Opinion Piece on Industry Challenges 2024
To all Valued Customers
As many of our loyal customers return to work for those that took a break, and to those that worked through, it is evident that the global supply chain is going to face many of varying challenges in 2024, and that we all need to be appropriately prepared.
For Retailers, the biggest fear is empty shelves. For suppliers to retailers, the fear of not having enough stock to supply opening the door to competing brands, and for exporters the risk is real in regards to stock either not meeting it’s required timeline, which results in spoilage and/or reduced pricing as an outcome.
With all these potential issues at hand, proactive planning in this current global logistics climate is absolutely critical. Increased inventory, higher shipping rates, storage of FCL or palletised goods, access to stock is cheaper than a loss of customer.
It’s absolutely imperative that importers and exporters start changing their behaviour for supply and start thinking and acting in line with Covid times. Business became resilient during these testing times, and it became very clear that “Just in time” was an outdated model, and “just in case” was the new norm.
Why do we provide this warning?
- Whist we don’t have a crystal ball, it’s Important to note that hindsight never got anything wrong. In supply chain, we need to see and acknowledge the risks at play, and plan accordingly.
What are the potential threats?
- Industrial Disputes – the current industrial dispute between DP World and the MUA is the most threatening industrial dispute since the lockouts in 98, where the Govt and Patrick worked cohesively to shut down Ports across the country. Whilst we don’t expect that to happen this time around, what we are seeing is a long prolonged industrial dispute, that is affecting transport companies, importers and exporters in what I would call, “death by a thousand cuts”. ACFS does not take sides in this dispute, as ACFS is a union supporting company to protect the standards of workers and maintain standards across industry, otherwise it would be a race to the bottom in industry and living standards, creating a two speed economy. But we do encourage the parties to work out the dispute in a productive and cohesive way, without the intervention of Govt. There is nothing to be gained long term with the workforce, union, or DP World if the Govt needs to get involved. We need to be reminded, that wounds take time to heel.
- Red Sea Shipping – as has been well documented, the Red Sea does not impact Australia directly for our key trade lanes, but does impact Australia heavily. The re-routing and or delay of vessels going through the Suez Canal, has resulted in increased shipping rates, increased transit times, and reduced vessel capacity. Coupling this issue with Australia’s industrial dispute, there is a real chance that capacity will be taken away from the Australian market. Resulting in less capacity, bumping of customers on low shipping rates, delays at transshipment ports, and access to containers could be affected as well.
- Covid Variables – is Covid making a comeback? Based on actual data in December and early January materially increased hospital submissions, it seems so. Whilst Govt and people will react differently now that we learn to live with Covid, it will no doubt start to play a factor again in 2024.
- China / Taiwan Relations – this is the elephant in the room, and the one that could impact Australia more than any other factor. The re-election of the current president of the Democratic Progressive Party in President Lei in Taiwan, may result in inflamed tensions in the region. We genuinely wish for peace!
- Varying Local Factors – terminals in Australia are becoming congested, as DP World subcontracts many vessels putting huge pressure on the remaining terminal providers. Due to the delays incurred by vessels in Australia as an outcome, many vessels are “cutting and running”. What does this mean? Skipping ports, and or dropping off imports, and running back northbound with either no exports, limited volume of exports, and generally no empties. Considering empty containers are Australia’s largest export, the consequences are dire in regards to empty park capacity nationally. Just think that there is nowhere to dehire the empty, and the detention clock is still ticking for the customer. This is a transporters and/or importers worst nightmare, and has the real potential to hurt the ongoing viability of companies no matter where they sit in the supply chain.
- Road Closures – in Melbourne due to road works, upgrades, developments, are making transit times unreliable. It took me 75min to get from the port to Tullamarine in early Dec as an example when this trip is normally completed in well under 30min. Unfortunately, the plane didn’t wait!
- Pallet Accessibility – during Covid, access to pallets became a real issue as inventory storage rose to record volumes. Expect this issue to pop its head up again in 2024.
- Skilled Workforce – the shortage of skilled labour remains and continues to play havoc within our industry. A shortage of drivers, skilled forklift drivers of heavy reach stackers, twin pick operators, mechanics etc… in an ageing industry sector workforce is a daily challenge.
In summary, whilst the above sounds pretty dire for the supply chain, effective planning is now critical more than ever. Increase your safety stock, keep your inventory storage available here in Australia, and work on the “just in case” principle. Don’t run the gauntlet, because the challenges we face internationally and locally far exceed Covid times in the supply chain.
At ACFS Port Logistics, be assured that we are prepared! 2023 was a record year of investment for our business in Property (Container Hardstand – Full and Empty Depots, Mobile Fleet Assets – Trucks, Trailers, Forklifts etc.) and IT. Our counter cyclical investment in 2023 has ACFS prepared for these challenges in 2024, but again this will not come without daily issues, where our business will need to remain agile to the daily task.
ACFS Port Logistics has also made some slight tweaks to our customer service team, that will be rolled out over the coming months, that we believe will be integral to our success in 2024. With the theme, “think big, act small” we are relocating our customer service teams back to a state based offering and focus. Whilst still looking after direct importers / exporters national accounts through our centralised office in Brisbane, accountability will be localised on a per state basis. Freight Forwarders, will now be 100% localised to a state Key account manager, insuring that local matters in each respective state, are managed by those within the state. This will allow our business to remain agile and responsive to the challenges ahead, whilst building relationships on a local level is absolute key
Whilst we have not covered every potential challenge and/or solution in this update, I genuinely hope that we have provided enough information for our customers to consider, whilst also having comfort that ACFS is in the best position to support and deliver on the best possible supply chain solutions within the containerised sector. Our team is reinvigorated by the investment and subtle changes made to our offering, and we are here to assist both current and new customers in 2024.
Please don’t hesitate to reach out, as our Executive management, Operational management, staff, and myself personally would be more than happy to engage further on any matter.
Look forward to supporting industry in 2024!
Managing Director & CEO
Sydney | Brisbane | Melbourne | Adelaide | Perth | Auckland