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Transport and Warehousing

Transport

The primary service offered by participants in this industry is of course the transportation of goods belonging to other parties between locations. However, modern logistics operators become involved in a range of warehousing and storage operations and in some cases assist with the packaging of goods. Through-transport operators may also assist with transportation by other modes of transport.

 

Some trucking businesses or divisions of large fleet operators specialise in a particular segment of the transport industry. Their fleet of trailers may be custom built for the carrying of particular commodities such as livestock, cars, boats, bulk fuels and other liquids, containers, bulk items like coal and grain, packaged dry and liquid groceries, refrigerated and frozen items, furniture, machinery, and heavy-lift and wide loads.

 

The vehicles used in the long haul transport industry vary depending on area of operation, load carried, and other considered efficiencies:

 

  • Rigid body trucks with single or double axle at the back and very occasionally double axle at the front.
  • Some rigid trucks will tow a trailer using a draw bar or frame. These trailers can be single, double or triple axle.
  • In some remote areas in some states or Territories rigid body trucks will pull one, two or three trailers (road train).
  • Prime movers (with no cargo capacity) with one trailer commonly known in Australia as a semi-trailer.
  • Prime movers (with no cargo capacity) and two or three trailers. These can be either B-Double or B-Triple (trailers connected to each other with a fifth wheel coupling like standard semi-trailers) or road trains where trailers with a front axle or removable bogie are connected to each other with a draw bar.

 

Perishable goods (produce, meat and packaged frozen or chilled goods) are transported by custom built refrigerated bodies fitted to a rigid chassis or as an articulated trailer. Vehicle bodies need to be thermally efficient, strong, light and durable.

 

There is also a wide variety in how trucking operations are established. These include:

 

  • Individuals or businesses with employee drivers operating a fleet of vehicles contracting to carry the goods of a second or third party.
  • Individual owner-drivers who contract to work for another individual or business to carry that business’s goods or those of a third party.
  • Individuals or businesses who operate their own vehicle fleet to carry their own company’s goods.

 

Generally, prior to transport there will be some sort of price and contract negotiation. Depending on the country and legislative environment there may be Carriage of Goods legislation governing road transport and setting minimum liabilities for loss of goods in the care of the carrier. Domestic transport in New Zealand by air, land and water for example is governed by the Carriage of Goods Act 1979. The act contains a wide definition of ‘carriage’, which includes services incidental to carriage (e.g. stevedoring and warehousing). Under the act, liability for loss of or damage to cargo is channelled to the contracting carrier. The contracting carrier is the carrier which contracts for carriage with the shipper or consignee. Liability is limited to NZ$1,500 per unit, unless damage is caused intentionally. In turn, the actual carrier is liable to the contracting carrier for loss of or damage to goods occurring while it is responsible for the goods.

 

On the other hand, in Australia, transport operators (other than Domestic Carriers i.e. Removalists) are free to contract with commercial entities out of responsibility for loss or damage to the goods. When acting under contract terms, the carrier is described as a “private” carrier, whereas if the transportation of the goods is not subject to contract terms, the carrier is acting as a “common carrier”.

 

When signing the documents for transportation, such as a consignment note, freight note or the conditions of contract, there will be agreement on who has liability for the goods if there is damage during the transit. In Australia, it is often the case that the terms and conditions will stipulate that the owner of the goods has liability, and this means they will often purchase insurance. However, many transport operators these days are involved in a variety of contract situations where they may either accept full responsibility for the goods, or, even where they operate under the protection of a well worded contract or consignment note, may still be under commercial pressure to accept responsibility and pay for loss or damage to goods regardless of strict liability.

 

Generally, the industry is dominated by larger logistics operators with many vehicles, but there are also many smaller independent operators or owner drivers. For smaller companies, work may either come direct, or under a sub-contract to another (often larger) transport operator. Likewise, many medium size operators may both act as sub-contractors to larger operations and also contract work out to owner drivers.

 

Drivers will be dispatched to the consignor’s premises on the agreed date/time to pick up the consignment. Prior to loading, the driver may be charged with the responsibility of obtaining the consignor’s signature on the consignment note which incorporates the carriers terms and conditions of cartage and details of the transport. The contract with often stipulate whether or not loading and unloading of the goods is the responsibility of the carrier or consignee/consignor. The truck may be used for either a single load, or may pick up loads from multiple consignors for consolidation at the depot. For long haul operations, local metropolitan pick-ups may often be facilitated by smaller vehicles and the goods consolidated into a single load onto a larger vehicle (including B-double or road trains) for interstate haulage. The process of load consolidation is often referred to as “transhipment”. The reverse process may occur at the destination depot i.e. the load split into smaller individual consignments. On arrival at the destination point, the driver will often request signature of the receiver on the standard consignment note, evidencing receipt of the goods. The goods will then be unloaded as specified by the consignee either by the driver or by the consignees own staff.

 

The past two decades have seen tremendous changes in the road freight transport industry and in the economic and regulatory environments within which it operates including:

 

  • vehicles have become larger, reducing the number of vehicles required and easing the pressures of growing driver shortages;
  • a growing concern about congestion, accidents, noise, pollution and greenhouse gas emissions;
  • the focus of regulatory reforms has been on more flexible regulations (performance-based standards and fatigue management) and towards more economically efficient road pricing.
  • technology available has changed in relation to vehicle efficiency, information and communication technology (ICT) and e-commerce.

 

Larger transport operators are following a general industry trend of outsourcing by using sub-contractors rather than employees, thereby saving administrative costs and transferring their risk onto the sub-contractors. Sub-contract agreements are also known as Yard Agreements. This trend has led to a growing need for individual owner operators, previously covered under group insurance programs, to arrange their own insurance.

 

Modern technology now allows fleet owners to track the movements of the entire vehicle fleet in real time, provides Dispatch Systems tools, text and voice communications, and the ability to add Driver ID and Fatigue Management systems, integration into on-board weighing systems, Trailer Tracking, Temperature Monitoring and many more, including:

 

  • Historical vehicle reports
  • Monitor when vehicles arrive and leave sites and reporting of doors opening and closing
  • Driver Identification and Driver status buttons e.g. Picked up, job completed etc.
  • Dispatch vehicles to jobs
  • Monitoring of travelling speeds of vehicles
  • Digital and Analogue interfaces available. e.g. Bar Code readers
  • Mobile Data Terminals to improve communications

 

New technologies, including mobile phones, has greatly improved communications between customers and carriers making it easier for customers to track goods in transport.

 

There are clear benefits from using ITC and e-commerce, including improved customer service, better product tracing, reductions in empty loading, timely delivery of goods, reduction in processing errors and lower administrative costs.

 

Whilst in general improved technology and regulation results in better controls and better claims outcomes, better risk management etc, take-up of improvements in technology and compliance has varied with firm size, with small firms falling behind in this area. Competition within the industry is very high (the largest four firms have a combined market share of only 15 per cent). Freight rates have trended downwards due to this intense competition. The financial situation of many owner drivers/small operators is pressured and there has been an increase in heavy vehicles running empty on the road since the early 1990’s. This means smaller operators may be forced to cut corners, compromise on maintenance and put pressure on drivers (time). The challenge is, particularly for small operators, whether they can develop a business case for adopting these latest technologies. Unlike the technological developments in vehicles and mobile phones, small operators may find it difficult to embrace the most recent technologies either because of costs or the high level of skills required.

 

 

Warehousing

Warehousing services can be private or public, but both services attract a fee for storage of goods. Distribution or transport services may also be provided. The storage activity can be under term contracts or on an ad-hoc basis such as self-storage. Self storage service includes the hire of space (mainly short-term) to mostly households and small businesses. A key is provided to the hirer and in most cases, there is a 24 hour access to facilities and the goods are stored and retrieved by the hirer themselves.

 

Warehousing services operators are these days frequently situated in port areas or industrial estates. Many operators will have multiple facilities.

 

The main activity of this industry is properly storing and maintaining the product until required; in some cases this involves maintaining the product at a specific temperature or humidity. The services provided by non-temperature controlled warehousing and cold storage are similar, except that the goods in cold storage are stored in a temperature controlled environment. Typically, for outgoing goods the process includes order receipt (which can be on-line), order picking and distribution; and for incoming goods the process starts with product replenishment, product receipt and product storage. An important aspect of the operation is the checks which occur immediately upon arrival items, during the course of storage, and prior to dispatch. Inspection by federal or state officials may occur at any point.

 

Other value-added services offered by operators include blast freezing (for frozen product), handling goods, re-palletising, loading, tallying, branding and order processing. Most businesses are also involved in sales and administrative activities, such as establishing relationships with manufacturer or retailer customers, marketing and advertising the services, and in some cases transportation of third party goods. An industry trend is the increasing use of sophisticated automated picking and storage systems, trafficking software and detailed information systems for effective just-in-time inventory management. There is also a move towards vertical integration of supply chains. The growth in E-Commerce has also brought the impetus to utilise warehousing activities as increasing numbers of retail sales are conducted on the internet.

 

Warehouses are no longer simply empty dry spaces to store stock, but are complex distribution and information centres linking the entire supply chain. Automatic storage and retrieval systems have been introduced in Australia since the early 1990’s. Voice picking technology has also been progressively implemented into cold storage facilities which removes the need for bar codes, scanners and labels and requires very little operator training, compared with conventional radio frequency directed operations. Other examples of technological advancements introduced into Australian warehouses include computerised order picking, inventory control systems, restocking systems and on-line distribution systems. In general, machinery and equipment on premises may include:

 

  • Forklifts, hoists, cranes and other materials handling equipment;
  • Refrigeration machinery, coolrooms;
  • Conveyor systems;
  • Scanning systems, inventory management systems, computerised order picking systems and the like;
  • PA, security and fire control systems;
  • Larger quantities of storage systems and racks;
  • Trucks and vans;
  • Fuel storage tanks and fuel;
  • Backup generators; and
  • Air-conditioning plant and ventilation systems;

 

Self-storage involves a customer renting out a storage facility, usually between the size of a walk-in closet or a two car garage. The storage units are typically walled, without windows, and lockable by the renter usually with a roll-up metal door. Security guards, surveillance cameras and individual doors alarms may be present. Some facilities even use a biometric fingerprint scanner to ensure only the renter is granted access to the unit. If a person fails to pay rent their objects may be sold at auction after a certain amount of time.