Challenges in Global Business Logistics: Transportation and Warehousing in Australia

This assignment discusses the challenges related to the logistics in context of transportation and warehousing in Australia. It reflects the critical understanding the managerial implications of emerging logistics innovation and technological developments.

Global Business Logistics 1
Global Business Logistics

Global Business Logistics 2
Introduction:
Logistics are considered as those activities which occurred within the boundaries of the single
organization, and supply chain considered as the network of companies that work in coordinate
manner and together for the purpose of delivering any particular product to the market.
Traditional logistics mainly focus on the activities related to the procurement, distribution,
maintenance, and inventory management. On the other side, all these traditional logistics are
acknowledged by the supply chain management and also include some other activities such as
marketing, new product development, finance, and customer service (Omelchenko, 2003).
This assignment discusses the challenges related to the logistics in context of transportation and
warehousing in Australia. Structure of this essay includes the analyses of the immerging key
challenges in global business logistics in terms of the warehousing and transportation. All these
issues related to the logistics must be defined in the critical manner. This report further reflects
the critical understanding the managerial implications of emerging logistics innovation and
technological developments. Lastly, this paper states the brief conclusion which highlights the
important facts of the case.
Discussion:
In the present context of global economics, logistics play most important role in facilitating trade
and, by extension, and also ensures the success of the business operations. There are number of
challenges which occurred in the streamline logistics management, and understanding of these
challenges is very important.
In present global world, transport and logistics industry face number of challenges, and some of
these challenges are familiar in nature but other challenges are result of the modern technological
developments. These other challenges which are developed because of the modern technological
changes are difficult to understand and resolve Cooper, 1993).
For the purpose of practicing the effective and cost efficient logistic management, an
organization must ensure the foundation for a responsive, economical, and also the transportation
network. With all these efficiencies, a business entity can ensure the implementation of the major
strategic changes in context of reducing the cost and increase in the customer service levels. All
these changes are done without disrupting the whole supply chain.
It must be noted that, responsive transportation network initiates with the end-to-end visibility.
This concept of the visibility allowed the business organizations to centralize the product
operations at the low cost areas without affecting the levels of the services provided to the
customers, and this happens because any uncertainty in the network is monitored and managed in
appropriate manner for the purpose of keeping the inventory levels as low as possible (Eskigun,
et. al. 2005).

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The transportation network of economical nature, actually begins with the changes made in the
attitude, and be dealing with the challenges in effective manner. Generally, business
organizations conduct their operations with the traditional view and transportation is the
necessary evil- an unavoidable source related to the cost and risk. Following are the
transportation and logistics challenges faced by the organizations in Australia are stated below:
Fuel costs: The biggest cost contributing in context of the cutting transportation cost issue is the
prices of fuel. Higher prices of the fuel usually increase the cost of the transportation for the
business organizations, by pushing up the surcharges of the fuel. Increase in the prices of the fuel
is the reflection of the rising surcharges included in the freight rates, and this affects the revenue
and earnings of the truckers and also increases the cost of transportation for the organizations
(FPO, 2017).
Price fluctuation of the fuel in the market has constant effect on the industry of logistics. Sudden
increase in the fuel prices can have a delayed and stripping effect on the companies of the freight
management, and the sudden fall in the price can result in the short-term improvements in the
profit, and the flow of competition in the market for the purpose of providing the consumers with
the lowest price.
Because of the continuous flexibility in the price of the crude oil, logistic companies are forced
to restructure their strategies and operations for the purpose of ensuring the continued profit, and
also to avoid any potential setbacks. These adverse effects on the logistics industry and increase
in the freight transportation cost forced number of companies to start keeping more inventories
on hand for reducing the amount of transportation necessary. Larger bulk shipments are more
effective in terms of cost as compared to the frequent smaller shipments. This would provide
benefit to the shippers and also the receivers but it cause negative effect on the logistic industry.
Lack of quantity in the shipment also increase the number of empty miles covered by the carrier,
and in case more stops is made the carrier in the given route then more profitable the trip
(Crainic, 2000; Arvis, Marteau & Raballand, 2010).
Another challenge faced by the logistic industry in terms of fuel cost is the rapid changes
occurred in the cost and price volatility. Usually, fuel surcharges are calculated by the logistic
companies on the basis of the fuel prices of the last week, and whenever, cost related to the fuel
rises rapidly there is difference between the fuel price and fuel surcharge rate. This difference
between the amount cause huge impact on the earnings of the trucking company. However, in
case prices of fuel decreases then also there is huge difference between the amount, and trucking
companies made large amount of profit. It must be noted, this challenge is considers as the
permanent part of the logistic industry, and it also make the competition among the logistic
companies prominent. Each and every company wants to have the lowest rates, but still they
need large amount of profit (Yang, 2013).

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Digitalization: There are number of figures and data which are handled by the logistic managers
on daily basis, and they are also responsible for smooth discharge of the operations. They are
responsible for number of things such as safety of their staff and fleet, fleet loading, cross
checking of the route maps, sanctioning fuel bills, etc. When this work is performed by the
logistic managers, it is very time consuming and boring task, and there are high chances of the
errors and confusion. There are number of companies which have significant number of staff for
the purpose of handling the manual data, and also for capturing and exchanging the activities
such as Track & Trace, gathering freight bill invoice information, managing customs forms, or
securing proofs of delivery (PODs). It must be noted that all these activities are concentrated to
resources, and includes high chances of errors and also tend to reduce the billing and cash
collection.
It is necessary for the organizations to invest in the automated solutions for the purpose of
entering the data, bills related to the fuel, loading and unloading ledgers, etc. All these updating
help the organizations in managing their operations in better manner and also allowed the logistic
managers of the company to contribute their time in more important functions. Digitalization of
manual workings also helps the companies in reducing their cost which occurred on the
maintenance of staff in context of the handling of information (World Economic Foorum, 2016).
As stated, manual handling of the work takes lot of time and efforts of the employees and it
already increase the amount of the operations conducted by the organization. It is necessary for
the organization to ensure digitalization in their functions, because it not only save times and
efforts of the organization but also saves the cost of the organization. Reduction in operations
cost help the management in getting the competitive advantage over its competitors.
Digital fitness is considered as big challenge for this sector, which presently covers number of
customers in this context. It is believed by number of experts that digitalization not only deal
with the challenge of information handling but also help the organization in getting the
competitive advantage over its competitors. It must be noted, this strategy of digitalization for
the purpose of resolving the issue of information handling add more values to the services of the
customers in all the functions of the operational process (AIIM, 2016).
Organization working in this sector can adopt partial or full automation in context of information
handling and in other processes. Now, digitalization of the processes becomes important for the
organizations not only to deal with the challenges but also for ensuring their long term survival
in the industry. Organizations face the issues of extraordinary changes as digitalization is
increasing, and expectations of the customers are changing in this context. New technologies are
ensuring the more efficiency and also enhanced cooperative models related to the operations, and
they also changing the things in the market in which they are accepted. This sector is also
shaking by the new entrants, as they have more skill and experience in digitalization (Stock &
Douglas, 2001).

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Pressure to meet government and industry regulations: Presently, immense regulations are
imposed by the government on the logistic industry of transport, and these regulations are very
strict in context of the environment because this industry causes adverse effect on the
environment. Compliance with these regulations is considered as big challenge for the
organizations. The sustainable operating practices and also the changes occurred to the
regulations in context of chain of responsibility already influence the decision taken by the
industries.
This is considered as the increasing pressure for the purpose of reducing the gas emissions and
also manages the environmental compliance parameters in more effective manner. It also
increase the demand related to the employ sustainable business practices, and also include the
use of digital technology. It must be noted that, new technologies and innovations occurred in the
concepts are developed, so that organizations implement it for addressing the different issues
related to the environment such as vehicle emissions, energy consumption, fuel efficiency and
stream-lining operations with the help of automation (Lamming & Hampson, 1997).
Alternative fuels and electric vehicles are used by number of organizations in their every-day
operations. All these things are considered as the big challenge for the organizations because it
required number of changes in strategies and operations of the organizations. It also impose cost
burden on the organizations because companies required making changes in all the traditional
approaches and other systems of the operation process, and this is the costly affair. All these
things ultimately affect the consumers, as organizations pass the cost burden on the consumers
(Roth, Klarmann & Franczyk, 2013).
This can be understood through example, Tesla motors currently make announcement in context
of the electric truck development, and this truck is known as the Tesla-semi. They further states
that truck provides the considerable decrease in the cost of cargo transport by decreasing the
consumption of fuel and it also decease the CO2 emissions.
All these changes in the regulations and government policies impose strong challenges on the
companies in context of the environmental, social and governance (ESG) performance. These
new performance criteria require the organizations to adopt the new approaches in terms of the
development of the workforce and performance standards set by the company. This cause flow
of effect on the workforce relations, safety, and productivity, and impose obligations on the
organization in lieu of human resource capital.
Sustainability related to the supply chain extends beyond the environmental compliance, as it
also include the sustainability related to the workforce. Companies also focus on modernize their
operations with the help of make savings on resources and by increasing the productivity
performance for the purpose of ensuring the sustainability (AIS, 2018).

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All these regulations impose legal and fiduciary obligations on the organization to ensure the
protection of environment, and in case organization fails to do this then it will face legal
consequences.
A shortage of qualified drivers: Instead of the massive investments required in ports, airports,
roads, trucks, ships and airplanes, the logistics industry is still considered as the business of the
people. Shortage occurred in the skilled employees required to provide the services, and because
of this it has disastrous effect on the company’s efficiency and profitability. It must be noted that,
issue related to the driver shortages not only affects the transport but it also cause adverse impact
on the warehousing labor.
There are number of factors such as retirement, barriers to entry, poor working conditions, low
wages and a lack of interest in the profession by young people, etc. Although very few statistics
are present in context of provide back up to this declaration (Powell, 2001).
Shortage of labor is the serious issues for the logistic industry, as organizations need to hire the
drivers on high price in comparison of the fair value. It can be end by paying high amount to the
drivers, and companies are always under fear of the retention.
Lack of qualified drivers also imposes the risk on the companies in context of loss off goods
and services, and also risk of the lives of other peoples.
All these things cause negative impacts on the companies taking these services also, as price of
the services are increased by the logistic companies because of the labor shortage faced by the
industry. It must be noted that, such issue result in the higher wages for the drivers and
ultimately rates for the shippers will also increase. All these cost burdens are transferred by the
shippers on the receivers.
Some other ways are also there through which issue related to the driver’s shortage can affect the
organizations:
 Organizations fail to provide the service qualities to its customers because hired
employees work for long working hours for the purpose of compensating the lack of co-
workers in the organizations.
 Organizations focus on filling posts with the help of temping agencies, and this will be
considered as costly affair for the organizations, and high turnover also reduce
productivity level of the organization.
 Demand of the qualified drivers is increased and this results in the high charges of the
training companies for the purpose of providing trained professionals to the
organizations.
Above, stated challenges impose adverse effects on both logistic industry and on organizations
which are taking services from these logistic services. It is necessary for these organizations to

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understand these issues effectively and make strategies for resolving the same. For resolving
these issues, organizations required to make changes in their strategies and also in their
operations systems (TI, n.d.).
Conclusion:
After considering the facts of this paper, it can be said that logistic industry and customers of the
companies operated in this industry related to the transport and warehousing face number of
challenges in this industry. Logistics play most important role in facilitating trade and, by
extension, and also ensures the success of the business operations. There are number of
challenges which occurred in the streamline logistics management, and understanding of these
challenges is very important. Transport and logistics industry face number of challenges, and
some of these challenges are familiar in nature but other challenges are result of the modern
technological developments. By practicing the effective and cost efficient logistic management,
an organization must ensure the foundation for a responsive, economical, and also the
transportation network.

Global Business Logistics 8
References:
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Arvis J. Marteau J. Raballand G. (2010). The Cost of Being Landlocked: Logistics, Costs, and
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