UPDATE: Australian Logistics Supply Chain Under Severe Pressure and Rising Costs


UPDATE: Australian Logistics Supply Chain Under Severe Pressure and Rising Costs

Dear Valued Customers & Partners,

We recently sent out a notice in regards to severe pressure and rising costs in the supply chain (view here). The situation continues to be problematic and we would like to keep you posted with further information.

Transport companies continue to report staff shortages as a major problem, which has not subsided, and has had a domino effect on operating costs. One of Australia’s biggest domestic logistics providers, ACFS, indicate, “Despite paying hourly rates of between 23 – 42% above the modern award for hourly paid roles at ACFS in the eastern states and WA, the continued lack of skilled labour for such positions as warehouse high reach forklift drivers”. With the high turnover of labour & drivers this also leads to reduced reliability in service delivery.

In addition to this, other operating costs continue to increase. Capital equipment is fetching a premium due to high demand and issues in supply/manufacture resulting from shortages of certain components. Diesel prices are the highest they’ve been in more than 6 months and continue to increase (read more here). Administration expenses have increased as tasks which would have been simple prior to the pandemic now require additional touch points, follow up and take more time to complete. This means businesses need to increase their staff count to alleviate pressure on current staff and avoid negative turnover, plus financing costs continue to rise mainly due to payment terms being stretched further and further.

Local transport companies are now adding (or enforcing) bans on considering detention, and we ask for our clients to please request minimum 14 free days detention on their bookings not managed by SILA. We will consider detention on a case-by-case basis and will do the best we can to get containers back on time however customers may need to factor in detention costs, especially on bookings that offer the minimum 7 or 8 days from discharge.

Supply Chain pricing has traditionally been the first cost that is reviewed by importers and exporters where cost savings are needed however, the industry is heading to a point where, to maintain profitability, an increase must occur. Our supply chain is at a critical point where it is apparent that wages and other multiple operating cost increases are here to stay. These increases cannot be adsorbed and therefor rates will also increase to maintain the ability to provide services to customers and keep cargo moving. The recent introduction of COVID Levies will not be enough to alleviate this and unfortunately there will be a general rate increase incoming within the next few weeks as companies navigate the current situation and understand the impact on costs.

We will continue to monitor and keep you up to date when further info is received.

Simon Pepper
Managing Director
SILA Global Pty Ltd