As a transportation sector, sea freight is constantly evolving. Factors including government policies, growth in demand, varying customer requirements and technological innovations mean that new challenges are constantly emerging. There are, however, five common challenges that most logistics managers face frequently. Understanding what they are and how to overcome them is crucial for anyone responsible for either managing shipping in-house or outsourcing the task to an Australian freight forwarder.
Read on to learn about the five biggest challenges logistics managers face with sea freight in Australia, and how to turn them into opportunities to gain improved service levels and market positioning.
1) Congestion during peak seasons
Certain times of the year such as Christmas, Chinese New Year and other festivals or seasonal events result in sea freight providers operating at peak capacity. This can create congestion and capacity issues such as limited space availability. Combine this with the corresponding difficulties of sluggish custom clearance, high seasonal freight costs and potentially the unavailability of tracking services, and you have a recipe for both delays and added headaches for logistics managers. To ensure timely delivery of your shipment, and avoid the risk of customer order cancellations, you can switch to air freight. However, the relatively high price of this mode compared to sea freight can increase the shipping costs by up to 400 percent – reducing your margins significantly.
The best way to avoid these types of problems is to be aware of times when congestion is likely, plan for it in advance, and ensure your predicted freight transit times factor in any likely delays.
2) End-to-end management (alignment of your sea freight with surface transportation)
Delivery doesn’t stop at the dock! Getting your shipment to the end customer on time also includes ensuring your sea freight and land transport are aligned. It is also vital to pre-align the required customs clearance process.
Nothing is instant, and your shipment can take anywhere between days or weeks to reach its destined port and be subject to complications including unfavourable weather conditions, production delays, port congestion, and cargo detention. All of this makes predicting the arrival date tricky.
Having the support of an experienced Australian freight forwarder can help, as they will dedicate themselves to keeping track of your shipment’s movements and ensure all the required processes and linkages such as customs, warehousing and land transport are aligned.
3) Fluctuating prices
Fluctuating oil prices are not the only X-factor Australian logistics managers face regarding sea freight pricing. Other changeable elements include bunker adjustment factor (BAF), General Rate Increase (GRI), peak season surcharges (PSS) and port congestion charges (PCC). These charges are often very unclear and can vary for different shipping lines as well as according to the trading country.
For a logistics manager to incorporate all the charges in their planning is very important, especially as it also plays a major role in product pricing and profit margins. To eliminate the risk of unexpected charges eroding the predicted bottom line, it can be sensible to sign a contract with a shipping line or freight forwarder to gain pricing certainty. It is also good practice to maintain a buffer in your cost forecasting to absorb any sudden freight cost increases due to detention, demurrage, oil price changes or mandatory surcharges.
4) Long transit times raise the spectre of policy changes
International freight is affected by numerous government policies and regulations. Whenever there is a change in policies, due to outside forces such as a terrorist threat or alteration of the relationship between trading partners, there can be flow-on impacts regarding your cargo clearance procedure, including cargo detention. Because sea freight means your shipment is in transit for some weeks, there is a higher probability of a policy change happening while it is between the point of consignment and final arrival onshore in Australia.
To stay ahead in the game, alignment with a freight forwarder can be of assistance. It is their business to keep their finger on the pulse of changing rules and legislation and to ensure all freight documentation meets the latest requirements.
5) End-to-end visibility
Achieving end-to-end visibility with sea freight is a challenge for logistics managers worldwide. The combination of long transit days, dependency on multiple systems and processes, different government policies and unpredictable weather conditions can make tracking your goods a hit-and-miss proposition. This lack of transparency also means it is almost impossible to accurately align all the other elements that will ensure your customers experience timely delivery.
Partnering with an Australian freight forwarder can help take the pressure off and give you greater transparency and certainty. Their systems are integrated with shipping lines and transporters, giving them real-time information on progress and any factors that maybe be causing a deviation from the expected schedule.
Every logistics manager faces these five challenges in the global marketplace. At the same time, the pressure is on to ensure their company holds its own in a competitive world. Because there is no one-size-fits-all solution to the key challenges, the onus is on logistics managers to either take the right precautions beforehand or be prepared to wing it at the 11th hour and solve problems on the fly.
Allying with a professional Australian freight forwarder is an easy way to minimise the need for damage control and reduce risks, Their resources, expertise and networks ensure they can not only manage all the common challenges easily, but they are also able to ensure more efficient and cost-effective deliveries to your customers.
BCR is an Australian-owned business with offices all over the country including Sydney, Brisbane, Melbourne and Perth. For more than a century we have continued to assist small, medium and large businesses to achieve an optimum logistics solution with warehousing, transportation and sea and air freight services to and from the major ports of Australia.