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The effect of rising imports on the 2014 supply chain

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Apart from a dip in 2009, Australia’s imports have been steadily rising for the last decade, reaching an all-time high of $27,931,000,000 AUD in August 2013 (Source: Australian Bureau of Statistics). With a high Australian dollar this trend is expected to continue.

Since more goods are being imported, more storage is required, and more transport is being used to move the goods around. This is putting a lot of pressure on Australian infrastructure economically, organisationally, politically, and socially.

An organisation capitalising on rising imports will most probably require additional storage facilities, move to larger facilities, turn to third party logistics (3PL) providers, get a lot smarter in their inventory practices, or all of the above.

Purchasing and renting industrial property has a significant cost. In May 2013, GBRE Research listed Sydney, Perth and Brisbane in the top 10 most expensive industrial real estate markets in the world. When both demand and cost increase, this indicates a limited supply to satisfy the demand. So, not only is it getting more costly to get space, it is harder to find. Additionally, any increase in storage will be accompanied by an increase in the demand for labour, and transport. 

This upward trend in costs associated with the supply chain has meant that alternatives have become more attractive. Organisations that would previously have preferred to be in control of their own premises and staff are now looking at 3PL. Others are focussed on reducing their reliance on warehouse space by improving their operational practices, introducing more automation hardware and more strategic software. The real leaders in this area all look for ways of being less reactive by anticipating the areas of need and incorporating this in their plans for the future.

Transport is dependent on the availability of the appropriate road, rail, air and sea resources. Current transport infrastructure is struggling to keep up, and new infrastructure is not appearing fast enough. This is not just a cost but a political and social issue that can affect the supply chain.

In November, 2013 hundreds of demonstrators brought a major Melbourne truck route to a standstill in a protest calling for truck curfews during school crossing times. The protest group claimed that the vast majority of 21,000 trucks using inner-west streets per day are doing so as a shortcut between the port of Melbourne and container yards further west. Suggested solutions include alternative truck routes and changes in the times of operation of the transport hubs (like the port of Melbourne). Political and social pressure is likely to influence both the use of current infrastructure and the future of infrastructure development.

2014 is likely to see the same, or more, imports. Organisations will need to do something to service this demand or miss out on an opportunity that a competitor may seize. To achieve growth they will need to balance the things that they can control versus those they cannot. 

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Steven Hafey

Steven Hafey

Steven Hafey is a Technical Business Analyst for ERP vendor Pronto Software.

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