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09/09/2018
The transport and logistics industry generates approximately $100 billion for the Australian economy on an annual basis, which is predominantly derived from road, rail, sea, air, warehousing and transport support.
Despite road transport accounting for more than 25 per cent of this figure, this is a highly fragmented sector for the 40,000 operators in it.
The industries low entry barriers mean that inexperienced operators can have poor financial discipline, be prone to ego-based decisions and unaware of the safety regulation requirements. Increased performance and growth in the transport and logistics industry requires experienced leadership and operators that are willing to adapt to market trends.
The Asia Pacific region will make up half of the world’s global economic output by 2050 on the back of significant population growth, which is spurring greater urbanisation and innovation to accommodate educational and economical requirements.
As China is, and expected to remain, Australia’s largest trading partner in the long term, this will place significant strain on Australia’s economy to keep up with international trading demand. The development and growth of the Australian economy has been traditionally tied to investment in infrastructure to support the increasing movements of freight.
This is evident in the increase in freight moved by transport companies exceeding the level of infrastructure spend in the Australian economy in the last 10 years.
However, Australia’s ageing population has prompted greater levels of government spending to be directed toward aged care and pension funding and significantly less toward infrastructure, likely to force changes to how transport infrastructure is funded moving forward.
The transport and logistics sector has the second oldest workforce in Australia. High rates of WHS incidents and the cost and time required to obtain the necessary qualifications indicate that the shortage of qualified personnel across the industry is set to remain for the foreseeable future. Incentivising key personnel is critical if a skilled and younger workforce are to be attracted to the sector.
Offering more attractive remuneration and utilising more innovative and effective resources to establish a forward-thinking and revolutionary business model will aid this movement.
The emergence of blockchain and the increasing use of cryptocurrency will streamline the way transport operators conduct business and reduce additional third-party costs, in turn increasing margins and operational efficiencies.
Transport companies must embrace new technology to support higher freight volumes and increasing freight demand, in part borne by population growth and increased trade activity, especially with Asia. By 2020, there will be over 50 billion “Internet of Things” devices worldwide and estimates state that by 2025, up to $US2.5 trillion of additional value will be generated by IoT devices for the global logistics industry.
As more retailers move to an online platform to sell stock, the purchasing behaviour of consumers has also changed as a wider variety of delivery options are available (e.g. next-day, same-day delivery). Freight can also be measured, tracked and analysed by both business and consumer.
This allows freight operators to identify areas of performance improvement to increase the pace and reliability at which goods are shipped. The IoT is dramatically accelerating the pace of innovation in the transport industry and will remain at the forefront of technological development in this industry in the long term.
The state of the Australian economy and the rate of population growth in the next 20–30 years will undoubtedly shape the transport and logistics industry in the immediate and long term. Value to the industry will be found in showing clients how eliminating middle layers and complicated steps from their supply chains can optimise their efficiency and performance.
This value will be found when operators focus on their core operational strengths that align with the state of the economy and consumer demand. They need to have a business model that is lean enough to adapt to industry change and have the workforce skilled enough to embrace and harness these changes.
Despite road transport accounting for more than 25 per cent of this figure, this is a highly fragmented sector for the 40,000 operators in it.
The industries low entry barriers mean that inexperienced operators can have poor financial discipline, be prone to ego-based decisions and unaware of the safety regulation requirements. Increased performance and growth in the transport and logistics industry requires experienced leadership and operators that are willing to adapt to market trends.
Where is the investment?
The Australian economy is forecast to achieve strong growth to 2050 based on our geographical proximity to economies that continue to grow at unparalleled rates such as China and India.The Asia Pacific region will make up half of the world’s global economic output by 2050 on the back of significant population growth, which is spurring greater urbanisation and innovation to accommodate educational and economical requirements.
As China is, and expected to remain, Australia’s largest trading partner in the long term, this will place significant strain on Australia’s economy to keep up with international trading demand. The development and growth of the Australian economy has been traditionally tied to investment in infrastructure to support the increasing movements of freight.
This is evident in the increase in freight moved by transport companies exceeding the level of infrastructure spend in the Australian economy in the last 10 years.
However, Australia’s ageing population has prompted greater levels of government spending to be directed toward aged care and pension funding and significantly less toward infrastructure, likely to force changes to how transport infrastructure is funded moving forward.
The people’s power
As Australia’s population continues to increase, anticipated to be almost 42 million in 30 years’ time, traditional modes of transport will need to be more effectively and efficiently utilised to reduce traffic congestion and carbon emissions as the number of commuters progressively increases.The transport and logistics sector has the second oldest workforce in Australia. High rates of WHS incidents and the cost and time required to obtain the necessary qualifications indicate that the shortage of qualified personnel across the industry is set to remain for the foreseeable future. Incentivising key personnel is critical if a skilled and younger workforce are to be attracted to the sector.
Offering more attractive remuneration and utilising more innovative and effective resources to establish a forward-thinking and revolutionary business model will aid this movement.
Technology driving the sector forward
Technology companies, which are driving digital disruption in the 21st century, will become transport companies of the future. Amazon, for example, has made significant investment in supply chain capabilities to handle larger volumes of shipments than specialist postal delivery services and courier services.The emergence of blockchain and the increasing use of cryptocurrency will streamline the way transport operators conduct business and reduce additional third-party costs, in turn increasing margins and operational efficiencies.
Transport companies must embrace new technology to support higher freight volumes and increasing freight demand, in part borne by population growth and increased trade activity, especially with Asia. By 2020, there will be over 50 billion “Internet of Things” devices worldwide and estimates state that by 2025, up to $US2.5 trillion of additional value will be generated by IoT devices for the global logistics industry.
As more retailers move to an online platform to sell stock, the purchasing behaviour of consumers has also changed as a wider variety of delivery options are available (e.g. next-day, same-day delivery). Freight can also be measured, tracked and analysed by both business and consumer.
This allows freight operators to identify areas of performance improvement to increase the pace and reliability at which goods are shipped. The IoT is dramatically accelerating the pace of innovation in the transport industry and will remain at the forefront of technological development in this industry in the long term.
Future of the Industry
The growing technological presence in this industry will revolutionise the way business is conducted by business and consumer alike.The state of the Australian economy and the rate of population growth in the next 20–30 years will undoubtedly shape the transport and logistics industry in the immediate and long term. Value to the industry will be found in showing clients how eliminating middle layers and complicated steps from their supply chains can optimise their efficiency and performance.
This value will be found when operators focus on their core operational strengths that align with the state of the economy and consumer demand. They need to have a business model that is lean enough to adapt to industry change and have the workforce skilled enough to embrace and harness these changes.