Solutions December/January 2018 by Linfox

Solutions In this edition

Asia Pacific December/January 2018 Keep your cool: just-in-time delivery for fresh food

All eyes on BevChain: next level visibility

Iconic Route: Goulburn to Bega and Batemans Bay

Waving the flag: the promise and challenges of autonomous vehicles

Fresh technology SUPPLY CHAIN SOLUTIONS

Click here to follow us on

Stay connected for supply chain insights, industry updates and Linfox news.

Solutions

Asia Pacific Dec/Jan 2018

Contents FROM LINFOX LEADERS Positioned for investment and growth Peter Fox

Our journey beyond 3PL Annette Carey

Targeting Asia’s dynamic economies Greg Thomas

Keep your cool: just-in-time delivery for fresh food

FEATURES Keep your cool: just-in-time delivery for fresh food

All eyes on BevChain: next level visibility

A truly fulfilling experience

Iconic Route: Goulburn to Bega and Batemans Bay

All eyes on BevChain: next level visibility SPECIAL 4 PAGE LIFTOUT

Waving the flag: the promise and challenges of autonomous vehicles

Green is the new red

RESEARCH IN FOCUS Spotlight on health and wellbeing

OPINION ASEAN’s logistics infrastructure: ready for growth?

Driving towards zero

Iconic Route: Goulburn to Bega and Batemans Bay

TECHNOLOGY Nowhere to hide: how blockchain shines a light on your supply chain

New wave technology: cutting through the hype

LINFOX PEOPLE Scott Nicholls: new opportunities

Waving the flag: the promise and challenges of autonomous vehicles

EXECUTIVE CHAIRMAN

Positioned for investment and growth Throughout our 60-year history, Linfox has grown through strategic investments and acquisitions. This year, a positive financial position underpinned by strong governance has enabled us to continue this pattern by capitalising on opportunities where we see value and growth. In September, Linfox acquired full ownership of BevChain and, in August, we entered into a consortium with Pacific National to purchase rail assets on Queenslandâ&#x20AC;&#x2122;s northern freight line.

The future of rail The proposed consortium will see Linfox and Pacific National purchase the containerised freight haulage and end-to-end freight forwarding capability between Brisbane and Cairns from Aurizon Queensland Intermodal. Rail is an important element of Australiaâ&#x20AC;&#x2122;s multi-modal freight network and Linfox is committed to converting more freight from road to rail where we see a benefit to our customers. The advantages of combining road transport with high-quality rail services are well documented. Rail is cost effective, safe and environmentally friendly. As we move to a low carbon economy, we will increasingly rely on rail as a fuel and energy-efficient mode of transport. Our Intermodal team already boasts a comprehensive national rail footprint, spanning key freight depots in every state and territory in Australia.

Linfox Solutions

This proposed acquisition forms part of our broader strategy to expand this footprint and increase our strategic rail assets in northern Queensland. The proposal is awaiting clearance by the Australian Competition and Consumer Commission and I look forward to updating our customers on the outcome in the near future. Powered by data Linfox continues to take a longterm approach to our investment in technology. This means regularly exploring new solutions and adapting our current ones to ensure we are continually evolving with our customers. Recently, our IT team began working on the rollout of a new in-cab solution, to be integrated with our existing control room application, FoxTrax. FoxTrax 2.0 will introduce electronic driver worksheets, sign-on-glass, advanced vehicle tracking and several new safety features to our existing platform.

The introduction of this technology will bring us closer to our goal of transitioning our drivers to electronic work diaries and removing unnecessary paperwork from our transport operations. We are also investigating a new Transport Management System (TMS). A revitalised TMS, along with the incab solution, will enable us to better schedule and optimise transport routes for our customers. Importantly, these combined applications will significantly increase the amount of data flowing into our central systems and add valuable operational, safety and compliance insights to our operations.

Safe and happy holidays The trust and responsibility that our customers place in Linfox to manage their supply chain operations is not lost on me and I sincerely thank you for your ongoing support in 2017. I wish you and your families a safe and happy festive season and I look forward to continuing our partnership in 2018. Peter Fox Executive Chairman

Data is power in a supply chain network and this rich information opens the door to trials of machine learning and artificial intelligence, which we are actively investigating. I am excited about the opportunities this rich data will offer us as we look to transform our operations and set a new standard in the industry.

CEO AUSTRALIA NEW ZEALAND

Our journey beyond 3PL The best companies successfully diversify and reinvent their business model in line with customer demands. The story of Linfox is one of growth. It is a legacy that began more than 60 years ago with just one man and one truck. Today, it is a logistics icon. Part of Linfox’s success is our ability to adapt to new technology and add value to our customers’ operations in new and unexpected ways. This year has been no different and Linfox is on an exciting journey to expand our capabilities beyond traditional 3PL services. This year, we have been working on a new product and supplier procurement solution.

Nine months after its launch, the fulfilment solution is achieving its goal of offering customers a direct and seamless link to their B2B and B2C customers and assisting them to expand into new markets. We’re listening to customer feedback and finding solutions to meet their problems and opportunities. I look forward to updating you on developments of these new services in the coming year. BevChain acquisition In September, I announced that Linfox acquired full ownership of BevChain.

The solution seamlessly integrates forecasting and procurement into the supply chain via an integrated online ordering portal.

This strategic acquisition opens opportunities to grow our beverage business, and service a wider range of customers in this category.

The rich data and insights enabled by the solution, combined with our knowledge of the customer supply chain, will allow us to add significant value to our customers’ operations.

The transition is on track, and while we will leverage synergies between the two businesses, BevChain will remain a stand-alone business, retaining its own branding, culture and business model.

The Linfox Fulfilment Centre in Sydney is another example of how we’re expanding beyond traditional 3PL services.

I look forward to realising the benefits of this transition and welcoming new customers in 2018.

Driving safe behaviours I am proud to report that Linfox continues to move closer to achieving our Vision zero safety targets. As at the end of September, our total recordable injury frequency rate is trending down positively at 1.2 points below our target for the 2018 financial year. This represents a 12 per cent improvement on our result for the 2017 financial year. Our motor vehicle injury frequency rate remains steady, and we are on track to meet our target for the 2018 financial year. In 2018 we will strive to further reduce these injury rates through the introduction of an intuitive safety management system and the development of a critical risk program. Thank you to our customers, colleagues and industry partners for your support this year. I wish you all a safe and happy festive season. See you in 2018. Annette Carey CEO Linfox Australia New Zealand

CEO LINFOX INTERNATIONAL GROUP

Linfox Solutions

Targeting Asia’s dynamic economies Six months into the CEO role, I have visited all our Asian operations and gained important insights into our people, our business and our customers. We recently confirmed our strategic direction for 2020 and we have a clear path to achieve it. This includes defining organic growth opportunities, identifying new target markets and sectors, and confirming our entry into new geographies. Linfox International Group remains committed to our heartland countries of Thailand, Vietnam, Indonesia, Malaysia, China and India. We also see enormous potential in continuing to expand our footprint in the Mekong Delta countries of Laos, Myanmar and Cambodia. We are committing resources to gain a better understanding of the logistics requirements in these countries and targeting potential customers and sectors. We are also actively pursuing new sectors in Asia where Linfox has proven expertise and capabilities including healthcare and cold chain transport. To achieve this, we are investigating strategic acquisition opportunities and joint ventures as well as building our capabilities internally. I look forward to updating you on our progress in the new year. Building scale in India In India, we have successfully secured several transport opportunities, including partnerships with resources company Vedanta Resources, beverage company United Breweries Group and additional work with AB InBev, the world’s largest brewer.

These new partnerships represent significant additions to our customer base and reinforce our position as Asia’s leading logistics provider. We remain committed to expanding our Indian customer base and growing our partnerships with existing customers. This growth allows us to improve and develop our transport network, which in turn allows us to offer scale and increased cost efficiencies to our customers. Improving critical capabilities I am also prioritising changes in two critical areas: safety and compliance. The recent tragic deaths of two subcontractors working on behalf of our business in Thailand and India have deeply impacted our business and team members. Linfox has a strong safety record in the countries we operate in and it is something we work very hard to maintain. Driving conditions in some parts of Asia are challenging due to congestion, poor roads and low compliance with regulatory requirements. Because of this, our drivers face unique risks as part of their daily jobs. But one incident is one too many and we must not become complacent or accept these challenges as ‘part of life’.

Improvements to our safety systems and behaviours will be a key focus in 2018. We will do this by increasing our on-road compliance, including random checks of licensing and log books, re-training team members on fatigue policies, and increasing our GPS monitoring of contractor vehicles. Building a strong and committed team We have recently appointed two internal candidates to our senior leadership team: Jeffery Cotterill as Country Manager, Thailand and Roger Bayley as Country Manager, Indonesia. Both Jeffery and Roger offer a wealth of experience gained from senior supply chain leadership roles in Asia and Australia. I am very pleased with the strength and depth of our senior team and I look forward to working with them to implement our country strategies early next year. Reflecting on the life and achievements of the late King Bhumibol Adulyadej The funeral ceremony for Thailand’s widely-revered King Bhumibol Adulyadej offered another opportunity to pay our respects and reflect on his life and achievements. Linfox continues to support and stand by our people during this difficult time. Greg Thomas CEO Linfox International Group

FEATURE

Keep your cool: just-in-time delivery for fresh food

Australian shoppers want fresh food and they want it fast. In the battle for market share, retailers must build a true partnership with growers, suppliers and cold chain specialists to move produce more quickly from paddock to plate.

â&#x20AC;&#x153;By cutting the time fresh food spends in transit, customer can reap the benefits of a fresher, longer-lasting product.â&#x20AC;?

The demand for fresh produce is rising. With a growing awareness of health and wellbeing, Australiansâ&#x20AC;&#x2122; preferences have shifted towards fresh foods. At the same time, convenience is highly valued. Two income families have less time to plan, shop and prepare meals. Consumers now do smaller, faster, more frequent grocery shops instead of the weekly visit to the supermarket. With more non-conventional work hours and busier lifestyles, shoppers take advantage of late trading hours to replenish supplies.

The popularity of discount operators Costco and ALDI in an already crowded market has created a price war between the large supermarket chains. And with little sign of shopper loyalty, retailers must provide the freshest fruit, vegetables, meat and dairy at the lowest prices. This makes the fresh food supply chain more complex than ever, according to Linfox General Manager Retail, Debbie Reich. In the past, grocery retailers took a fixed approach to forecasting and replenishment. Demand for the freshest food at the lowest prices has forced them to innovate.

Linfox Solutions

“There is so much pressure to minimise the time fresh produce spends in the supply chain that the approach has changed from a just-in-case scenario to just-in-time,” says Debbie. “Retailers must be able to forecast produce accurately to order on demand. If they order too much, food is wasted. If they don’t order enough, they lose sales. There’s no margin for error.” This means that stock must be pulled through the supply chain rather than pushed.

Just-in-time delivery Supermarkets have by-passed the wholesaler to share information about forecast demand directly with growers and suppliers. This information is drawn from the hundreds of thousands of SKUs passing through registers. Sophisticated software predicts demand for produce giving retailers the visibility they need to place orders so that stock is delivered as needed. This helps to ensure reliable, on-going availability of fresh produce. It keeps costs down and prices competitive. It reduces the time taken to transport groceries to supermarket shelves, and gets produce into customers’ hands within days of harvest. The improvement in forecasting accuracy over the last few years has reduced grocery retailers’ stock on hand from 60-90 days to an average of 30.

“There is so much pressure to minimise the time fresh produce spends in the supply chain that the approach has changed from a just-in-case scenario to just-in-time,” says Linfox General Manager Retail, Debbie Reich.

This approach requires more frequent deliveries. For some grocery retailers, Linfox can coordinate up to 15,000 truck movements each week. Dependable transport and handling systems are paramount, and specialised transportation equipment and storage facilities are required.

At every stage of the supply chain, produce must be stored and transported at the right temperature to ensure it arrives at the store in the best condition. Each step in the cold chain has a significant impact on the quality of the food that ends up on the shelf. A holistic approach As a national cold chain partner managing temperature-controlled, chilled and frozen distribution for major grocery retailers, Linfox takes a holistic approach to complex supply chains. The Linfox network includes a series of temperature-controlled distribution centres, cross dock facilities, and a fleet with the latest in vehicle, trailer and container equipment. Linfox’s warehouse and transport management systems integrate with retailers’ systems to track location and control temperature from the moment stock is picked up until it reaches its destination. Understanding the demands of the end consumer is essential. “Our ability to optimise and track routes, and monitor and control the temperature of each food group from the grower to consumers’ home, assists our customers in meeting the demands of an ever-changing marketplace,” Debbie says.

Data source: Statista 2015 and internal analysis At every stage of the supply chain, produce must be stored and transported at the right temperature.

FEATURE

All eyes on BevChain: next level visibility

In just over a decade, BevChain has evolved from an idea to a true industry solution. Now, under 100% Linfox ownership and with a focus on new technology, BevChain is offering even more to the beverage industry. When Linfox and Lion launched BevChain in 2006, it tapped into a thirst for specialised beverage supply chain services. BevChain was created as a joint venture between the two iconic companies. “We could see the opportunity for a beverage industry solution, and some early conversations with Gordon Cairns and Sir Rod Eddington ultimately led to BevChain,” says Linfox Executive Chairman, Peter Fox.

See how BevChain’s new technology tracks every step in the supply chain

“It takes strength to be in business with a company that is also a customer. BevChain’s success has come from the strength of the Lion and Linfox partnership.”

BevChain currently supports warehousing and distribution for leading brands in the liquor, beer, wine and energy drink categories. As an industry solution with beverage-specific expertise, BevChain provides an affordable route to market that is sensitive to the demands of a unique product. “Not only does beverage stock need to be handled with care,” says BevChain Group Manager - Customer, Strategy and Transformation, Josh Morris, “but products like top end wine and craft beer require climate control.” Strict compliance with customs and bond licencing, and high security, are also necessary when moving alcohol. “There’s a level of investment we’ve made in security so that customers can be confident their stock is secure at all times,” he explains.

Linfox Solutions

6 states 25 distribution centres 200 vehicles 700 people 2.5B serving units annually 25,000 delivery points each week

BevChain’s ‘one stop shop’ concept has led to major growth, enabling the formation of a national delivery network for the beverage 3PL industry.

BevChain customers range from large companies such as Lion, Coles, Woolworths and Red Bull, to boutique operators such as Byron Bay’s handcrafted beer brewery, Stone & Wood. Since 2011, BevChain has doubled in size, generating $250 million in revenue in the last financial year. A new era Linfox took full ownership of BevChain in 2017 in a mutual departure from the joint venture. The change will allow Linfox to leverage its logistics expertise and scale as the beverage industry evolves to meet changing demand. There has been a recent premiumisation trend in the beer market, with consumers expressing a preference for craft and contemporary varieties over classic full-strength beers. Growth in the carbonated soft drink market has softened as consumers seek out low-sugar options. Bottled water has become the fastest growing beverage in the world. What hasn’t changed is intense competition. Profit margins are tight as supermarket chains and main street liquor stores fight the financial squeeze caused by a permanent price war.

Craft beer is the only segment in the Australian beer market experiencing continuous growth.

Liquor retailers rely on fast, efficient and reliable supply chains. BevChain is changing the game by introducing a higher level of visibility and consolidation to streamline the beverage supply chain and enable customers to reduce costs.

FEATURE

“I can see when to expect the delivery, which means I can make sure I have staff to receive it without impacting customer service,” says Sam Chand, owner of Cellarbrations liquor outlet.

A taste of what’s to come “We’ve had feedback from our customers on their desire for a greater level of certainty and visibility within the supply chain,” says Josh, “particularly with the execution of the delivery itself. We’ve responded with the capability to track orders at every touch point.” BevChain will launch this new technology in early 2018.

“Accurate, timely information is so important to the smooth running of the supply chain, and that’s what this system will enable,” he explains. “The more we empower our customers and their customers with information, the more time they can spend on value-added activities for consumers rather than chasing deliveries - because at the end of the day, it’s not really about BevChain or our customers, it’s about ensuring the consumer has the best retail experience possible.”

Linfox Solutions

Beverage suppliers will receive a notification via SMS or email detailing the delivery window. Sign-on-glass technology will transmit immediate proof of delivery. For owner of Cellarbrations liquor outlet in Marylands, NSW, and customer of Lion, Sam Chand, the technology will save him time that he can channel into his customers and business. “I won’t need to spend time calling to find out when to expect my order,” he explains. “I can see when to expect the delivery, which means I can make sure I have staff to receive it without impacting customer service.” Faster routes BevChain’s new tracking technology is underpinned by a sophisticated routing model.

“The more we empower our customers and their customers with information, the more time they can spend on value-added activities for consumers rather than chasing deliveries,” says BevChain Group Manager - Customer, Strategy and Transformation, Josh Morris.

“We’ve invested a significant amount of work in route planning to be able to ensure the most efficient route at the lowest cost to customers,” says Lena. “This is not something you can achieve out of the box. It’s our deep understanding of the market and our knowledge of routing that has allowed us to come up with this optimised model.” According to Josh, there has been a change in thinking as beverage suppliers look for a more cost-effective way to operate.

Better visibility BevChain’s Group Manager - IT, Lena Seal says BevChain new technology will give customers complete visibility of their orders. “They will have the flexibility to track orders on any device, iOS or android, and our customers and their customers, the outlets, will be able to connect directly with our drivers,” Lena says.

“I think brand owners are less concerned about their brand being on the side of the truck, and more interested in costeffective, reliable supply chains, and consolidating with other brand owners to take advantage of each other’s scale,” he says. “That’s what BevChain’s business model, as a beverage specialist and consolidator for the beverage industry enables.”

FEATURE

A truly fulfilling experience In the midst of Australiaâ&#x20AC;&#x2122;s $20 billion e-commerce boom, delivery has become a key differentiator. Linfoxâ&#x20AC;&#x2122;s end-to-end fulfilment centre enables consumer goods companies to provide a seamless customer experience through their retail, wholesale and direct channels via a single supply chain.

Australians shop differently now. Faster and better internet combined with growing trust in online security have fuelled huge growth in e-commerce. As more people enjoy the convenience of mobile shopping, consumer goods companies can now reach an even broader audience.

According to IBISWorld, revenue from e-commerce in Australia is forecast to grow by 9.4% annually to reach $31.4 billion by 2022. The relatively low cost of a high-quality e-commerce site means there are low barriers to entry, and new companies continue to enter the market. However, e-commerce is not as simple as setting up a website and selling products.

Linfox Solutions

“Logistics plays a critical role in e-commerce. Customers consider speed and convenience as important as price and quality,” says Linfox General Manager Operations Development FMCG, John Pucek.

Linfox General Manager Operations Development FMCG, John Pucek, says customer experience is one of the most powerful differentiators for e-commerce companies. But a good experience online is quickly undermined by delivery delays and other complications.

As orders are received from retailers, business customers and consumers, products are taken from shelves, packed and handed to shippers. For delivery, Linfox liaises with last-mile carriers such as Australia Post and StarTrack.

“Logistics plays a critical role in e-commerce,” says John. “Customers consider speed and convenience as important as price and quality. Plus, the volume of orders is growing, but in smaller sizes, which means consumer goods companies need to deliver larger volumes of packages, faster. A higher volume of transactions also means more returns and exchanges.”

Track-and-trace technology gives Linfox’s customers visibility from the moment the order is placed to when it reaches the customer, with signed proof of delivery.

In March 2017, Linfox opened its first high-speed fulfilment centre in Erskine Park in New South Wales. John describes the fulfilment centre as a ‘one-stop shop’ enabling consumer goods companies to service retail, wholesale and direct channels via one supply chain. Linfox’s fulfilment centre includes a technical repair centre, spare parts, returns management processing, repair services and retail-ready packing. Value-added services include personalisation and gift wrapping. The centre also allows people to pick up their online order from a physical location.

FEATURE

“Customers know they can place an order at 2pm and it will be shipped on the same day,” says Director of Operations at Sennheiser Australia and New Zealand, Markus Dreimann. “We can give them reliability and certainty.”

Consumer electronics companies Sennheiser and Belkin were Linfox’s first fulfilment customers. For Sennheiser, partnering with Linfox meant the company could access expertise and scale without the hassle of managing technology, infrastructure or resources. “To ensure we continued to exceed our customers expectations, we looked for a 3PL provider who could support our future growth strategy,” says Director of Operations at Sennheiser Australia and New Zealand, Markus Dreimann. “Engaging with Linfox has given us a strong partner who understands premium brands and quality, and can deliver value-added services to our customers that we couldn’t provide with our own IT systems.” Markus says the transition was a success. “On the day we went live, we could send boxes. I’ve seen other warehouse integrations before, and this is certainly the best.” After four months, Markus says Sennheiser is providing customers with the level of service they expect. “Customers know they can place an order at 2pm and it will be shipped on the same day,” he says. “We can give them reliability and certainty.”

End-to-end fulfilment Linfox is in talks with several companies about its fulfilment services and is preparing for growth in the next 12 months. Automation will go live in the Erskine Park facility in December, and Linfox’s cloud-based fulfilment technology means other facilities can be turned on quickly and inexpensively, in any location. “If our customer already has their own supply chain,” says John, “we can take fulfilment technology and put it over the top of their operation. They can have our system with their premises. They can differentiate themselves in the market by offering lots of different choices around where, when and how products are delivered and offer additional services they couldn’t otherwise.”

Linfox Solutions

RESEARCH IN FOCUS FEATURE

Spotlight on health and wellbeing Linfox is funding a major new research study with Monash University to better understand the health and wellbeing of workers in the transport and logistics industry.

Linfox is working closely with the Transport Workers Union (TWU) and Monash University to build a strong profile of the health, safety and wellbeing of drivers and other workers in the Australian transport and logistics sector. Monash University researcher, Professor Alex Collie says that while past research has focused on driver fatigue and safety, there have been no large Australian studies of health and wellbeing of workers in this sector.

The Linfox-funded Transport and Logistics Industry Health and Wellbeing Research Study will seek information on diet, exercise, chronic illness, stress, mental health and other conditions associated with long haul driving and warehouse operations. Findings from international studies show that truck drivers have high rates of chronic back and neck pain, diabetes and obesity, chronic sleep disturbances, osteoporosis and arthritis, and may be at risk of poor mental health.

“As an occupation, long haul truck driving has many risk factors for poor health, illness and injury,” Professor Collie explains. “Truck drivers report higher than average rates of risky health behaviours such as smoking, lack of physical activity, very long working hours and poor diet. Drivers also spend long periods of time working alone, which may contribute to risk for mental illness.”

RESEARCH IN FOCUS FEATURE

Professor Collie noted that truck driving can be highly demanding work. “Drivers have lots of time pressure, and work pressure, but limited control over their day-to-day tasks. We would characterise some of these roles as having high demands and low control. That is not a healthy combination.” “This research will allow us to characterise the lifestyle factors, family circumstances and working conditions that affect the health of drivers, and other workers in the industry,” he says. The study will be conducted in two phases. The first phase will look at existing data from national workers compensation statistics and other large databases. Monash University has access to information on every compensation claim made in Australia over the last 13 to 14 years.

Health and wellbeing plays an important role at Linfox. Healthy Fox is a company-wide program designed to encourage healthy behaviours and lifestyle choices in the areas of general health, mental health, nutrition and fitness. In another Linfox initiative, Healthy Fox recently announced a new partnership with the Baker Heart and Diabetes Institute in a study on the prevention of coronary artery disease.

Would your organisation like to participate in this important research? For more information, email Professor Alex Collie at alex.collie@monash.edu.

The Transport and Logistics Industry Health and Wellbeing Research Study will take place over the next three years.

The second phase will include a large survey of drivers, and interviews with employers. Linfox President Human Resources, Laurie D’Apice says the study will provide a better understanding of the impact of this work on employees and their families. “The findings will help Linfox better support employees by considering their unique working conditions,” says Laurie. “It will also help us improve programs and employee benefits to appeal to a younger workforce and attract more women to the industry.”

PROFESSOR ALEX COLLIE Professor Alex Collie is Director of the Insurance Work and Health Research Group in the Faculty of Medicine, Nursing and Health Sciences at Monash University. Alex previously established the Institute for Safety, Compensation and Recovery Research (ISCRR), a partnership between Monash University, the Transport Accident Commission and WorkSafe Victoria. He has a PhD in psychology, and has published over 100 journal articles, book chapters and technical reports. Alex is regularly invited to speak at national and international conferences.

FEATURES

Iconic Route

Linfox Solutions

NSW

Goulburn to Bega and Batemans Bay Linfox trucks operate in some of the most stunning scenery in the world. For nearly 55 years, Linfox has been delivering groceries to Coles stores. In southern NSW, semi-trailers carry goods from Australiaâ&#x20AC;&#x2122;s first inland city, Goulburn, down to the picturesque south coast towns of Bega and Batemans Bay.

Coles: serving Australians for over 100 years Coles is one of Australia’s largest retailers, providing goods and services through an average of 21 million customer transactions each week. In 1963, Lindsay Fox convinced GJ Coles and Coy, now Coles, to put one truck on a three month trial. Today, Linfox still delivers goods to Coles stores, and also operates their distribution centres in NSW and VIC.

“The people I work with are great. The people I deal with at each store are great. I love my job.” Peter Challinger is a Linfox driver on the Coles contract working from the Goulburn Distribution Centre. From Goulburn, he delivers groceries to Coles stores across western NSW, Canberra, south coast NSW and Sydney.

Batemans Bay, NSW

Goulburn, NSW

Canberra, ACT

Climb up into the cab, immerse yourself in the 360° video

“This route has everything; farmland, nice green rolling hills. On Brown Mountain it’s tropical, almost rainforest, then we drop down and see the seaside, the coast. It’s very pretty”

Linfox Solutions

Iconic Route NSW

Ride along with Pete on a the Coles delivery from Goulburn to Bega and Batemans Bay.

“The road from Bega to ‘The Bay’ is a bit different. We travel through lots of nice little seaside towns.”

“Unloading pallets is like a big game of Tetris. You need to be creative and strategic, so you can make your load fit on the dock.”

Bega, NSW

“A lot of ‘truckie-oke’ goes on, I have a good old sing to myself. If I was on The Voice I don’t think I’d get any chairs to turn around. But it keeps me entertained.”

The numbers Linfox

• Linfox trucks travel 42,000,000km per year on the Coles contract. • 446,000 Linfox deliveries are made to Coles stores every year. • 155 Linfox prime movers tow 396 Coles trailers. • More than 4,121,000 pallets are transported to Coles stores each year. • Linfox has a 915 strong team working on the Coles contract across transport and warehousing.

Coles

• A network of 798 supermarkets across Australia. • 706 smaller Coles Express convenience stores. • 3 liquor store brands with a total of 888 retail outlets. • Under the Spirit Hotels brand, Coles has 88 hotels. • 107,000+ team members..

OPINION

Linfox Solutions

ASEAN’s logistics infrastructure: ready for growth? With the Association of Southeast Asian Nations (ASEAN) about to celebrate its 50th anniversary, James Evans looks at whether the region’s logistics infrastructure is ready for the anticipated population and economic growth, and how the logistics industry can help to connect countries, improve safety and make it easier to access markets in the newly-formed ASEAN Economic Community (AEC). Director of Legal and External Affairs, Asia, James Evans. Advancing by rail Southeast Asia relies heavily on road transport. In Thailand, for example, more than 90 per cent of goods are transported on its congested roads with less than two per cent on an aging single-track rail network. An advanced rail network is planned which will run from China’s north through Laos, Thailand, Malaysia and Singapore, with branches to the east through Cambodia and into Vietnam.

This will improve speed and reduce costs. The road transport industry will have to compete and integrate with rail as new logistics hubs develop. Linfox is at the centre of this future network, in Bangkok, and has expertise in managing intermodal logistics. It is at a competitive advantage in the region and well placed to work with customers to create these hubs.

OPINION

Making it safer to go by road Driver safety and fatigue is a major challenge for the region. The World Health Organisation (WHO) reports that 117,000 people died on the roads of ASEAN member countries in 2013.1 A 2016 analysis shows that deaths from road incidents as a percentage of total fatalities are exceptionally high among ASEAN member countries. Malaysia has the highest incidence, with six per cent of all fatalities being a result of a road incident. The global average in the same year was 2.1 per cent. In the transport industry, drivers and their assistants frequently drive excessively long hours, sometimes in poorly maintained vehicles, endangering the public and themselves, and compromising the efficient delivery of goods.

Location

Recognising that this is a serious social and economic issue, the ASEAN Secretariat rolled out its Regional Road Safety Strategy in 2015. Its impact has been limited, indicating that ASEAN members must do more to enforce safety laws and educate drivers and communities.

Road deaths as a percentage of all fatalities

Malaysia

6 per cent

Thailand

5.1 per cent

Brunei

4.4 per cent

Vietnam

3.7 per cent

Global average

2.1 per cent

Source: http://www.who.int/gho/road_safety/en/

Removing legal and regulatory obstacles

Linfox is working with local governments to improve road safety in a number of countries. In Vietnam, we have worked with the local government and communities to introduce road markings and signage and raise safety awareness in schools.

ASEAN aims to facilitate the free flow of goods and services between markets. There is still a long way to go to meet this goal. The logistics industry can help change this with strategic investment in regional distribution centres and transport solutions, but the region must harmonise its laws and practices before the industry will be willing to invest. To free up the movement of goods, laws and taxes will need to be fair, transparent and similar to those in other countries in the AEC. Customs departments will also need to invest in modern technology and systems and the related laws and taxes must be similar, fair and transparent. This will encourage local and foreign investment alike.

http://apps.who.int/gho/data/node.main.A997?lang=en

The recent effort to harmonise laws and standards on labelling goods for certain products is a welcome step. Local language differences will almost always mean that labelling must be changed across countries, but there are at least agreed regulations on content. Direct foreign investment and ease of access to markets remains a contentious issue. In many ASEAN countries a 100 per cent foreignowned company cannot hold a transport license, which means foreign companies must establish a joint venture with local companies or people. This is a significant barrier to doing business. Despite AEC regulations providing for foreign ownership of up to 70 per cent in logistics businesses, many ASEAN nations have maintained a limit at 49 per cent.

Linfox Solutions

Creating a connected economic community A coordinated and efficient intra-ASEAN logistics network is essential to both growth and economic integration of countries in the region. This will require the further removal of non-tariff barriers, the easing of barriers to market entry, and a simplification of procedures for goods in transit. The AEC needs time to mature – as an example, Myanmar and Cambodia have not fully implemented laws to satisfy the community’s conditions. At present, if a member country doesn’t comply with the AEC regulations, there is little ASEAN can do in the way of incentives, penalties or sanctions. Membership to the World Trade Organisation (WTO) may be a way to influence ASEAN nations - full WTO compliant membership across the ASEAN region would be a very good point from which to grow further in the next 50 years. ASEAN’s leadership structure could also be improved. With leadership rotating from country to country it is difficult to build the momentum for change.

ASEAN Timeline In the 1960s, five foreign ministers signed the ASEAN Declaration (aka ‘Bangkok Declaration’). The ASEAN Community is composed of three pillars.

Political security 1967 Indonesia Malaysia Philippines Singapore

1984 Brunei Darussalam

Economic

Social cultural

1995

1997

1999

Vietnam

Lao PDR Myanmar

Cambodia

Thailand

Stronger transport networks, better safety on the roads and harmonised laws and regulations will go a long way to helping ASEAN countries integrate and grow. With our strong relationships, expertise and cross-border capabilities, Linfox is ready for the opportunities in the region.

FEATURE

Waving the flag: the promise and challenges of autonomous vehicles Faced with an increasing freight task and a shrinking and aging driver workforce, the logistics industry needs to consider autonomous vehicles if it is to meet demand in the future. But what are the benefits for supply chains? And what needs to be done to realise them? Linfox Group Manager, Innovation and Operations Development, Oliver Needham. The world has imagined self-driving vehicles for more than 60 years. As with any technology, legislation takes time to catch up. Just over 100 years ago, legislation in the United States and the United Kingdom required â&#x20AC;&#x2DC;self-propelledâ&#x20AC;&#x2122; vehicles to have a flag bearer walk in front to ensure public safety.

Safety, efficiency and lower costs and emissions The first potential benefit is safety. 90 per cent of all road traffic accidents are caused by driver error. In theory, self-driving vehicles equipped with advanced sensors, spatial imaging software and avoidance algorithms can constantly monitor and adapt to traffic and weather conditions and avoid obstacles more effectively than a human.

Linfox Solutions

To prove this for heavy vehicles, testing needs to be conducted on a much larger scale. Algorithms and computing power need to evolve to accurately assess the movement of multiple road users and other hazards. Another potential benefit is lower fuel costs and carbon dioxide emissions from dynamic routing and aerodynamic efficiencies through platooning, where a lead truck controls the speed and braking of a digitally connected convoy. Early trials of two-truck platooning have reported fuel savings of about five per cent for the lead vehicle and 10 per cent in the trailing vehicle. Linfox is involved in an Australian trial to understand what this means in the context of double and triple trailer configurations. Other benefits include increased utilisation. At full automation, trucks would be able to travel 24 hours seven days a week without a break. With a shift in regulations, a driver could be resting and moving at the

same time. Advances in information sharing, vehicle-to-vehicle and vehicleto-infrastructure, could help reduce trip time by avoiding and potentially reducing traffic congestion. So where does the driver sit in all this?

“Making driving less arduous and less stressful may also help the logistics industry attract new drivers, and help tackle the driver shortage,” says Linfox President Human Resources, Laurie D’Apice.

For the foreseeable future, the driver will remain in the driver’s seat. Heavy vehicles are not as manoeuvrable as cars. Avoiding hazards is more difficult. Much more development is required for autonomous systems to match the situational awareness of trained, professional drivers. Even when they can, the driver will still have roles to perform at pick-up and delivery points and must know when and how to assume control of the vehicle. Given how highly trained and regulated they are, drivers are likely to be critical in the roll out of autonomous technology. And the arrival of exciting new technology may help attract a new wave of drivers to the industry.

A 1950s view of automation. Source: Computer History Museum.

Key issues addressed by driverless trucks

Source: Roland Berger 2016

FEATURE

The next steps towards autonomy Linfox already has a level of automation in its fleet. While exact configurations depend on customer requirements, Linfox’s newer trucks include lane departure warning systems, fatigue warning systems and autonomous emergency braking systems. Fully autonomous vehicles are expected to be on our roads in the next decade, but much work is to be done for policy and perceptions to catch up with the technological capability. A clear and consistent regulatory environment and automated vehicle standards are essential but will take time to achieve. Just as important are well-maintained road markings and signage. Executive Director of the Australian Driverless Vehicle Initiative, Rita Excell, says there are unique issues in different countries. For instance, Australia has many unsealed roads and unmarked highways. “There are also some things you don’t find in other countries. If you’ve got a car passing something like [a road train], it needs to understand what that is,” Ms Excell said.

Other challenges are deeper, such as how to legislate for when the dynamic driving task goes from being controlled by the driver to being controlled by the automated driving system. At present, laws don’t recognise autonomous systems as drivers. Policy makers will need to address this and legal and ethical issues that go with it. Given the amount of regulatory effort required, Linfox anticipates that nearterm explorations into autonomous vehicles will continue to focus on controlled environments on private land. Fully autonomous heavy vehicles are already at work in sectors such as farming, defence and mining. For its part, Linfox will continue to pursue higher automation at sites that sit at ‘either end’ of the transport leg such as at transport yards, on receiving docks and in warehouses, as well as to explore the benefits of vehicle-toinfrastructure communication. Linfox’s Australian Automotive Research Centre tests autonomous vehicles regularly and has formed a consortium to further develop the facility with Monash University, Robert Bosch, CarAdvice.com, with specialist advice from VicRoads, General Motors and Transurban.

The pathway to automation for heavy vehicles

Linfox also uses the facility to educate customers, recently holding an event with Tesla, Volvo and CarAdvice.com. Linfox is monitoring trials in jurisdictions with more progressive regulation. Recently, a self-driving truck in the United States travelled 200 kilometres on a highway with the driver in the sleeper berth. However the truck had to be piloted to and from the highway and required a car to drive ahead to ensure the lane was clear. Much like the first flag waver walking in front of a car. While trust in self-driving trucks is still some way off, Linfox will continue to make its operations more autonomous to bring safer, more efficient service. Ultimately, harnessing this technology will enable a truly efficient, safe and integrated supply chain.

See Linfox testing autonomous vehicles at the AARC.

Linfox Solutions

FEATURE

Green is the new red In 2016, Linfox succeeded in cutting its total emissions by 50 per cent. In 2017, the focus on reducing our environmental impact continued.

The latest additions to the Linfox fleet bring significant emissions reductions.

The reason for investing in reducing emissions is simple and best explained by Linfox Executive Chairman, Peter Fox. “There are significant wins for both business and the environment by reducing emissions,” Peter says. “Our approach is based on a belief in climate science. We share an obligation to upcoming generations and are pleased that our strategy to reduce our carbon footprint has been effective.” Most recently Linfox has invested in 60 new Mercedes Benz Actros 2653 prime movers.

Fitted with the latest Euro6 engine technology, the trucks will be used across the Linfox Intermodal fleet and bring the latest safety, efficiency and emissions reduction technology. The lower fuel consumption is so significant that the fuel tanks have been made smaller, without reducing the range. Carrying less fuel means a lighter truck, further increasing efficiency. Linfox has also made a significant investment in renewable energy with five 100 kilowatt (kW) solar panel systems installed across the warehouse

network. The systems provide enough energy to power the equivalent of 100 Australian homes and will offset our total energy use. This will avoid creating 554 tonnes of CO2 annually. More systems will be installed in the coming years to further decrease our environmental impact.

OPINION

Driving towards zero To err is human. We all know it, but when it comes to road safety we think we can train humans to not make mistakes. Samantha Cockfield TAC Lead Director, Road Safety.

Road safety practitioners around the world have understood for some time that training and other efforts to change behaviour will only get us so far in reducing the number of people seriously injured and killed on our roads.

This prompted our colleagues in Sweden to turn how we think about road safety on its head. They started with some fundamental principles. • Nobody deserves to be killed or seriously injured on our roads. • People make mistakes so our road system needs to be designed to protect people when this happens. • We all have certain tolerances to the forces that impact the body in a crash, and we understand what forces humans can survive. • Road safety is a shared responsibility – everyone in society needs to do their part.

Linfox Solutions To address this, Victoria’s road safety agencies launched Towards Zero, which asked Victorians ‘who deserves to die on our roads?’ However, most thought this was unlikely to ever happen, with only 15 per cent3 believing that this would one day be possible. When asked why, most people said it was because people make mistakes or do silly things. We need to show people what’s possible. Road safety agencies know that: • around 50 per cent of the state’s road deaths occur on country roads at high speeds of more than 80 kilometres per hour • more than 60 per cent of these crashes involved a vehicle crossing the centre line or median • the biggest problems are when vehicles run off the road or hit other vehicles head on • the highest crash speed that can be survived in a head-on scenario is 60 kilometres per hour, or going side on into a tree at 30 kilometres per hour. By sharing this information with the Victorian community, and our plans for improvement, we can demonstrate how our roads can be designed so that we can survive and avoid serious injury, even if we make a mistake. How can we design a road system that protects people from the consequences of their mistakes?

The Swedish researchers then started looking at all the elements of the road system: the roads, the vehicles, the people and travel speeds. They looked at how they could make their roads safer by making changes to each of those elements. In the 20 years since, Sweden’s road death rate dropped from 6.48 deaths per 100,0001 people in 1995 to 2.64 in 2015. If we had the same rate, we’d have saved more than 80 lives in 2016 in Victoria alone. Instead, fatality numbers have flat-lined in Australia. ‘Nobody’, was the heart-warming response. Research showed that, after the first wave of the campaign, 88 per cent2 of people surveyed believed the long-term aim for road deaths should be zero.

SAMANTHA COCKFIELD Samantha Cockfield is the Lead Director Road Safety at the Transport Accident Commission (TAC) in Victoria. Samantha has been involved in the road safety field since 1992, beginning her career as an economist working on the development and evaluation of accident blackspot programs. Samantha is responsible for the TAC’s road safety strategy which spans road infrastructure, vehicle safety initiatives and a range of programs designed to improve road user behaviours. Recently, Samantha was awarded the prestigious Australasian College of Road Safety Fellowship Award in recognition of her contribution to road safety in Australasia.

Flexible barriers have been successful in reducing run-off-road and head-on crashes by 85 per cent.

1 OECD Data https://data.oecd.org/transport/road-accidents.htm (accessed 12 November 2017) 2 TAC Road Safety Monitor 2016 http://www.tac.vic.gov.au/__data/assets/pdf_file/0017/220094/RSM-Q3-2016_FINAL.pdf (accessed 12 November 2017) 3 TAC Road Safety Monitor 2016 2016 http://www.tac.vic.gov.au/__data/assets/pdf_file/0017/220094/RSM-Q3-2016_FINAL.pdf (accessed 12 November 2017)

OPINION

Flexible roadside and centre line barrier systems have been shown to reduce run-off-road and head-on crashes by up to 85 per cent. To save lives, these barriers are being installed on some of the riskiest high-speed, high-traffic rural roads. We are also installing more tactile treatments on lower volume roads. These tactile treatments will widen the centre medians to create more space between vehicles. They will also be added to more roadsides to prevent people running off the road to the left. Crashes involving heavy vehicles are the most serious. Although usually not at fault, heavy vehicles are involved in 15 – 20 per cent of fatal crashes. As an industry, those who own, manage and drive heavy vehicles can play a huge part in reducing the number of lives lost on our roads.

We already see large logistics companies such as Linfox, with its Vision ZERO for safety, showing leadership and following through with training in safe work practices and vehicles with the latest safety technologies. Most importantly, Linfox is setting an expectation and aspiration for its workforce: there is no reason anybody needs to be killed or seriously injured while at work. Zero is possible. We need this aspiration to spread more widely, throughout the heavy vehicle industry, and beyond to all work places and our community. Nobody deserves to die or be seriously injured on Australia’s roads. Road safety agencies have the knowledge that can drive us towards zero. The biggest challenge is to create the belief in the wider community that we can do it.

Linfox truck safety series In a four-part truck safety series launched by the TAC in November 2017, Linfox truck drivers provide insight into their working life on our roads. They talk candidly about road safety, and share their thoughts on everything from fatigue and speed through to interacting with other road users and coping with stress.

“We’re all car drivers too, and we understand what people go through.” – Retail driver and driver trainer, Steve

“Everyone just needs to take a breath … slow down. It’s not worth it.” – FMCG truck driver, Lana

Linfox Solutions

A focus area for Towards Zero is country roads, where around 50 per cent of the state’s road deaths occur.

Long haul truck driver, Callum talks about the ‘ever-present danger’ of driver fatigue.

“Leave a bit of space between us and we’ll leave you space.” – Fuel truck driver, Aaron

– Retail driver, Callum

TECHNOLOGY

Nowhere to hide: how blockchain can shine light on your supply chain Faced with reality, the beautiful logic of a supply chain can become a complex, fragile and sometimes obscure network of people, contracts and transactions.

Linfox Solutions

It is this decentralised record-keeping that makes blockchain so powerful: it replaces secrets with transparency, distributing evidence across many computers. With a copy held by each computer the database remains secure, even if some of those computers are tampered with. Blockchains and supply chains just seem to go together. In a blockchain, everything that happens is recorded. Multiple suppliers can add to the same chain and, because it all happens on a network, the information flow is hard to break down. A supply chain manager would have full confidence about the provenance, location, quality, quantity and authenticity of goods moving through the system. Customers would be able to see every part of the journey their product took before arriving in their hands. The rules for adding blocks means that transactions comply with contracts and regulations, combined with sensor technology to track the condition and whereabouts of goods and the availability of this information in closeto-real time.

For companies that depend on multiple suppliers, spread across the world and known only by a website, that poses risks that can be very hard to manage. With so little visibility—and without the factor of trust—it can be difficult to assure the quality of what is coming through. Blockchain promises a technological solution to this problem of visibility. It’s a simple concept. A blockchain is a list of transactions to which new transactions—blocks—are added according to a rule. They live on computer networks with every computer holding the whole chain in its memory.

“Blockchain promises higher degrees of verification, shorter backoffice processing times, and better interoperability between IT systems”, says Linfox Group Manager, Innovation and Operations Development, Oliver Needham. In the future, blockchain could remove the need for the customised and costly IT integration needed to connect systems. According to Mark Ullah, Portfolio Manager Smart Transport at Telstra Enterprise, “it’s going to happen—it’s more a question of when.” But he believes that we probably won’t see it fully implemented in global supply chains for at least another 12 to 18 months.

Another reason is to do with networks. We need a true Internet of Things and there is greater value when every participant in the supply chain is on board. This makes it difficult to get the ball rolling. A lack of knowledge and blockchain’s complex nature make it difficult to gain buy-in from decision makers and integration into front and back-end systems in the near term is not trivial. He also believes that data standards should be agreed by industry so that assets can be tracked in a consistent way —one name for each asset all the way through the chain. Without this there will be limited visibility during custody changes. Blockchain promises a great deal: cost savings and efficiency but also the potential to make the supply chain more responsive to demand. This is a profound change. Now the technology is proven, it’s time to build skills and partnerships in the industry to make it happen.

“Blockchain enables the creation of exciting new applications and solutions that connect multiple supply chains partners, allowing them to interact and easily exchange meaningful information.” - Mark Ullah, Portfolio Manager Smart Transport at Telstra Enterprise

Why? One reason is that the talent has already been scooped up by fintech start-ups that have led the field in applying blockchain technology.

TECHNOLOGY

New wave technology: cutting through the hype With so much talk about the impact that big data and sensors will have on the way we live, Linfox Chief Information Officer, Conrad Harvey asks what it means for the supply chain. Linfox Chief Information Officer, Conrad Harvey.

Linfox keeps a watchful eye on advances in technology that could help us operate more safely and efficiently. Some of the most exciting innovations are happening in sensor technologies and data analytics. So, what do they mean for our supply chain operations, now and in the future?

A sensory experience With more and better quality location and routing data, we can improve communication with our drivers and the visibility of truck movements. Working with Australian technology innovator, MTData, Linfox has drawn on years of in-cab technology innovation to develop a new fleet monitoring system, FoxTrax 2.0.

They will also be able to streamline the maintenance of digital driver worksheets and improve accuracy. Linfox has long used in-cab cameras to improve our safety performance. In the future, our connected fleet will make it possible to use smart cameras and Internet of Things sensors to communicate with other vehicles and infrastructures.

Linfox Solutions

Construction machinery and equipment company, Caterpillar is using sensors to predict the machinery maintenance requirements, before they become an issue. This is all driven by data gathered from fleet telematics. The tools have dramatically reduced downtime due to unpredicted machinery failures, increased efficiency and reduced manufacturing delays. Similarly, the data collected from FoxTrax 2.0 will allow us to predict future events and create tailored alerts for our drivers and maintenance teams. In the future, machine learning and artificial intelligence will combine sensors and high speed central data processing to increase productivity and unlock new business opportunities. There has never been a more exciting time to be involved in supply chain technology. We will continue to invest and work with our partners, Monash, SAP, Telstra and the start-up community to tap into great innovations and thinking.

Looking forward, we will also work with the broader industry to establish the necessary standards to help make electronic work diaries a reality. How do we make sense of this huge influx of data? We are investing in data lake platforms and analytics tools to store large amounts data and interpret it in new and unexpected ways.

Recently, we partnered with one of our pharmaceutical customers to analyse historical supply chain data to help them better plan and manage the demands of the flu season. Through big data, we will be able to help our customers to predict future events and solve problems in ways weâ&#x20AC;&#x2122;ve never seen before. The possibilities are endless.

The challenge is to align the best new technologies with real business outcomes, rather than trying to adopt everything at once. By investing in sensors, data sets and analytics tools, we are equipping Linfox to offer our customers value through technology.

LINFOX PEOPLE

Scott Nicholls: new opportunities These are interesting times for the Resources and Industrial business. The end of the mining boom has been a challenge for many of our customers as they take a hard look at their cost base. Digital and data technologies are also beginning to transform our industry. For Scott Nicholls, our new President Resources and Industrial, it was Linfox’s vision and our ambition to grow in this environment that drew him to the business. “It’s been tough for our customers,” says Scott, “but commodity prices and exports are improving and we can see the momentum lifting in the mining sector in Western Australia and Queensland.”

Meet Scott Nicholls, our new President Resources and Industrial.

“That means that we have new opportunities to work with customers on being a true end-to-end supply chain partner,” he adds. “We’re looking at technology and how that can drive efficiencies and create new value, but we’re also looking at new ways of thinking and best practice insights from other industries.”

In this climate of growth and innovation Scott is mindful of people. “I started off in my career in BHP working as a fitter before going on to do my mechanical engineering degree,” says Scott. “It’s helped me to always think about what change is going to mean for the operator or the person behind the wheel of the truck.” And that includes safety. “Every company says safety is its number one priority,” says Scott. “At Linfox this holds true, from the senior leaders to the people on the ground.” With his 20 years of experience in commercial sales, operations, logistics and strategy, Scott is a valued addition to the leadership team. His keen observation and strategic insight will help Linfox grow and work more closely with our partners in the Asia Pacific region.

Subscribe to get it first! Enjoyed reading this edition of Solutions? Click here to subscribe and receive the next edition in your inbox.