The Logistics Association of Australia Ltd (LAA) and supply chain and logistics management consultant Logistics Bureau have released the first definitive report on the state of the logistics and supply chain industry in Australia.
The report is the first in a series that will provide regular annual updates on the state of the industry. It comprises an economic update and market update, defines market participants and reviews Australian industry performance.
Key findings include:- For Australia, the main threats to growth are the credit crisis in the US, rising inflation, increased fuel and commodity prices and weaker consumer demand. However, the global economy should stabilise in 2009 and recover in 2010.
- Transport and logistics are increasingly significant in Australia’s economy with a total product equal to 14.5% of GDP. Road transport and services and storage are the major contributors to the industry gross product.
- Freight volumes have grown. Japan is the country’s largest export market, followed by China.
- Sea dominates international freight, but air has a significant share. Road is the major player in domestic freight transport but rail is catching up.
- The transport and storage industry is the seventh largest employing industry in Australia with growth anticipated at an average rate of 1.6% pa in the next five years. The storage sector is likely to have the strongest growth.
- Fuel costs, wages, depreciation and rent are prime contributors to total costs of transport and warehousing. In the long term, fuel prices are a major challenge for the transport industry.
- In 2007/08, labour costs in the transport and storage sector increased by 3.8%, less than the country’s average rise of 4.2%.
- In the six months to March 2008, industrial rents stabilised in the Gold Coast, Northern NSW, Sydney and Melbourne. Rental growth for the industrial market was above 10% in Perth, Brisbane and Adelaide and limited availability led to rent increases.
- Climate change and carbon accounting lead the way in generating industry initiatives to lower emissions.
- Other initiatives, such as e-technology, to improve supply chain performance are increasingly being embraced.
- With the federal government’s scheduled investment, land transport infrastructure for road and rail should see significant improvement.
- Mergers and acquisitions have increased over the last 12 months.
- While there is still sufficient supply of industrial properties in most regions, some developments may be delayed due to increased construction costs and interest rates.
- Australia’s logistics spend equates to 9% of GDP, comparable with the logistics spend in Japan, US, Europe and Singapore, which is a good position to be in, in terms of our distance from markets.
- Total business inventory has been steadily rising since 1993, with the major industries being manufacturing, retail and wholesale.
- From 1993, improved supply chain management practices have led to a decline in the inventory to sales ratio.
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