3 Things Driving Perfect Storm in freight transportation

My view of the transport and logistic sector is that Australian operators are facing a ‘perfect storm’ and public and private operators must lift their game and collaborate to form an agile transport eco-system. Planning for these issues is not going to be cheap and may require significant capital investment or consolidation which presents another issue in itself. Below are the issues I believe will converge over the next decade which will change the freight transport sector and the market must be prepared or risk failure.
1. Macro-economic pressures: 

Over the last year, our governments have talked about the transfer of assets from the public to private sector (Port of Melbourne, Port Botany & Port Kembla) and major infrastructure projects (Port of Hastings, Melbourne’s East/West project, Sydney’s second airport). These decisions are going to impact how transport companies make future decisions about capital investment and asset allocation. With rising operational costs and already tight margins, it’s really going to test the survival of many small to medium sized operators. How much consolidation will we see as a result?

2. Customer expectations are driving change: 

Conversations I am having with market participants show consumer expectations are changing and not all businesses are prepared for change. Consumers want to be better informed and have integrated delivery solutions – this requires innovation and must go beyond network planning and service scheduling. Seeing where Australian retailers are at the moment with their digital strategies, I’m not surprised so many transport companies are further behind this change curve, especially small to medium size freight transport organisations. Consumer demands are changing and brought about by new technology which traces deliveries, identifies customer and traffic bottlenecks and ensures rapid replenishment. The truckie of the future must be technically savvy – I am not sure business is prepared to ensure the truckie they employ is not only technically savvy, but also an integrated sales and service representative.

3. Technology enablement: 

Let’s face it, technology is changing and last year’s technology may already be obsolete! Freight transport operators already face rising operational costs and slim margins, being able to invest in new technology may ruin some. I believe we will see consolidation of freight transport organisations as small to medium sized operators decide whether to skill-up or sell-up if capital investment becomes restrictive.

Here more about these issues from Simon Cook, Consumer Business Lead Partner: http://www.deloitte.com/view/en_AU/au/industries/consumerbusinessandtransport/transport/index.htm

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