minimal time as
possible. Companies need to manage such a change effectively to ensure their
employees understand why the change is taking place and that they have any
support they may find necessary.
Adjusting to New Systems
Not only are employees at risk of falling behind following the implementation of a
new system, but whole companies and their operations are. Transferring old
information to new systems takes time and can be a confusing process.
Companies may require additional external assistance to help them cope with the
changes. This may lead to delays in production or distribution.
5.6 Other Challenges
There are also several other challenges that companies may come across that do
not fit into any of the above categories. They are described below.
Rising Fuel Prices
Using statistics from BITRE (2008), Estrada-Flores (2008, 3) stated that road and
freight rates in Australia increased by 9% and 5% respectively from 2001 to mid-
2008. A large amount of this increase was due to rising fuel prices. Every country
around the world has experienced additional strain on transport and the resulting
costs from higher fuel prices. While Australia is not alone, the challenge of
keeping other costs down to accommodate for these increases is still present.
41
Security Issues
Theft and property damage is an increasing risk in goods movement and storage.
Items that are most at risk include high value electronic goods such as computer
equipment, laptops and mobile phones, as well as other goods such as cigarettes
and jewellery. Security systems are now a must and they are continually being
upgraded to prevent theft.
According the Mayhew (2001, 1), Salkin (1999) claimed that worldwide losses
from cargo theft totalled US$30 billion a year at the turn of the century. This figure
has surely increased during the last decade.
Mayhew (2001, 3-5) gives some tips for improving the security for goods, both in
transit and in storage. These strategies are widely used in the logistics industry
today. They can include the following.
Additional surveillance systems
Additional seals on packaging
Additional locks on windows, doors etc.
Supervised loading/unloading
Strict controls over access to warehouses and dockyards
Random security checks
Additional fraud prevention measures
Use of enclosed trucks so goods cannot be seen
Each of these measures taken to improve security comes at a cost. Meanwhile,
criminals are improving their techniques and are discovering new ways to get
around the newly implemented security measures. Australian logistics companies
need to take these measures into account.
Different Rail Gauges
The initial construction of three different rail gauges (see section 4.2.2) has led to
a challenge also seen in Europe. The three gauges mean trains cannot continue
42
travelling on different tracks and that cargo must be unloaded. The present
uniform gauge provides some relief to this problem, and it may not be as severe
as in the early 1900s, but it still creates a challenge on smaller regional lines.
Maintenance Work
Maintenance work on infrastructure such as roads and rail may result in
transportation delays. Additional planning prior to journeys must be done.
Individual Oversized Shipments
Oversized shipments are quite common, as in many countries around the world.
The transportation of large items such as those used in construction and large
pieces of machinery need additional planning (see example in section 5.1.2).
Australia’s geography may create additional problems that need to be overcome.
Market Entrance/Competition
Large Australian logistics companies like Toll Holdings and Linfox hold a large
percentage of the market share. Their operations also cover a wide range of
logistics solutions. A new company looking to enter the market, or an established
company looking to diversify their operations, may run into barriers. Toll Holdings
itself has acquired many smaller companies during the last decade or two.
43
6. Case Study: Interview with Sydney Courier
6.1 Background
Sydney is the largest Australian city with a population of over 4.5 million people.
As a result of urban sprawl the city has expanded to cover just over 4000 square
kilometres. This is almost equal in size to London and is double that of New York
City despite having a much lower population density. The city area itself, known
locally as the Central Business District (CBD), is approximately 26 square
kilometres. (Sydney Media 2011)
As with any large city there is a need for local courier and transportation services.
While Australia Post is capable of delivering these services, the sheer number of
goods and the urgent need for them to be delivered quickly has led to an
increase in the number of courier companies in Sydney over the last 20 years.
Inside the CBD one will find hundreds of local cyclist couriers who deliver small
envelopes from one business to another. On a city scale there are thousands of
vans and small trucks available to transport and deliver envelopes, parcels,
boxes, pallets and other small goods to their destination with the added value of
personal customer service.
One man has been delivering goods in Sydney by van for 15 years as a local
courier. His job has taken him to Newcastle (160 kilometres away) and Canberra
(290 kilometres). The knowledge gained throughout the years has made him a
more than competent employee in a small courier company in Sydney’s eastern
suburbs.
An interview was conducted with this courier in order to give a different and
realistic view on the logistics challenges faced by an everyday Australian working
within the logistics industry in the country’s largest city.
44
6.2 Method
In keeping with the theme of this thesis, the interview and the resulting analysis
are based on the method of qualitative research. In order to obtain the most
comprehensive results it was decided that the best way to approach the interview
was to give the interviewee time to think about his answers. Twelve questions
(refer to Appendix 1) were devised and sent by email to the interviewee. The
interviewee then wrote his answers to the given questions separately on a piece
of paper before they were then returned for analysis.
6.3 Results
The answers given to the interview questions pointed out several challenges that
the courier has faced in his job. They include:
The weight of items and the influence from the Transport Workers Union
(TWU)
Security lockouts in CBD buildings
Security of goods
Rising fuel prices
Traffic congestion as a result of increased cycleways and bus only lanes
6.4 Discussion
The results given in the interview shed some light on the logistics challenges
faced at an operational level. While this is only a small part of the process of
logistics, the courier brings up some interesting points.
The challenges mentioned by the courier further reinforce the ideas presented
earlier in this thesis. Traffic congestion (see section 5.1.1) and security issues
(see section 5.6) are notable mentions.
45
Weight of Items
The courier states that ‘the major logistics challenge today is the weight of items’.
He goes on to explain that any item weighing over 20 kg must be transported or
lifted by two men, as stipulated by the TWU. While the TWU has the best
interests of workers in mind, in this case their wellbeing, sometimes this is not
practical. There may be times when there is no other option than for one worker
to lift an item weighing more than 20 kg. As the courier points out, even a
television can weigh approximately 28 kg. Obeying this rule may lead to time
delays. Despite that, the reason the rule is in place is obvious and, if possible,
should be followed at all times to avoid personal injury.
Security Lockouts
A daily challenge faced by the courier is the issue of security lockouts in the CBD;
‘deliveries in the city can be a challenge because a lot of buildings have a
security lockout on certain floors’. In order to get around this, building staff such
as the concierge or security personnel must be contacted. This incurs lost time
and extends time delays for items that are to be delivered later in the day. If a job
cannot be performed, as stated by the courier, it requires rebooking. This extends
time delays even further as well as increases the costs.
Security Issues
A logistics challenge that was not as evident previously, but is one of large
concern today, is the security of goods. The courier states ‘my van has a
compulsory alarm and central locking system as well as tinted windows’ and that
‘the company I subcontract (for) requires that my van has no company logos’.
This is something that has changed dramatically in the last 10 years. Theft and
the damage of goods through vandalism is something that companies are
becoming more aware of and the realisation of needing to protect goods is more
widespread.
46
Although it is not mentioned in the interview answers, the courier drives together
with an ‘offsider’. One stays with the van and goods at all times while the other
makes the deliveries. This procedure only came into force a few years ago. If
security issues were not of such huge concern, then each courier could drive
separate vehicles and complete far more work in the same period of time.
Rising Fuel Prices
Rising fuel prices is a concern around the world. As companies battle to combat
the rising costs of fuel, many individuals who need to pay for fuel to carry out their
work are suffering. As a result the courier has needed to adjust his driving habits
to save fuel. His driving habits now include ‘using lower revs, higher gears and
higher tyre pressures’. These all help to improve fuel economy and therefore
reduce associated costs.
Traffic Congestion
As mentioned in section 5.1.1, traffic congestion is a major logistics challenge in
Australian cities. In the courier’s experience, ‘the number of vehicles travelling in
the CBD has remained basically the same for the past five years’. However, due
to the introduction of cycleways and bus only lanes in an effort by the local
government to reduce personal car traffic in the CBD and to promote greener
alternatives, traffic congestion has increased. It is not practical to think that
motions to decrease personal car traffic will also decrease goods traffic. There
will always be goods traffic coming into the city. In fact, goods traffic will probably
increase as more businesses are established in the CBD area. Transit times will
be affected if the city does not provide the necessary space and allowances.
The courier also mentions poor traffic light synchronisation as a logistics
challenge. This leads to increased traffic jams and time delays.
47
Solution Suggestions
The courier only provides a couple of suggestions to solve the issues he faces;
‘get rid of the cycle lanes and better synchronise traffic lights to maximise traffic
flow’, he says. As with many large cities around the world, in Sydney there is a
feeling of resentment between drivers and cyclists. While cyclists can be a
nuisance to drivers, it is necessary for both to share the road. Cyclists should
also understand the need for at least some cars on the road and respect them.
One suggestion to overcome traffic congestion during the day is to promote
delivery times outside of regular daytime hours. Early morning deliveries, for
example, at 4am could reduce traffic congestion during the day.
7. Potential Solutions to Challenges and Conclusion
After looking at the content of this thesis, it is easy to see that there are many
logistics challenges facing companies in Australia. While there are some
challenges that simply exist and have no solution, such as work safety legislation,
there are other challenges that could be addressed in different ways. The
following tables examine some of the challenges mentioned earlier and put forth
some potential solutions to overcome them.
While some solutions may overcome one particular problem, they may, in turn,
create additional challenges. The solutions are solely for the challenge mentioned
and do not take into account any additional challenges that may arise.
48
Urban Challenges
Challenge Potential Solutions
Traffic congestion
Road changes to improve traffic flow
Encourage public transport to reduce the
number of road vehicles
Consider warehouse relocation away from
congested areas
City lockouts/special entry times for certain
vehicles
Better route planning
Toll roads
Consider different routes that do not include
tolls
Minimise trip numbers by having bigger loads
Road changes
Better route planning to avoid trouble spots
Ensure most recent information is used
Many of these suggestions, if not all, are viable. City lockouts and special entry
times for certain vehicles may be the most difficult to implement. This would
involve giving certain vehicles, such as large trucks and vans, certain times when
they can enter the CBD. It could be enforced, for example, in the early hours of
the morning on weekdays from 3am to 5am. It would almost definitely face
opposition from many transportation workers and unions simply because some
workers would be forced to work at different times. A driver completing a set run
of deliveries may also be unable to deliver to destinations outside of the CBD in
the early morning.
State and local governments could be more lenient on drivers in attempting to
force them to use toll roads by creating additional routes and modifying roads.
Road changes may also include widening existing motorways to allow for
additional traffic.
49
Regional Challenges
Challenge Potential Solutions
Distance
Bigger loads to ensure greater capacity per trip
(e.g. use of road trains)
Consider different transport modes such as rail
Source different local suppliers eliminating
need for distant transportation
Better planning
Better driver management and forced breaks
to decrease fatigue
Animals
Better awareness of animals
Driver training
Protective equipment for vehicles
Fencing to prevent animals from crossing the
road
Signs to warn drivers
Road conditions
Better/more warnings signs
Open feedback channels allowing community
members to request upgrades or inform local
government of problems
Improve older roads
Distance is a challenge that will simply not go away in Australia. However,
companies could consider using different transportation modes. Using rail, for
example, could ‘kill two birds with one stone’ by eliminating the need for trucks as
well as the need for additional drivers on the roads, eliminating driver fatigue.
However, as mentioned earlier some places are not accessible by rail.
Improving roads is an ongoing effort. Increased signage, more safety features
and upgrading roads is the responsibility of the Government. If feedback
50
channels were created for members of the public to inform the local governments
about the need for road upgrades, trouble spots may be identified and rectified
more quickly.
Environmental Challenges
Challenges Potential Solutions
Climate change/green
logistics
New transport technologies that are
environmentally friendly
Minimise waste
Look at different production methods and/or
materials
Bigger loads to ensure greater capacity per trip
(e.g. use of road- trains) while minimising trips
Look at green and environmentally friendly
technologies for other processes (e.g. green
warehouse technologies)
Seasonal problems
Look at alternative routes and transport modes
to overcome poor weather conditions
Monitor weather forecasts in planning
Better cooling technologies in warehouses and
vehicles
Good employee management to avoid heat
exhaustion
Governments need to show more support for green technologies such as solar
and wind power. Increasing the awareness of these technologies would allow
companies to better consider these options. Minimising waste, especially by
considering different production methods and materials would go far in reducing
costs.
51
Being prepared for different types of weather is something transportation
companies must consider. Alternative routes must be identified in order to avoid
possible delays. Improving employee management on hot days by providing
more breaks or installing cooling systems could help to avoid heat exhaustion.
Demographical Challenges
Challenges Potential Solutions
Ageing population
Good employee management
Job rotation (i.e. moving older employees to
different work areas)
Additional training
Adapting to Australia’s ageing population is becoming increasingly important
every year. Reservations must be made for older employees as the trend of a
later retirement age continues to impact companies. Job rotation and additional
training can help older employees adjust to different jobs without being forced to
leave.
Legislative Challenges
Challenges Potential Solutions
Funding disagreements
Lobbying groups to ensure infrastructure
projects are carried out with minimal disruption
Quarantine
Better planning
Ensure most recent information is available
Be aware of regulations
52
Lobbying the government to ensure projects are completed is a difficult task and
something that has failed on some occasions in the past. However, the efforts of
lobbyists can make a difference.
Quarantine restrictions can be overcome purely by knowing what the restrictions
are. Being well prepared for importing goods and being aware of the regulations
would help companies greatly.
Technological Challenges
Challenges Potential Solutions
Additional costs
Better forecasting/planning
Look at different technological options
Joint/cooperative purchases with other
companies (e.g. suppliers)
Lack of integrated
systems
Ensure systems are compatible
Better collaboration within the supply chain
Dependence on
technology
Use back-up systems
Resistance to change
Better employee management
Provide support and training
Adjusting to new
technologies
Better planning
Take implementation in stages
Additional support and training
While collaboration in the supply chain may be difficult, it can reap many rewards.
Good relationships between suppliers and customers help speed up business
processes, increase trust and lead to economic savings. Integrated systems
would be extremely beneficial.
53
Good planning when implementing new technology is a must. Good employee
management by providing the necessary amount of training and support also
helps in the adjustment phase.
Other Challenges
Challenges Potential Solutions
Rising fuel prices
Improved driver training to improve fuel
economy
Partnering with fuel companies to reduce costs
Determine the most economical transport
modes (e.g. rail, shipping)
Improve/increase vehicle maintenance to
improve fuel economy
Maintenance work
Additional planning
Be aware of changes, road closures as a result
of maintenance works
Oversized shipments
Improved planning
Consider different transport modes
Improved driver training to help improve fuel economy and vehicle maintenance
can lead to significant financial savings in the long run. Investment and ongoing
costs are reduced. The courier mentioned in the interview that the use of lower
revs, higher gears and higher tyre pressures have helped to improve fuel
economy. These strategies are relatively easy to implement. Considering
different transportation modes may also help to reduce costs.
The solutions mentioned above could be implemented by different entities
including governments, companies, employees and the general public. In the end
it is up to each one to determine whether implementing the different solutions is
going to be worthwhile.
54
This thesis has given a special insight into Australian logistics and presented
many different logistics challenges. It has also used many different examples to
illustrate them. The case study, in particular, gives a good, practical
understanding of the challenges facing an individual in Australia’s largest city.
The solutions mentioned may provide some answers to the problems
encountered.
There will always be challenges facing the logistics industry in Australia.
Domestic logistics alone is filled with challenges, while international logistics
presents companies with even more. Some challenges will be overcome over
time while new challenges will continue to present themselves. It is important to
remember that each challenge presents a different problem and there may be
one or more ways to overcome it. This may involve a long and costly procedure
or there may be a simple fix. It is necessary to be aware of the challenges faced
and continually look for new ways to overcome them.
55
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Appendices
Appendix 1: Interview Questions
1. How would you describe your job?
2. What kind of tasks do you carry out?
3. How long have you been working in this field?
4. Where does your work take place?
5. Has your job changed over the years? In what way has it changed?
6. What kinds of logistics challenges do you face in your job?
7. How has the advancement of information technology affected your job? Has it
created additional challenges?
8. Are there any particular challenges that you face daily? Describe them.
9. What challenges are there currently that were not evident previously?
10. Is there a challenge you can think of that you have reacted to in recent times?
11. Can you think of some challenges that you might expect to arise in the coming
years?
12. Can you think of any possible solutions to the challenges you have
mentioned?
Appendix 2: Interview Answers
1. I work as a contract courier (self employed) for a small courier company at
Mascot (suburb of Sydney). I work an eight hour day, usually from 8 am to 4
pm, delivering high risk freight; mainly mobile phones. My vehicle is a
Mitsubishi 1 tonne van.
2. My day consists of a loosely based set run which takes most of the day. I
usually do deliveries only, although pick-ups can occur.
59
3. I commenced the job as a courier on 28/3/1996, so 15 years of experience,
having had no prior experience. It took about 12 months to get into a rhythm.
4. I pick up the goods for my run from a warehouse at Alexandria before sorting
them out in order of delivery. 80% of my work is in the CBD of Sydney, the
remaining 20% on Sydney’s lower North Shore (North Sydney, Cremorne,
Neutral Bay and Mosman).
5. For the first 6 years of being a courier I worked “ad hoc”, which means I
picked up goods from point A and delivered them to point B. It involved a lot of
kilometres travelled, longer working hours and I was paid per job only. For the
past 9 years I have worked on an hourly hire basis.
6. The major logistics challenge today is the weight of items. The Transport
Workers Union (TWU), of which I am not a member, states that the delivery of
any item weighing more than 20kg must be performed by 2 men. This is
somewhat impractical, for example, a television weighing approximately 28
kg. Having worked in the industry for so long I have developed special
techniques of doing this without injuring myself.
7. The difference using information technology as compared to, say, 10 years
ago, is that there is very little paperwork involved now. All deliveries and pick-
ups are recorded on a hand held barcode scanner. Originally the scanners
were quite large and heavy and nicknamed "bricks". They are now small and
light enough to fit in your pocket. A mobile phone is still a necessity for certain
jobs, e.g. private addresses.
8. Deliveries in the city can be a challenge because a lot of buildings have a
security lockout on certain floors. When using the lift a swipe card is required
for access. This means contacting the concierge, security personnel, dock
master etc. This results in lost time. In some instances a job cannot be
performed at all and requires rebooking.
60
9. The main challenge today is the security of goods. My van has a compulsory
alarm and central locking system as well as tinted windows. Carrying high risk
freight for the company I subcontract requires that my van has no company
logos, i.e. it is plain white and I do not have a uniform with a logo.
10. To keep costs down! The rising price of fuel (approximately $1.60/L for 98
octane) required a change of driving style. This included using lower revs,
higher gears and higher tyre pressures (less rolling resistance).
11. Traffic congestion. Although the number of vehicles travelling in the CBD has
remained basically the same for the past 5 years, the introduction of
cycleways and bus only lanes has hampered traffic flow. Poor traffic light
synchronisation has also resulted in more traffic jams.
12. Get rid of the cycle lanes and better synchronise traffic lights to maximise
traffic flow.
doc_534871624.pdf