Intermodal logistics is defined as such logistics which facilitates the movement of materials which are contained in the containerized or unitized form of cargo which can be carried through different mode of cargo bearers as per the medium like water, land or air. This concept endorses different type of transport like rail, ships, boats, barges, aircrafts, etc. to name a few of the available mode for this service with the specific qualification of handling containers (Businessdictionary, 2015).
Intermodal form of logistics is referred to the movement of cargo from original point of dispatch to destination through several models of transport with the facility of container carrying where every option available for this mode should be with the feature of entity responsible and of different types of transport provider subject to independent contracts. In the process, multiple carriers are being contracted to be utilized for completion of a single journey (Manaadiar, 2013).
The Premier of New South Wales had launched the NSW Government Statement on innovation in later part of 2006 which includes development of specific innovation strategy to extend support for the economic growth in NSW with specific emphasis on the industries which are found important to be state economy with best possible potential for innovation. Through this process the industry of freight logistics with the related transaction service was being identified as a significant contributor to the NSW economy which has represented from the range of 9.6% to 14.5% of GDP of Australia. The Department of State and Regional Development has been assigned with the steps to deliver improvements to this segment of industry through applicable innovation policy (Ranasinghe & Spoehr, 2013).
Challenging environment of freight and logistics sector in NSW
There are challenges faced by the freight and logistic sector globally and NSW is not an exception to this concept. There are challenges which are depicted below:
- Changing pattern of the geography of global economy- This situation is the result of relocation of many manufacturing units for availing market of low cost for different components of supply chain including labor.
- Longer supply chains- The factors like distance and number of connections are getting increased which are creating issues related to collection and translation of information with subsequent sharing of it with other stakeholders of up and down stream of the supply chain(Transport, 2014)
- Facing increased level of pressure from customers- Being the market as customer driven, the requirements to shorten the lead time and make the delivery in full on time, continuous effort to reduce cost, and to ensure visibility with transparency.
- Emerging trend of new distribution models – As a result of changing pattern of business model with introduction of E-Commerce to facilitate e-trading through internet, supply chains are facing reverse direction planning which lengthens the supply chain.
- Enhanced energy costs- Due to global implication of global rise of energy cost, Australia is also facing the heat of this problem, even if the cost of fuel is lower in Australia than that of countries of same status.
- Shortage of labors with well equipped skills- This is applicable incase of drivers on road and on rail service with proper handling.
- Increasing requirement on compliance- The demand of industry attracts more information about cargo related to security measures regarding movement and history of the same and other compliance in the fields of regulations in safety and environmental regulation are demanding more improved management with proper monitoring as per requirement(Acilallen, 2014).
- Growing population of the cities- The result of growing population in the city demands more quantum of freight with the additional constraint of generating more traffic for bigger markets. Traffic congestion and conflict between the users are getting increased in the metro cities due to huge rush of traffic. The problem is getting worsened with the addition of incessant pressure on the infrastructure capacity.
- Increasing level of awareness in environmental issue- The demand of the industry pulls the need of environmental friendly application which can prove its sustainability for long period to make significant development in the control of green gas emission which can ensure quality of local air and other amenities ad expected from such action(Meyburg, 2003).
Key Characteristics of NSW freight logistics industry
Freight logistics of NSW is covering all type of logistics pertains to all domestic, import and export movements. This industry contributes estimated percentage of NSW GSP around 11.2%. Some prominent features of the NSW freight logistics industry are comprised of:
- This industry is consisting of a large numbers of small and middle companies- the total number of businesses in NSW in this sector are almost 29,000 with employment opportunity of less than 2o people;
- This industry is providing employment of ageing workforce with higher percentage in logistic industry of 45 years which is compared with the general labor averages of prevalent market(Nsw, 2012).
- The province is relying upon a number of gateways of basic infrastructure like Port Botany, Sydney Airport which denotes that constraints of capacity can play significant role on the NSW economy in overall aspect;
- Majority of the gateways of infrastructure related to freight logistics of the province which support the industry are marred with constraints of capacity ability as Port of Newcastle is restricted for coal and grain exports, Port Botany with container imports, Port kembla with coal and other products, Railways runs with the priority of passenger carrying defying the growing need of freight paths and Road congestion to restrict the speed of the vehicles specifically around the area of port or airport nearby(Nsw, 2010).
Basic requirement of infrastructure for NSW logistics development program for better economy
There are certain requirements of infrastructure for better economy of the province with the following highlighted points:
- The biggest contributor of NSW logistics by volume is domestic coal ands aggregates within the state which represents 62 % of the total business(Nsw, 2012).
- Second contributor is export bulk by volume of 15% which is comprised of coal and grain with predominance;
- The third contributor by volume is manufactured goods with inward direction volume of 9% and outward direction by volume of 11% in respect of NSW to other Australian provinces;
- Last but the least contributor is international import of goods into NSW by 3% of volume although the value contribution is 71% of the total combined import and export of NSW;
- Air export cargo is contributing 32% of total export value not considering the export of coal.
Given below the chart with clarification depicting the above:
Factors of Innovation as a tool to improve logistics
There are three different instruments which are identified by Australian Bureau of Statistics to enhance the scope of innovation in the field of NSW logistics as new introduction or enhancement of standing services:
- Goods or services,
- Operational processes
- Organizational or managerial processes.
It is observed from the analysis of a group of supply chain representative of NSW that the driving forces of innovation are alike to other sectors. There are following factors which are important in this aspect:
- This market of service industry is based on the concept of price driven economy which provides a major incentive for reduction of cost in the supply chain in order to expand market share(Sakchutchawan, 2013).
- Infrastructure capacity is a critical component which can be adjusted with the concept of sharing facilities in cooperative mode.
- Cost of freight is proved to be a vital element of product pricing and major gains can be availed by ensuring mitigation of activities which can not add value from supply chain with reduction of cost and increment of margin.
- Supply of manpower is critical as where the involvement of high labor is required within the freight logistic assignment; provision of incentive is there to reduce manpower cost by introducing innovative processes and technology.
- Service delivery is the basic criterion for retention of customer and this is the focal point of priority to have a good number of loyal customer bases who can be retained with quality service in time with perfect invoicing(Lin, 2006).
Barriers to innovation
There are basic elements constituting barriers to innovation which can affect all organizations with their impact. They are considered as cost, issues related to market with shortage of skills, etc. Apart from them, there are also varieties of factors which are acting as the practical barriers to restrict innovation within the periphery of NSW freight logistics industry. They are grouped in three major types:
Limited cooperation- due to the fragmented supply chains which are complex in nature with unsophisticated type of end-users can always roves to be the real barrier to enhance efficiency level.
Limited scope of interfacing- Transport operations are considered as provider of competitive edge which can have the ability to protect firms in different markets by working with togetherness by combing transport services ensuring reduction of costs with the significant factors like number of transaction along the supply chain, limited utilization of latest technology and availability of relevant information can also prove to be the barrier to innovation (Roso et al., 2013).
Dominance of inefficient organizations- This criterion restricts innovative ideas of entry to new candidates along with long term contracts.
Three specific supply chains effective within NSW namely domestic grocery supply, export of coal and grain supply chains are showing their intentions to come out for overcoming these barriers while other supply chains are apparently found to lag with their efforts to come out from this vicious cycle to encourage and welcome innovations basically for presence of large number of barriers which prevent them to apply innovative approaches though leverage of cooperation or clustering into effective type of solutions (Nsw, 2008).
Freight and Trade Alliance
Freight and Trade Alliance or FTA is the organization which provides solution of innovative ideas in this aspect through their extended services to the exporters, importers, customs brokerage and freight forwarders, depots and intermodal in this aspect. FTA and Australian Peak Shippers Association has a joint tie up regarding these services by providing membership with standard and premium in status, sponsorship packages, e- learning induction program for Sec 77G staff and consultancy services to facilitate knowledge about support chain compliance as per statutory reforms and effective type of integration with supply chain associates. FTA is providing freight and logistic services with necessary knowledge sharing in the field of intermodal type of freight facilities by providing premium membership to the aspirant members (Ftalliance, 2016).
The recommendations for better type of logistic and freight management related to NSW to promote innovation as a part of their efficient services are as follows:
- To collect improved standard of additional information or data on the said industry of NSW freight and logistic sector. This effort should emphasize on specific objective with setting of accurate and applicable strategic vision with respective agenda for the next steps with the accumulation of a freight database for Sydney ;
- To put focus on integrated infrastructure planning to progress in the assigned Auslink project, to make recommendation for Port Botany and give importance to issues regarding Sydney Airport;
- To extend help for the industry to make it more equipped with information in order to take decision about development of toolkits, analysis of case study and reviews of new products and latest technologies to ensure encouragement of greater take up of best practices of the said industry;
- To ensure establishment of benchmarking activities for the sector development indicators and programs in order to benchmark the sector to protect from any jurisdiction and industries in order to ensure gauging of the relative success of any actions;
- Finally it is also recommended to find and assess the requirement for developing more comprehensive level of applicable strategies and policy in order to ensure the most applicable support to targeted supply chains of NSW.
In perspective of the above discussion, proper path of success in respect of NSW logistics industry is suggested by analyzing the different factors which are mandatorily to be considered for this purpose. The role of government of the province is very important as the infrastructural amenities towards expansion of road and other facilities are to be provided for successful implementation of the scheme of development for the said sector. The need of the moment is to educate and upgrade the knowledge data base of the stakeholders in order to ensure that they will be well equipped with the future course of action related to this proposition of development. This industry is helping numbers of Small Units who are involved in this business and they are instrumental to raise the GDP of Australia with their contribution.
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