Challenges in Global Business Logistics: Transportation and Warehousing in Australia

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).

Global Business Logistics 3
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).