Challenges in the Australian Transport and Logistics Industry
Discuss about the Logistics and Supply Chain Specialists Australia.
The transport and logistics industry plays a crucial role in providing a reliable mode of transport of commodities for all the major economic sectors in all countries across the globe. The Australian transport and logistics industry contributes an estimated 15% of the country’s GDP as it serves some of the vital economic sectors such as agriculture, manufacturing, and mining industry (Waters, 2003). The logistics industry of Australia has undergone rapid growth in the recent decades due to the tremendous growth in technology. The current advancements in technology have led to the emergence of fast and reliable transport equipment. It has also improved the safety and security of goods in transit as well as the security of those who handle them, and hence, the improved efficiency in the logistics industry. Conversely, there are numerous challenges that are encountered by stakeholders in the logistics industry. Some of the challenges include but not limited to accidents and destruction of goods in transit, delays in roads and ports, theft and the lack of safety and security of commodities in transit or in storage. Besides, there are policies and regulations that international and local players in the industry have to comply with to move commodities across inter-border regions (Australian Bureau of Meteorology, 2011). These challenges have derailed the performance of the Australian transport and logistics industry. As a result, logistics companies need to take a lot of consideration a lot of logistics management issues during the planning phase to ensure smooth operations. A new international mining company requires to transport thermal coal on a soon-to-be built 500 km railway between the townships of Alpha in Central Western Queensland to Abbot Point port in Northeast Queensland. However, this company first need to import 40 standard gauge locomotives that weigh 100 tons each and 600 coal wagons, which are to be transported from an inland regional setting in Germany, which is the point-of-origin, to Abbot Point Port, which is the final destination.
The safe arrival of the locomotives and coal wagons mentioned above require proper planning to overcome the challenges that are associated with the transport and logistics industry. In this regard, the aim of this paper is to provide a report that highlights some of the challenges in the Australian transport and logistics industry and the measures that this particular mining company should take into consideration to ensure a successful transportation of the 40 standard gauge locomotives and the 600 coal wagons from Germany to Abbot Point Port. In line with these aspects, this report is going to discuss the logistics industry by examining some of the logistics issues that are associated road and sea transport in these two countries. In addition, the report will discuss the Australian Custom Issues, warehouse management, and risk management in the transport and logistics industry.
Solutions for Successful Transportation of Goods
The scope of this report is limited to the Australian and German transport and logistics industry. The focus is going to be on three modes of transport namely, sea, road, and railway. This report will limit its discussion to some of the logistic issues surrounding sea freight and road transport, as well as the vital activities that contribute to the successful transportation of commodities from the point of origin to final destination.
The process of transporting commodities from the place of origin to the final destination is normally accompanied by several challenges. Therefore, while transporting the 40 locomotives and the 600 wagons, this mining company will encounter a number of issues; however, the following are the three major issues that the company will encounter.
Safety and security
One of the major logistic issue that this mining company will encounter is the safety and security of the locomotives and the wagons during the transportation process. To deliver these commodities to Abbot Point, the mining company will rely on the use of road and sea transport. Roads will be used to transport the locomotives and wagons from the inland point to a German port, while sea freight will be used to transport them from Germany to Abbot Point Port. During transportation, the commodities will be under threat of getting stolen by highway robbers or by pirates in the sea (Australian Associated Press, 2004). The commodities are also under the threat of getting damaged from accidents that may occur on roads. Road transport is vulnerable to truck accidents due to the poor condition of roads or mistakes by drivers (Bureau of Infrastructure, Transport and Regional Economics, 2010). Equally, sea transport is also vulnerable to accidents resulting from sea tides or attack by pirates, which results could to damages to the locomotives and wagons. Besides the safety and security of the commodities, there are safety and security issues associated with the storage of commodities (Sydney Motorways, 2011). At storage, the locomotives and wagons are under the threat of theft or warehouse fire accidents. In this regard, the mining company will have to identify and implement appropriate safety and security measures to ensure that all their commodities arrive in good conditions.
Distance and poor conditions of roads
The mining company will encounter the issue of long distance and poor road conditions. After receiving the locomotives and the wagons at the port, the company will rely on road transport to deliver them to Abbot Point Port. The long distance between the point of origin and the point of destination is one of the major transport and logistic issues that affect the transportation of commodities. There are long distances between mining quarries and other major Australian cities, for example, the 500kim between Alpha West and Abbot Point Port. Therefore, the mining company will experience delays in the delivery of commodities due to the time-consuming transport activities (Hult, Craighead, & Ketchen, 2010). The geographical location of places such as mineral mining sites in the NSW are in very remote areas, and hence, the involved long distances complicate the entire process for the logistics firms. In addition to this, the presence of poor conditions of roads is also another major logistic issue that this company will have to deal with. The poor conditions of the roads in the remote areas in the Alpha North makes the transportation very difficult for the truck drivers who need to plan well in advance. Due to the long distances and poor condition of roads, truck drivers get fatigued along the way; however, due to pressure to deliver the commodities on time, they become vulnerable to accidents leading to deaths and destruction of valuable commodities.
The Australian sea freight has experienced a reduced growth in the recent decades; however, modern shipping facilities have been launched to accommodate the rising demands of shipping services (Hair, Sarstedt, Pieper, & Ringle, 2012). The transportation of the locomotives and wagons from Germany to Abbot Point Port will be through sea freight due to their bulky nature. The company will have to choose several large cargo ships that that can accommodate bulky commodities the size of a locomotive. This mining company will use road transport to move their commodities from one point to another. Therefore, for appropriate choices, the company should be aware of the types of roads in Australia. In Australia, the road network consists of local roads, state highways, and federal highways. This company will use trucks to move their commodities, in this regard, to ensure the safety and security of commodities, the company should rely on state and federal highways due to their relatively good conditions (Waters, 2003). These roads are fixed with safety features such as warning signs, road reflectors, barriers, and guard rails to enhance road safety. The company should select modern trucks with powerful engines and with enhanced safety features while moving the wagons or other mine products. Besides, the company will have to hire qualified and experienced truck drivers to ensure compliance with road transport regulations.
In its operations, the new mining company will have to adhere to the Australian custom requirements. In this regard, the company will be required to observe the quarantine laws in the country as stipulated in the Australian Quarantine and Inspection Service (AQIS). Australia has a highly strict import and export environment due to its fragile econ-system, therefore, the AQIS was formulated and implemented to ensure the exportation and importation of safe products in the country (Waters, 2003). AQIS requires a thorough inspection and certification of all commodities that leave or enter the country. This quarantine law is useful in reducing the risks of diseases and pests, and it protects the Australian major economic sectors. In line with these aspects, the new mining company will have to produce high-quality and safe coal products according to AQIS standards.
The new mining company will need to be acquainted with effective warehouse management activities to ensure proper storage of received commodities and those that need to be exported. The success of a business such as mining companies depends on how effective the warehouse is managed. This is because an effectively managed warehouse optimizes the business activities of the involved company. The following are some of the important warehouse management activities that should be taken into consideration.
According to Richards (2011), there are three main activities related to warehouse management. Inbound is the first step in warehouse management. It is where the warehouse receives commodities, after which the received commodities are taken through inspection to determine whether they are the right products and whether they are in the desired condition and the right quality before storage. There are other activities that take place during the inbound process. At this stage, the repackaging of the received commodities take place, and they are labelled accordingly. They are labelled using barcodes for accurate electronic record keeping.
The second warehouse management process is storage. At this stage, the commodities are stored based on how they are labelled. This process is normally carried out using the Warehouse Management System (WMS), which is an electronic software application that allows for the centralization of activities such as stock locations and tracking inventory (Emmett, 2011). The storage should be divided into two; bulk storage and pic storage. The bulk commodities should be stored in pallet racking while the less bulky should be stored in shelves.
The final process of warehouse management is outbound, which is where the involved company picks and packages the products that are to be shipped to clients (Emmett, 2011). The company should pick orders using the single-order picking for single order items, batch picking for multiple orders, and zone picking for orders to be delivered to a particular zone. At this stage, the company should ensure that all the commodities to be delivered to clients are correct, are of high-quality, and are packaged appropriately.
The transport and logistics industry is faced with numerous issues, for example, risk and compliance, accidents and damage of commodities in transit, delays, and government restrictions. However, the two major logistics issues that will affect the new mining company are safety and security problems and long distance and poor condition of roads. There are risks such as theft of commodities, damages to goods, and destruction of commodities through fire or road and rails accidents (Mayhew, 2001). The findings also reveal that the Australian international trade activities are governed by strict rules and regulations. Therefore, the mining company will be required to adhere to the rules and regulations regarding import and export activities in the country. This includes laws such as the Australian Quarantine and Inspection Service (AQIS). The appropriate management of warehouse management operations is necessary for the success of mining companies.
The logistic issues highlighted in the findings section above will negatively impact the performance of this new mining company. The lack of sufficient safety and security in the transport and logistics industry will have significant negative impacts on the performance of this company (Wang, Jie, & Abareshi, 2014). The presence of highway robbers who will target the company’s commodities will lead to massive losses in the profit margins of the company (Leonard, 2009). There is also the risk of theft of commodities at the place of storage. The risk of theft of commodities during transit can be managed by employing security personnel to escort trucks that are transporting the company’s commodities to their various destination (Waters, 2011). To prevent theft at the warehouses, the company should use the warehouse management system to maintain accurate records of inventory. This should be backed up by the use of physical surveillance through the use of CCTVs and security personnel to monitor the activities at the company’s warehouses.
Long distances and the poor road conditions is also another major stumbling block to the transportation and logistics activities of this mining company (Australian Department of Infrastructure and Transport, 2011). There is a long distance between Alpha region and Abbot Point Port, and the conditions of roads are very poor between these two points, and therefore, there will be significant delays in the delivery of commodities to and from this mining company (Faure & Peeters, 2008). Delays will result from the slow movement of trucks that will be forced to travel at a slow speed to minimize accidents due to the poor road conditions. This will give rise to other negative events as the drivers will get fatigued in along the way, making them vulnerable to causing more accidents (Andreas & Carl, 2012). This risk can be managed by improving the conditions of roads that connect mining companies with ports to eliminate instances of delays in the delivery of commodities (New South Wales Roads and Traffic Authority, 2011). This will minimize the damage to goods in transit by reducing the events of road accidents.
The company needs to train its members of staff on effective warehouse management activities to manage the risks that are associated with warehouse and port activities (Sanchez-Rodrigues, Potter, & Naim, 2010). To reduce the risk of goods damaged during inbound and storage processes, the new mining company should hire workers who are equipped with appropriate schools of handling inbound and outbound goods (Simangunsong, Hendry, & Stevenson, 2012). Besides, the workers should be equipped with safety and security skills such as anti-theft and fire prevention to minimize the destruction of goods under storage (Patil, Shrotri, & Dandekar, 2012).
In summary, the new mining company will be faced with several transport and logistic issues. The two major logistics challenges that the company will encounter while importing the locomotive and wagons and its coal products are safety and security issues and the challenges associated with long distance and poor condition of roads. The commodities of the company are under the threat of theft or destruction from accidents during transport activities. The long distances between mining sites and ports and the poor road conditions in rural areas will result in delays in delivery. The company will have to have to adhere to Australian custom issues such as the Australian Quarantine and Inspection Service (AQIS). As a measure against the risks that have been identified in this report, the mining company should hire security personnel to guard their products during transport. The company should also use physical surveillance such as CCTV to minimize the theft or vandalism of their products during transport and storage. Finally, the company should hire workers with effective skills and knowledge on warehouse management to prevent the damage of goods in storage.To promote security in the transport and logistics industry, the Australian Federal government should improve security on highways and sea transport by posting police officers and installing surveillance equipment to monitor activities in the industry.
To eliminate delays and to reduce the loss of goods through road accidents, the Federal government should improve road conditions connecting mining sites and ports.
To enhance safety and security of its properties in storage, the mining company train its workers on effective warehouse management activities.
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