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This Inissue this issue March 2016 December 2017/January 2018
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A time for reflection As the year draws to a close, it’s a great excuse to take stock and reflect on the progress made over the months prior. For Australia’s supply chain, 2017 has been a year of suspense, strategy and security. In January, Amazon began quietly hiring for positions for the company’s AmazonFresh grocery business in Queensland, and speculation about its plans Down Under was soon rife. In March, a former executive confirmed that the company did indeed plan to enter the Australian market. The following month, Amazon officially confirmed that it was looking for a large distribution centre ahead of bringing a retail offering to the country, though without confirming a timeline. In July, the company leased its first Australia DC, in Dandenong South, Victoria, and in October, announced a series of online retail summits for Australian SMEs. It’s certainly been a busy year for Amazon, but now the hard work really begins, says Passel Co-founder Marshall Hughes, for Australia’s retailers that is (see page 16). 2017 was a big year for defragmentation of freight movement in Australia, with significant progress made on the development of the Proving profitable at theStrategy, cutting National Freight and growth Supply Chain ed Proving profitable growth at the which was announced in late 2016. Thecutting edProving profitable the Australian Logistics Council’sgrowth Forum at brought cutting growthpriorities at togetheredProving key industryprofitable minds to identify the cutting edProving profitable growth in March, and in recent months Deakin at the cutting edProving profitable University’s Centre for Supply Chain Logistics growth the cutting edProvingscenarioprofithas beenatworking on a fascinating able growth at the cutting edProving planning project to shape its recommendations profitable at the cutting for the final growth form of the Strategy (seeedProvpage 12). ing profitable growth the cutting edHere’s to an even safer, at smarter and more Proving profitable growth at the cutting productive year ahead. edProving profitable growth at the cutHappy reading. ting edProving profitable growth at the cutting edProving profitable growth at the cutting edProving profitable growth at the cutting edProving profitable growth at the cutting edProving profitable growth at the cutting. Philippa Edwards | Editor
behindthecover
18 Contents COVER STORY 14 A united approach
28 Blockchain: an introduction
The Federal Government’s National Freight In the future, Blockchain will help simplify and and Supply Chain Strategy is set to bring secure local and global transactions. Yet, for consistency to the management and planning of such a potentially disruptive technology, RMIT Tru-test of quality. University researcher 04 Bulletinboard 42 Data Australia’s freight networks. Deakin University’s ChrisCapture Berg notes& that very Supply Centre for Supply Chain and Logistics has been little is truly understood aboutChains the way it works instrumental in ensuring it is ready for the 24 Factory Materialsand the benefitsSustainable it can bring. supply chains. 06 Mercury Awards future, whatever that may look like. Handling
contents
2010 Mercury Awards Changing times Spiral conveyor 32 solves launched. 44 Forklifts & Lifting FEATURES The Internet of Things promises to make life heat problems. Humbled and Exalted Six newonoverhead easier in the workplace, the street cranes and in the Cart dollies for simple –18 2009 Mercury Award for mean Ferrocut. People power home. While it may a leap for efficiency handling tasks. winners. Melbourne-based start-up Passel’s and visibility, organisations and individuals Airfreight system reduceswill crowdsourced delivery model could turnpallet dispenser. need to step up their cyber costs. security, says RIoT Double handling everybody into a courier. Co-founder Solutions Managing Director, Rob Merkowitza. 14 Training Palletising robot. Hybrid forklift. Marshall Hughes speaks to Logistics & Bell’s Transport benefits Materials Handling about learning curves, 34 The expansion plan fromglobal Skillsambitions for Growth and grasping 32 opportunity. Warehousing & Storage Five minutes49 with Port of Melbourne CEO, Handling Hazardous program. Brendan Bourke.Goods Record picking 22 Changing codes to make freight transit productivity. Gloves for handling safer 16 Information hazardous substances. New laws could hold business executives acrossstorage. Automated Technology - Supply the whole supply chain to account for poor risk Hand-held eyewash. Chains Storage success. management. The Australian Logistics Council 05 From the Editor Information driven. and Australian Trucking Association state their 06 Industry News case for a revised rulebook. 11 Global News 26 Towards zero in NSW 12 Australian Logistics Council
Regular Run
Melinda Pavey, Minister for Roads, Maritime and Freight – New South Wales, threw her support behind proposed interstate changes to the National Heavy Vehicle Regulator’s Chain of Responsibility at the Australian Logistics Council’s 2017 Supply Chain Safety and Compliance Summit.
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Industry News
2018 Mercury Awards to recognise supply chain excellence After a brief hiatus, the Logistics & Materials Handling Mercury Awards will be relaunched in 2018 for the ninth annual instalment, in partnership with MEGATRANS2018. The Awards, featuring a new design, will recognise the outstanding achievements and successes of companies across the logistics, supply chain and materials handling sectors. Twelve awards will recognise outstanding individuals and organisations across the supply chain: • Supply Chain Innovator of the Year • Safety Advocate of the Year • Best Technology Application
• • • • • • • • •
Sustainability Initiative Award Freight Transport Solution of the Year – Road Freight Transport Solution of the Year – Rail Freight Transport Solution of the Year – Air Freight Transport Solution of the Year – Sea Outstanding Graduate Program Best Storage Solution Best Infrastructure Innovation Victorian Government ‘Contribution to Industry’ Award The Mercury Awards is the official awards program of MEGATRANS2018, a business-tobusiness trade event focusing on the freight and logistics supply chain. MEGATRANS2018
incorporates all forms of freight transport, logistics and materials handling, infrastructure and storage and warehousing, providing perfect alignment with the Mercury Awards. The 2018 Mercury Awards sponsors include the Victorian Government, the Port of Melbourne and SICK. Sponsorship opportunities are still available – for more information, contact Show Director Simon Coburn on 03 9690 8766 or simon.coburn@primecreative.com.au. Nominations are now open – head to www.mercuryawards.com.au to cast your votes, voting closes Friday 30 March, 2018.
DB Schenker Australia opens mammoth NSW facility DB Schenker Australia has opened a new logistics facility in Hoxton, New South Wales – 42km west of Sydney. The company notes that the internal site covers an area the size of almost eight football fields, making it one of the largest multi-client contract logistics facilities in the Southern Hemisphere. The addition of the Hoxton site, with its 50,000m2 internal area and 15,000m2 external under-cover area, brings DB Schenker Australia’s nationwide coverage to 330,000m2 over 25 sites. “Hoxton Park is the newest and largest contract logistics facility for DB Schenker in Australia,” said Ron Koehler, CEO Australia and New Zealand, DB Schenker. “Our staff will provide for our customers first-class logistics services in this well-positioned facility right on the Sydney freeway network.” He added that the company will also utilise the facility as a hub for its domestic transport network, and to move full-container-load movements cost effectively to Hoxton Park for distribution to Sydney customers. The facility will incorporate Automated Transport Sortation Systems (ATSS) to allow for the consolidation of freight from several customers into the Schenker domestic transport business. In addition, value added services will be provided on site, including an Advanced 6 | Logistics&MaterialsHandling December 2017/January 2018
Technical Centre providing configuration and testing for IT devices. “DB Schenker Australia is consolidating existing business into Hoxton Park as well as adding new substantial business,” said Michael Harich, Director – Contract Logistics/ Supply Chain Management AU/NZ, DB Schenker Australia. “Hoxton Park is a key part of our 2020 strategy to grow to 500,000m2 in Australia
and at the same time combine existing smaller sites into larger facilities to generate synergies.” The facility includes high-clearance warehousing and access for high-performance vehicles (two 40’ containers or four 20’ containers on one truck), full drive-around access and a weighbridge to support Chain of Responsibility (CoR) commitments.
DB Schenker Australia’s recently opened New South Wales facility covers an area the size of almost eight football fields.
Industry News
Rio Tinto completes Australia’s first fully autonomous rail journey Mining group Rio Tinto is a step closer to its goal of having a network of driverless trains in the Pilbara after undertaking the first fully autonomous rail journey at its Western Australian iron ore operations. A Rio Tinto train completed Australia’s first fully autonomous rail journey, travelling 100km without a driver on board.
The nearly 100km pilot run was completed without a driver on board, according to Rio, making it the first fully autonomous heavy-haul train journey ever completed in Australia. The company is aiming to fully commission
the AutoHaul driverless train project by late next year. Rio Tinto, with representatives from the National Rail Safety Regulator, monitored the journey in real time from the company’s operations centre in Perth. The company said that it regards the pilot run from Wombat Junction to Paraburdoo as a significant step forward toward full commissioning of AutoHaul, which will depend on it meeting safety and acceptance criteria and obtaining regulatory approvals. Chris Salisbury, CEO – Iron Ore, Rio Tinto, said the pilot run put the company firmly on track to meet its goal of operating the world’s first fully autonomous heavy-haul, long-distance rail network. “Gains from AutoHaul are already being realised, including reduced variability and increased speed across the network, helping to reduce average cycle times,” he said. “Rio Tinto is proud to be a leader in innovation and autonomous technology in the global mining industry, which is delivering long-term competitive advantages as we build the mines of the future. New roles are being created to manage our future operations and we are preparing our current workforce for new ways of working to ensure they remain part of our industry.” Rio Tinto originally launched the driverless trains project in 2012, and had plans to have the program fully installed by 2015.
VALUABLE EXPERTISE. VISIONARY SOLUTIONS. logisticsmagazine.com.au | 7
Industry News
Investment group to acquire Coates Hire Investment group Seven Group Holdings (SGH) has entered into a binding agreement to pay $517 million for the remaining 53.3 per cent of securities it does not already own in equipment hire company Coates Hire, from an affiliate of Carlyle Asia Partners II, a fund managed by The Carlyle Group, and minority owners. SGH said in a media statement that the Coates Hire acquisition reflects its continued focus on becoming “the leading operator of industrial services businesses in Australia” and driving efficient capital allocation across its portfolio. “The Coates Hire business is led by a strong and
experienced management team, with a number of business improvement initiatives in place and already delivering results,” it continued. “Full ownership of Coates Hire will enhance SGH’s portfolio with increased exposure to industrial services.” Ryan Stokes, Managing Director and CEO, SGH, said: “We are pleased to reach agreement with Carlyle to acquire the shares in Coates Hire we don’t already own. “We have had a long history with the Coates Hire business and believe with the visible market opportunity associated with east coast
infrastructure activity, along with the current performance of the business and management team, the company is extremely well positioned to create value for all shareholders. “The move to full ownership of Coates Hire will enhance SGH’s position as a leading operator of industrial services businesses, with a strong macroeconomic environment and a positive outlook providing the potential for significant opportunities to be realised.” The transaction is subject to satisfactory waivers being obtained from Coates Hire’s existing lending syndicate.
Brisbane hosts longest containership to visit Queensland
Image supplied courtesy of the Port of Brisbane.
The Port of Brisbane played host to the longest container ship to ever visit Queensland in October. Ahead of the visit, Main Roads, Road Safety and Ports Minister Mark Bailey said the arrival of the 347-metre Susan Maersk was a clear demonstration of the port’s capabilities in handling an increasing number of large vessels operating in the region. “The visit of the Susan Maersk is only made possible thanks to extensive studies that have taken place over the last two years, to optimise the port’s channels to accommodate this class of vessel,” said Bailey.
8 | Logistics&MaterialsHandling December 2017/January 2018
He noted that everyone involved at the Port of Brisbane had had prior experience in operations of that scale thanks to the first visit of a mega-containership to Brisbane, less than 12 months ago. “These larger ships are taking a leading role in servicing key trade routes and the state is well positioned to take advantage of the efficiencies these vessels offer,” Bailey added. Joan Pease, Member for Lytton, said the Port of Brisbane marked a milestone event in November last year with the arrival of the containership Lloyd Don Carlos.
“At 334 metres in length, it was slightly shorter than our latest visitor, which will now take the title of longest container vessel,” she said. “More importantly there will be further visits from vessels on this scale, which can only enhance the Port of Brisbane’s international reputation and place it in a highly competitive position in the global trade market.” The Port handled a record number of containers in 2016–17, moving 1.22 million twenty-foot equivalent units (TEUs) through its wharves, an increase of almost seven per cent on the previous year’s result.
The 347-metre container ship Susan Maersk is the longest to visit the Port of Brisbane .
Industry News
Toll announces appointment to Board of Directors Logistics company Toll Group appointed Geoff Wilson to its Board of Directors, effective 1 October 2017. According to Toll, Wilson has over 35 years of executive leadership experience with professional service company KPMG in Australia, Hong Kong and the US. “We are delighted to welcome Geoff to the Toll Board,” said John, Mullen, Executive Chairman, Toll Group. “His deep knowledge and experience across multiple markets, including Japan, and his leadership of large, dynamic workforces will be invaluable to Toll’s transformation, governance and future growth agenda. “We welcome the skills and knowledge Geoff will bring to our board, and we look forward to his contribution to the future of our business.” Wilson also assumed the role of Chairman of the Audit Committee with the commencement of his directorship. Toll has said that Wilson is the last of eight directors to be appointed to Toll, following the rebuilding of the board this year. With Wilson’s appointment, the Toll Board now
comprises eight directors: Chairman John Mullen, Managing Director, Michael Byrne, Geoff Wilson,
Kunio Yokoyama, Tomohiro Yonezawa, Taneki Ono, Noboru Ichikura and Norio Wakasa.
New Toll Group Board member Geoff Wilson is the latest appointment to the logistics company’s Board of Directors.
logisticsmagazine.com.au | 9
Industry News
Dinner drone delivery trials under way in ACT, NSW Australian Mexican food chain Guzman y Gomez and pharmacy chain Chemist Warehouse have partnered with Project Wing, a team developing drone delivery technology in the Australian Capital Territory and New South Wales. Both retailers will be taking part in Project Wings’ trials, receiving orders from testers using the drone team’s smartphone applications. Project Wing will then dispatch drones to the retailer’s location, which, once loaded with the goods, will deliver the orders to the testers’ residences. Project Wing is owned by Google parent company, Alphabet. On the company’s blog, Project Wing Co-Lead James Ryan Burgess explained, “Our partners
Guzman y Gomez and Chemist Warehouse will teach us what we need to do to ensure that orders are channelled to their staff smoothly and that they can easily load goods onto our delivery drones. “In the case of Guzman y Gomez, who is our first delivery partner for this trial, we’ll need to make sure our technology fits in smoothly into their kitchen operations, as their staff have to juggle many orders at once to ensure that every customer is served fresh, hot food in a timely fashion. We want to learn how much notice to give them for a drone’s arrival so that they can cook, pack, and load it in one well-timed workflow.” He noted that through the collaboration with Chemist Warehouse, Project Wing hopes to
confirm its system is able to support merchants with a wide variety of products. “As part of this test, [Chemist Warehouse is] offering nearly 100 products across categories like vitamins, dental care, sun care, and over-the-counter medicines,” Burgess said. “By practising how we pack items of very different shapes and sizes into our fixed-sized package, we’ll learn how to optimise how many items we’re able to deliver per flight. “The information we gather from both of these test partners will help us build a system so that merchants of all kinds can focus on what they’re good at – like making food or helping people feel healthier – rather than being distracted by complex delivery logistics.”
ALC calls for freight-friendly urban planning The Australian Logistics Council (ALC) has called for Australia’s urban planners to bear freight in mind when designing cities. Speaking at the recent Online Retail Logistics 2017 event, ALC Managing Director Michael Kilgariff noted that the country’s cities are not freight friendly, as a result of planning systems that fail to properly account for freight movement. He added that the problem of complicated CBD deliveries is set to get worse unless remedial action is taken. “Australia is already one of most highly urbanised countries in the world, and a significant proportion of the residential and employment growth projected to occur in the years ahead will be heavily concentrated in CBD areas,” the ALC said in a statement. “It follows that the larger our cities grow, the larger the freight task gets. Accordingly, if we wish to grow our cities and ensure their continuing functionality and amenity, we must adopt policies which can support that increasing freight task.“ The ALC recognised that the default instinct in many Australian urban planning systems is to adopt policies that impede urban freight delivery, especially in CBD areas, by limiting access for heavy vehicles. CBD delivery is made more cumbersome and costly, the ALC added, due to a lack of adequate 10 | Logistics&MaterialsHandling December 2017/January 2018
Australian Logistics Council Managing Director Michael Kilgariff asserts that Australian city planning fails to account for freight.
street loading zones, as well as new residential and commercial buildings with poor (or non-existent) freight delivery facilities. “Perversely, the growing difficulty of freight
delivery in Australian cities is occurring during a period where growth in e-commerce is fuelling expectations of faster delivery timeframes and lower shipping costs,” the ALC said.
Global News
Amazon reveals in-home delivery service In early November, e-commerce company Amazon launched Amazon Key, an in-home delivery service that enables online shoppers to receive goods when not at home. Amazon Key offers US members of Amazon’s premium Prime service free in-home delivery after installation of the Amazon Key kit, which includes the Amazon Cloud Cam to record entries and a range of lock systems. After selecting the ‘in-home’ delivery option when shopping, Prime members can follow the order with real-time notifications, watch the delivery happening live via the Cloud Cam and later submit a review. “Amazon Key gives customers peace of mind, knowing their orders have been safely delivered
to their homes and are waiting for them when they walk through their doors,” said Peter Larsen, Vice President – Delivery Technology, Amazon. “Now, Prime members can select in-home delivery and conveniently see their packages being delivered right from their mobile phones.” The technology doesn’t replace a key with a digital passcode; instead each time a delivery driver requests access to a customer’s home, Amazon verifies that the correct driver is at the right address, at the intended time, through an encrypted authentication process. Once this process is successfully completed, Amazon Cloud Cam starts recording and the door is then unlocked. Amazon Key will also offer an option for
residents keen to allow access to their property to friends and service providers when not at home. Amazon Key has initially been made available in 37 cities across the US.
DHL and VW launch car-boot delivery pilot DHL Parcel and Volkswagen are launching a joint pilot project in Berlin in which Volkswagen will deploy 50 VW Polos to be used as mobile addresses for the delivery of their DHL parcels. The project partners have worked in recent months to develop and test a solution for in-car delivery. The vehicles are fitted with the required equipment for in-car delivery, called ‘We Deliver’ by Volkswagen. To use the new service, customers need to register with DHL Parcel and enter their trunk as the delivery location in their customer profile. “Since we’ve already tested car-drop delivery successfully in other projects in Germany and continue to offer it for Smart drivers, we’re pleased to win Volkswagen as another partner – our partnership allows us to offer this attractive service to an even broader target group,” says Achim Dünnwald, CEO, DHL Parcel. “As an innovation leader in the parcel sector, our objective at DHL Parcel is to be able to offer in-car delivery as an option to as many recipients as possible in Germany, offering personalised processes to make the sending and receiving parcels even easier for our customers.” The VW Polo driver will be notified via email about the delivery process and receive a delivery notice when a parcel has been delivered to the vehicle’s trunk. During the ordering process in an online shop, the driver can specify a two-hour time slot between 10am and 9pm during which DHL will deliver the parcel. For delivery, the vehicle will need to be parked in a
A new partnership between DHL and Volkswagen will allow shoppers to have online orders delivered to car boots.
place accessible to the parcel courier. Possible delivery sites include the office parking lot, a park-and-ride facility, or any other address at which the vehicle is located during the time slot specified during the order. The DHL parcel courier receives the delivery location information from the DHL Delivery app, which provides the vehicle’s exact position via GPS. The app also issues a single-use,
time-limited code to access the vehicle. In combination with the customer-specific car ID, which the recipient receives from Volkswagen and provides as part of the delivery address, the courier can open the vehicle’s trunk. Once the courier closes the trunk, the access code is cancelled. Not only can the VW Polo drivers receive parcels, they can also leave returns in the trunk to be picked up. logisticsmagazine.com.au | 11
ALC Column
Michael Kilgariff Managing Director Australian Logistics Council
T
hroughout much of 2017, there has been consistent coverage of the disruptive impact of technology on Australia’s freight logistics industry, with an especially significant focus on what the arrival of Amazon in the Australian marketplace might mean for long-established businesses. However, as is the case with many other industries, technology can have just as much of an enabling impact as a disruptive one. The key to making this happen is ensuring that we have the right regulatory settings in place, so that established and new businesses can take advantage of the opportunities for advancement that technology offers. The growth of e-commerce over the past two decades has ‘personalised’ the experience of freight for an increasing number of Australians – even if many of them still won’t necessarily understand the complexity of the issues involved in freight movement. However, what the increasing ubiquity of ‘tracker’ apps has done is give consumers an appetite for rapid delivery and, increasingly, an expectation that they will be able to pinpoint the location of merchandise they have ordered at any given moment. Consequently, in a world where one or two taps on a smartphone screen now allows consumers to track the minute-by-minute progress of their Uber, or their pizza, the freight logistics industry needs to ensure it is in a position to offer its customers a similar experience. Yet, for all the advances that have been 12 | Logistics&MaterialsHandling December 2017/January 2018
VISIBILITY KEY TO MEETING CONSUMER EXPECTATIONS made over recent years, many within the industry are still not able to provide such an offering. This will need to change in the years ahead, in order to keep pace with customer expectations. During the Australian Logistics Council’s (ALC) 2017 Forum, which was held in Melbourne during the first week of March, Austroads released the research report, Investigating the Potential Benefits of Enhanced End to End Supply Chain Visibility, based on data collected using GS1 global data standards (GDS) in real-time industry pilots that were operated by Toll Group, Arrium OneSteel and Nestle. This report represented the culmination of an extensive effort by the ALC Supply Chain Standards Working Group and GS1 Australia to quantify the benefits of improving end-to-end visibility across the supply chain. The results of these pilots suggest that added supply-chain visibility can improve interoperability across service providers with a common tracking identifier, and boost productivity while reducing costs in the end-to-end supply chain. Based on the pilot findings using GS1 standards, the economic benefit to the Australian transport and logistics sector could exceed $1 billion. That’s an exciting opportunity but, of course, there are barriers, and it is those barriers that the National Freight and Supply Chain Strategy that the Federal Government is currently developing must address.
Use of global data standards has been proven to improve the visibility and traceability of freight. Standards allow a common language to identify freight, transport assets and events during supply-chain execution, enabling all parties to gain real-time information and control and manage the freight more effectively. It has also resulted in benefits such as more efficient operations and improved planning, compliance, product integrity and supply-chain analytics. Enhanced supply-chain visibility and making more effective use of data can help the industry to improve capacity optimisation and scheduling, plan for investment, establish real-time compliance monitoring and employ more effective emergency management responses. One of the reasons that logistics service providers are not rushing to take advantage of global data standards to provide improved visibility, however, is a continuing perception that the cost outweighs the benefit. This is due in part to the prevalence of incompatible, bespoke IT systems, non-standard data formats that inhibit data sharing and, to some degree, a continuing lack of a collaborative mindset. The penalty for not adopting open global data standards – which will largely fall on small business – is significant. This avoidable industry cost has been estimated at over $1.6 billion, which the ALC believes will
ALC Column
impact the productivity of the sector. Throughout the ALC’s conversations with industry participants over the course of this year about the content of the National Freight and Supply Chain Strategy, there has been a significant degree of enthusiasm for dealing with these matters. In particular, industry is eager to encourage the ability to transfer non-proprietary information – to improve the flow of freight from one end of a supply chain to another, and to address other regulatory barriers and disincentives that are impeding the uptake of technology that can enhance supply-chain visibility. Generally speaking, the view of many within industry is that the development and introduction of technology on freight infrastructure networks should be directed towards four key objectives:
• enabling improved freight and supply chain performance and safety outcomes; • ensuring consistency and/or interoperability between infrastructure networks; • avoiding duplication of technology requirements, including hardware and software; and, • reducing operational costs. In the ALC’s view, improved end-to-end supply-chain visibility ticks all of these boxes. That is why Freight Doesn’t Vote, the ALC’s submission to the National Inquiry into Freight and Supply Chain Priorities, calls upon the Federal Government to work with smalland medium-sized logistics service providers to promote the benefits of adoption of global data standards. This may take the form of supporting industry research and awareness programs to help industry participants obtain a more comprehensive appreciation of the benefits, as well as the promotion of the value of global data standards in our supply chains across other industry
sectors. One key recommendation within the ALC’s submission is for the Strategy to identify any technological or competition law impediments that are currently preventing the transfer of non-proprietary data that would improve the flow of freight along a supply chain. It’s vitally important that the regulatory frameworks that impact our supply chains are compatible with meeting consumer demands and achieving greater efficiency in freight movement. There is no reason to fear the increasing influence of technology in this industry, provided we get the regulatory settings right. When freight is able to move efficiently, there are benefits for freight logistics operators, for consumers and for the economy alike. Just as the National Freight and Supply Chain Strategy must address the physical impediments to the efficient movement of freight – such as traffic congestion, poor planning and urban encroachment – so too must it deal with barriers to the flow of information about freight movement. This includes addressing barriers that prevent the uptake of technology that can help freight logistics operators make the right investment choices now to strengthen their market position in the years ahead.
According to the Australian Logistics Council, improved end-to-end supply chain visibility will be key in the years ahead. logisticsmagazine.com.au | 13
Cover story
UNITED approach
A
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The Federal Xxx. Government’s National Freight and Supply Chain Strategy is set to bring consistency to the management and planning of Australia’s freight networks. Deakin University’s Centre for Supply Chain and Logistics, amongst others, has been engaged to undertake research to support an inquiry, which will inform the development of the Strategy.
Image supplied courtesy of the Australian Rail Track Corporation.
hen Darren Chester, Minister for Infrastructure and Transport, announced in November 2016 that the Turnbull-Joyce Government would establish a national strategy for freight, Australia’s logistics industry welcomed the step towards a more unified approach to regulation and efficiency. “We have long campaigned for a national strategy incorporating the various and interlinked components of Australia’s supply chains to achieve better long-term planning outcomes and appropriate investment decisions,” Australian Logistics Council (ALC) Managing Director Michael Kilgariff said at the time. “As a nation, we cannot afford a disjointed
14 | Logistics&MaterialsHandling December 2017/January 2018
approach between jurisdictions when it comes to the movement of freight, because freight does not stop at state borders.” Darren noted the strategy had been chosen as a priority due to projections of a 50 per cent growth in the nation’s freight demands by 2030. He advised the content of the strategy would be decided through a comprehensive inquiry, to be completed by March 2018, and announced later in that year. In March 2017, the ALC dedicated its annual forum to the inquiry, bringing together senior figures from across the Australian logistics spectrum to brainstorm key considerations and raise issues. Since then, over 100 advice
documents have been submitted to shape the inquiry, including contributions from the ALC, the Australian Trucking Association (ATA), the Australian Peak Shippers Association (APSA) and the Freight Trade Alliance (FTA). The Government engaged Deakin University’s Centre for Supply Chain and Logistics (CSCL), to undertake research to look at future supply chain trends and impacts on productivity. “The National Freight and Supply Chain Strategy is incredibly important for Australia,” CSCL Director Dr Hermione Parsons tells Logistics & Materials Handling. “As a country, we have to recognise that supply chains know no borders – most of the businesses that
Cover story
account for the vast volume of GDP and cargo movement are national and international, so we need a cohesive view of supply chain and logistics. “At present, we have many cross-border issues that limit both efficiency and productivity, so we were delighted when we were commissioned by the Federal Government’s Department of Infrastructure and Regional Development (DIRD) to conduct research to help identify the inquiry priorities.”
Drivers of change The CSCL proposed that the Federal Government take inspiration from a major project carried out in the US to ascertain and plan for the country’s future transport needs, called Future Freight Flows. The CSCL had recently recruited Dr Roberto Perez-Franco, a former Massachusetts Institute of Technology (MIT) senior researcher and laboratory director who had worked on the original US-wide
research project. “Roberto and his team at MIT did a scenario-planning project for the whole of the US for its transport and future transport strategy,” says Hermione. “Here, we have thoroughly customised that methodology to the Australian project, tailoring it for the country’s needs and industry.” Once the project methodology had been decided, Roberto and the CSCL research team set out to interview stakeholders from different sectors of industry. “The CSCL has a vast network to draw from and we also researched to find the right people – from the right industries and the right functions across the supply chain – to give us a broad range of responses,” shares Hermione. “We asked interviewees what they saw as the drivers of change – globally, in Australian society and in the supply
chain space – over the coming 20 years.” From the responses, the project team identified key local and global drivers and used them to compile a survey, which was delivered to 2,300 Australian logistics industry professionals. “The point of the survey was to validate that the change drivers we had identified in the interviews were accurate,” says Hermione. “The survey responses showed we had gotten it right and that was a great part of the process.”
Best case-scenario Armed with a set of verified change drivers – essentially a short list of societal, environmental and technological developments with the potential to disrupt business style and freight movement – the CSCL team developed four future scenarios incorporating the industry
Deakin University’s Centre for Supply Chain and Logistics research will support the development of a cohesive national freight strategy. logisticsmagazine.com.au | 15
Cover story 17 February 2016 Infrastructure Australia releases the country’s first 15-year infrastructure plan, which recommends reforming the funding and operation of transport infrastructure and prioritising initiatives for the future, such as protection of corridors for high-speed rail and the development of new ring roads around Melbourne and Sydney.
7–9 March 2017 The Australian Logistics Council’s annual conference focuses on the required content of the National Freight and Supply Chain Strategy.
2016
2017
24 November 2016
trends collected through its research. “The next stage was absolutely glorious,” says Hermione. “Roberto and his team used the scenarios to create detailed, long-form narratives outlining four potential future environments.” The CSCL’s intention was to create a rich picture of what things could look like in the future, with the shape of each view driven by the survey results. For example, factors that supplychain professionals showed certainty about were incorporated in each of the four narratives, while the more contentious factors were put in a couple of different worlds but not all, to force readers not to think about a linear path to the future. “It could go any way and the government needs to be planning for any direction it may take,” Hermiones adds.
Darren Chester, Minister for Infrastructure and Transport, announces that the TurnbullJoyce Government will develop a freight and supply chain strategy in response to Infrastructure Australia’s Australian Infrastructure Plan. He notes that it will be informed by a comprehensive, independent inquiry.
26 May–28 July 2017 The release of the Discussion Paper marks the beginning of the official consultation period. Individuals, organisations, associations and representatives of territories submit 126 submissions.
Dr Hermione Parsons, Director of Deakin University’s Centre for Supply Chain and Logistics.
Identifying common priorities The finished scenarios were put to use at a series of workshops held across Australia by the CSCL in October and early November. Participants were chosen with care, to ensure that the approximately 40 spots available in each session were filled with individuals representative of positions, sectors and companies across the country’s logistics spectrum. Prior to each workshop, participants were given assigned reading of one of the four scenario documents At the workshops, the professionals first worked with those who had read about the same scenario to consider its implications on the logistics industry, and brainstorm what priorities a national freight and supply chain strategy should target to counteract negative impacts. Following this, the groups were mixed, so each contained individuals that had studied each of the four worlds, and tasked with 16 | Logistics&MaterialsHandling December 2017/January 2018
identifying the common priorities between the worlds. “We asked the groups to discuss commonalities in priorities for a national strategy, how to deal with them and what risks must be considered,” says Hermione. “At the time of going to print, the CSCL team was providing the results of these workshops to the DIRD. This important work is part of a suite of research to identify priorities to support development of the strategy. “The CSCL is proud to have been able to
contribute to the development of the inquiry and in the coming months will continue to make sure industry’s voice is heard. We look forward to the Government’s release of the final report in March next year and supporting the industry into the future.” For the latest, head to www. logisticsmagazine.com.au, and check out the March/April issue of Logistics & Materials Handling for an update from the CSCL on the strategy.
Cover story
August – November 2017 Deakin University’s Centre for Supply Chain and Logistics embarks on its scenarioplanning research project to help inform the inquiry.
March 2018 The inquiry into the National Freight and Supply Chain Strategy closes.
2018
November 2017 Deakin University’s Centre for Supply Chain and Logistics hands over the findings from its research project to the Government.
2019
Later in 2018 The Federal Government will announce the content of the National Freight and Supply Chain Strategy
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Interview
People power Melbourne-based start-up Passel’s crowdsourced delivery model could turn everybody into a courier. Co-founder Marshall Hughes speaks to Logistics & Materials Handling about learning curves, global ambitions and grasping opportunity.
18 | Logistics&MaterialsHandling December 2017/January 2018
Interview
Marshall Hughes and Julian Kelabora, Co-founders of Passel, are bringing three-hour delivery to Australia.
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t was a simple idea that led Marshall Hughes, one of the co-founders behind Melbourne delivery tech start-up Passel, to leave his career in freight and explore the possibility of launching a network of on-demand couriers – what if individuals could deliver orders to their neighbours and get paid for it? He realised that if he could create a platform to connect retailers with retail employees living close to customers, same-day – even same afternoon – delivery times could be made possible. A more honed concept soon emerged – a system that would match those
soon finishing work in and around shopping centres and heading in the same direction as the shipping address, enabling threehour delivery. In July, Marshall told Logistics & Materials Handling that he was keen to conquer businessto-consumer (B2C) delivery, something he said he had seen grow exponentially over his 20 years in the freight industry, and that few in the freight game were doing well. Five months later and the platform has launched, initially with one vendor – local, sustainable goods retailer Pookipoiga, adding the second – premium, organic cotton
brand Pure Baby, at the time of going to print. Logistics & Materials Handling catches up with Marshall to find out what he has learnt in his first few months as a start-up innovator, and what the future will look like for the company. Q: How has Passel gone about building up its network of on-demand couriers? A: We’ve been conscious of not getting too many passers on aboard too early then have nothing happening. We did do a couple of social network blasts, and it was encouraging to see the conversion rate of people seeing our posts logisticsmagazine.com.au | 19
Interview
By the end of 2018, Passel’s Co-founders want the platform to be supporting 50,000 deliveries per month.
“The key difference with Passel is up until the moment we send someone a text message asking if they’d like to do a delivery, they’re not a courier at all – they’re not even contemplating it. We’re keen to take advantage of that opportunistic targeting.” Marshall Hughes Co-founder, Passel.
and following through to our site to register. We’ve already got over 300 people registered without trying. I was somewhat surprised by the lack of response I got when I wrote to both of the retail unions for Victorian retail workers. I told them about the platform and that it would be perfect for their members, enabling them to make an extra $10 on their way home at the end of their shift, and neither responded at all, which I thought was interesting. Q: How can retailers feel assured that their goods will make it to the customer, that they won’t be ‘lost’ en route? A: Passel’s service is guaranteed – if someone purchases a product from Pookipoiga and it 20 | Logistics&MaterialsHandling December 2017/January 2018
doesn’t turn up, Passel will buy a replacement and send it to the shopper. So, there is no risk for the shopper or the retailer. One of the things I got tired of doing over my 20 years in the freight transport industry was writing those letters to say, “Sorry your stuff was lost, but you didn’t take out insurance – bad luck.” From a retailer’s point of view, if you’re going to be offering a premium service to people – even if it’s not at a premium price – there’s an expectation that it should be guaranteed delivery. In terms of the people we choose to execute deliveries, when they register we receive information about them – name, address, email, Facebook profile, phone number, etc. – it’s not just picking random people off the street. So
if we allocate a delivery to an individual and it doesn’t happen, we certainly know where to find them. Also, a lot of the people signing up work in retail, so if a retail worker from JB Hi-Fi does a pick up from Pure Baby and the delivery never gets made – when the Pure Baby and JB Hi-Fi workers come across each other in the food court, I’m sure there’d be a few questions! I think it’s important to remember that Passel isn’t a marketplace service, like Uber or Airtasker. It’s a transport company. Just like when people book couriers such as TNT or Allied Express and trust the company to send someone that can do the job, when retailers put their trust in Passel they can be sure that we take steps to ensure we’re choosing the best person to do the job – taking into account their location, when they’re likely to go home and, of course, their previous history. Q: What have your standout moments been so far in the development of Passel? A: I was given a bottle of sparkling wine to open when we thought we had something to celebrate – we still haven’t opened it, so maybe I’m still waiting on that moment. We set ourselves up to win with the first delivery – it was to my co-founder [Julian Kelabora’s] wife, but when the first genuine order dropped
Interview
through the shopping cart – that was certainly a high-five moment, and the biggest highlight so far was probably when Julian agreed to be my co-founder. Q: What goals have you set yourself for the company’s growth? A: By the end of 2018, we want to be doing 50,000 deliveries per month and to be available in at least every major city in Australia, if not in some regional areas as well. The goal is, if we’re on target to do that, we want to be talking to companies in the US and/or the UK about expanding overseas. Passel is often compared to crowdsourced couriers such as Sherpa and Go People, the Ubers of couriers, if you will. People get into a car or van, activate an app and say – now I want to be a courier. The key difference with Passel is up until the moment we send someone a text message asking if they’d like to do a delivery, they’re not a courier at all – they’re not even contemplating it. We’re keen to take advantage of that opportunistic targeting. The ultimate goal for us is that one day anyone and everyone will at some point receive a message on their phone saying, ‘Hi! We can see that you’re at Melbourne Central [shopping centre], do you want to pick something up from Nike and deliver it to your neighbour?’
an outsider. Now I’ve got Julian in the trench with me, sharing what’s going on. I only know what I know, so when he joined, Passel got twice as smart, twice as experienced. That’s a significant jump as while I have lots of freight experience, I did not have tech experience, so Julian has opened my eyes to what is possible and where we can take this platform. Q: Considering your interests in both freight and retail, you must be very interested in Amazon’s arrival in Australia. How do you think it will go? A: I think Amazon is very exciting for a lot of Australian retailers – it will give them more reach than they’ve got now, through Fulfilment by Amazon. I also think it will energise the retail sector as they can’t just open more stores like they’ve done previously; they really need to compete online. The real challenge for retailers
will be to play to their strengths, not just play catch up. Australia Post recently launched Shipster, where you pay a subscription and get free delivery. It’s basically Amazon Prime. Trying to play catch up isn’t enough, and when Australian retailers try to play the game according to Amazon’s rules, they won’t win. I think they need to do things that Amazon can’t – or doesn’t want to – do, and they need to think long term. Shareholders insist that Australian retailers deliver short-term profitability and that might not be the game that works here. Amazon’s two biggest strengths are the fact it is playing the long game, so it’s prepared to lose money – I think it lost around $5 billion on deliveries last year – and data. Amazon has so much data on what people want to buy and how they want to buy it, and I think Australian retailers need to be patient, invest and gather their own data to stand a chance of competing.
Passel Co-founder Julian Kelabora being interviewed in front of Pookipoiga by Indonesian news channel Metro TV.
Q: What lessons have you learnt along the way? A: On day one, we activated our mapping software and noticed a major glitch. It missed the first line of addresses, meaning that every customer showed up as being in Alice Springs. We had to go through and revise the software; it’s the sort of thing you just have to learn along the way. Shortly after, we were asked to make a delivery to an Australia Post parcel locker. I did the delivery myself and found that you can’t just put stuff in a parcel locker – we needed to go to the front counter at the post office and pay $7.60 to ‘send’ an envelope as a parcel to the locker. We paid it and straight away went to amend our terms to say no deliveries to PO Boxes or parcel lockers, because we can’t afford to have $7.60 of the $15 we charge for the delivery go on that. Another key lesson I have learnt is that it is vital to have a co-founder. Until July 2017, I was on my own – working with someone is much better than working alone. Until then, everyone that I was speaking to that came on board was logisticsmagazine.com.au | 21
Safety & compliance
The Australian Logistics Council’s 2017 Supply Chain Safety & Compliance Summit focused on the implications of upcoming changes to Chain of Responsibility obligations in Australia.
Changing codes to make freight transit safer New laws could hold business executives across the whole supply chain to account for poor risk management. The Australian Logistics Council and Australian Trucking Association state their case for a revised rulebook. Story by Steven Impey.
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very day on Australia’s roads, rail and waters, the freight industry and the general population it serves rub shoulders. The Chain of Responsibility (CoR) currently being observed is there to hold industry to account over incidents involving heavy-vehicle transportation – though there are moves for tougher interstate legislation. Next year, the rules are changing and will extend the liability of transit safety further than the point of incident or fatality, placing more emphasis on addressing risks and hazards before they can have a potentially lethal influence. In September this year, the industry met in Sydney for the 2017 ALC Supply Chain Safety & Compliance Summit, hosted by the Australian Logistics Council (ALC). Its purpose was to explain the impending 22 | Logistics&MaterialsHandling December 2017/January 2018
changes to the law, to continue a substantial campaign to promote a zero-harm culture in Australian freight and logistics and to unify the industry on the same ideal. “There has been a very deliberate intention from our transport ministers to align what we are doing in Heavy Vehicle National Law (HVNL) with the work of health and safety law,” said Michael Crellin, Manager – Chain of Responsibility for the National Heavy Vehicle Regulator (NHVR). “The Chain of Responsibility currently works through a deemed liability-type provision which means that, when an offence is committed by a driver, every party in the Chain of Responsibility becomes legally liable for that offence. “In the new regime, there will be a duty to ensure safety.” This means that the criteria that allows
a company or individual to plead they took ‘reasonable’ steps to avoid an incident is going to be banished. “It was an inappropriate standard and one that could never be met because the requirement was to apply all reasonable steps, and they were the ones which contradicted the others,” Michael added. “So, it is only fit and proper in my view that we should move much nearer to that same standard we have in health and safety law [which] essentially centres around risks and how we manage them.” The revised law will work to ensure safety ‘as far as reasonably practicable’ and will include a supplementary master code still under development by the ALC, which aims to steer the industry onto the same page. The idea is to give the liable party a clearer
Safety & compliance
According to Victoria Sherwood, General Manager – Supply Chain, Boral, an engaged organisation is a safe organisation.
understanding of the allegations being made against them, including the standards that are expected of them and what wasn’t done to prevent a freight-related incident in the first instance. That legal obligation will also extend to the executive officer or director of a company, who has a responsibility to see that safe practices are being adhered to and that the business, as a whole, is identifying, assessing and responding to risk. “It means we can take a strategic approach that can be integrated across your business and the supply chain,” said Michael. “Policies in place will be documented to make sure those frameworks are in place. “Something that has emerged from recent cases is the need for greater stakeholder engagement – [to look at] how we work together to identify what those risks are and how to respond to them. “What do we need to know about the people we are engaging with? And what do I want to know – because they are potentially the people exposing you to risk.” The ALC and the Australian Trucking
Association (ATA) have submitted joint notices of intention to the NHVR to develop an industrywide master code for heavy-vehicle safety. The code will establish the standards and protocols for identifying, assessing, evaluating and responding to risk around freight safety in the areas of speed, fatigue, loading and maintenance, and should be submitted to the NHVR in early 2018. The development of the code has received $200,000 of Commonwealth Government funding assistance under the NHVR’s Heavy Vehicle Safety Initiative program. “For the first time ever, it will be made very clear, not just for the courts but for the investigators and industry alike, to understand and appreciate what is ‘reasonably practicable’ in terms of managing the risks inherent in transport activities,” Michael added. The change in law had been proposed for 1 July 2018, though this could be postponed to accommodate state elections in South Australia (March 2018) and Queensland (May 2018), which Michael said could prove to be an obstacle.
“The Heavy Vehicle National Law has a broad duty to ensure – within the Chain of Responsibility and where reasonably practicable – that the safety of a party’s transport activities largely impose responsibilities to those seen in health and safety law,” said Kerry Corke, Policy Consultant for the ALC. “Because the ALC captures all elements of the supply chain, it is able to seize a role in the development of the master code to ensure that all of those participants have all the assistance necessary so as to comply with the obligations of the Heavy Vehicle National Law.” The requirement to document in-house practices and freight movement is important here. “There may be a lot of people who may not be aware that they have these obligations,” Kerry continued. “So the importance of the code is to flesh out the literal truth of Heavy Vehicle National Law and [to ensure that] it is performed in a way that all forms of participants comply with statutory obligations.” logisticsmagazine.com.au | 23
Safety & compliance Chris Bresnahan, Operations Director, Australia Post, has witnessed productivity benefits through fostering the company’s safety culture.
This plan places clearer responsibility and liability on all elements of the supply chain. Those include so-called ‘outliers’ who do not necessarily consider their businesses to be specialists in freight but own a fleet that nonetheless impacts or influences the supply chain. The ATA, which has supplied truck safety management systems to more than 800 businesses, played a key role in lobbying for reform to the HVNL. “In our view, these amendments will bring the law much closer to what we think of as safety best practice,” said Bill McKinley, Chief of Staff, ATA. “There needs to be specification standards in some areas – particularly for compatibility of equipment purposes and the elementary codes that provide a way of complying with the law. “It is important in an industry like trucking, which has a huge number of ancillary businesses that don’t think of trucking as their ‘main game’ – including farmers, miners, and factories – to know 24 | Logistics&MaterialsHandling December 2017/January 2018
how the trucking law operates.” At Boral Australia, one of the country’s largest construction materials and cement manufacturers, the team includes an array of different drivers outside the company. On average, Boral accounts for the transit of 6,000 heavy loads daily, equivalent to more than a million trips every year. “As a construction, materials and cement organisation, we play a significant role in infrastructure projects around Australia, including the Pacific Highway upgrade, which is connecting Sydney and Brisbane,” said Victoria Sherwood, General Manager – Supply Chain, Boral. “If you have an engaged organisation, they are a safe organisation. If you are present, it gives you that front of mind to not be complacent. “That zero-harm culture is a huge thing for us and cascades down [throughout the business]. Boral is an organisation that takes the moving of material as seriously as the making of material.”
Within an organisation, the current law places a focus on operations, meaning if nothing goes wrong at ground level, nothing should be referred to the top of the business. “The board level has a separate duty at the moment,” said Nathan Cecil, a partner at Melbourne law firm Holding Redlich. “They have reasonable diligence to ensure that the organisation has what it should have in place to comply with the law. “To some extent, this will be flipped on its head when we get the new laws because the executive will have a primary obligation to exercise due diligence to ensure the organisation complies with its primary duty. “What it really means is that executives can be prosecuted or can breach their duty even if nothing goes wrong on the ground at operational level.” Therefore, Nathan explained, if a CEO is not “actively engaged, awake and alive” to the risks or seeking to manage them, they will be in breach of the legislation even if, through luck, no incidences arise. At Australia Post, for example, Operations Director Chris Bresnahan noted his responsibility for safety across Australia’s mail network. “It is all about culture in the way that we work in business – in making sure that safety, whether you are a loader, driver or manager, is the numberone thing we talk about,” he said. “I am not sure whether safety drives productivity or vice versa, but one thing I do know is that you can’t have one without the other.” The issue of fatigue is also a pressing matter and means companies should be documenting exact time sheets for heavy-vehicle drivers. Considering a vertically-integrated supply chain, this could apply to the role of stevedores loading and unloading cargo on Australia’s ports, ensuring that any drivers delivering freight who are asked to wait are accommodated and wellrested ahead of an onward journey. “As a business, for every piece of freight that we touch there is an obligation from us to make sure that it is safe,” said Anthony Jones, CEO, Linx Cargo Care Group. “It is great that we are all talking about how we can engage together to make the environment safer. “In an environment where trucks are driving alongside our family cars, if it was overloaded with something from one of our terminals and were to land on my family, that is a motivation to ensure that every truck is safe to leave the terminal before it goes out onto the public road.”
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Safety & compliance
Towards zero in New South Wales Story by Steven Impey.
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elinda Pavey, Minister for Roads, Maritime and Freight – New South Wales, threw her support behind proposed interstate changes to the National Heavy Vehicle Regulator’s (NHVR) Chain of Responsibility (CoR) at the Australian Logistics Council’s (ALC) 2017 Supply Chain Safety and Compliance Summit. Speaking at the Summit, Melinda described the number of deaths on state roads annually as “unacceptable,” insisting that zero should be the only acceptable target. “I strongly support the introduction of a fair regime for the Chain of Responsibility as I believe it delivers on road safety,” Melinda said. “We have advocated a common start date of 1 July 2018 for various Chain of Responsibility reforms for various industry and regulator education. “We know there is a lot to do and one of the things is the issue of improving and enhancing the quality of heavy vehicles, encouraging that investment. “One of the ways that we need to do that is to have good conversations with local councils around Sydney and explain to them that a higher-capacity heavy vehicle can also be a safer heavy vehicle.” Freight is a $60 billion industry in Australia and employs close to 500,000 people, directly or indirectly. Industry forecasts anticipate freight volumes will almost double to 794 million tonnes by 2031, said to be one of the major factors when considering safety. The ALC and the Australian Trucking Association (ATA) have submitted joint notices of intention to the regulator to develop an industry-wide ‘master code’ that is hoped to enhance heavy-vehicle safety. Introduced at the Summit in September, the new code of conduct is hoped to extend the legal obligations for safe road transit of executive officers and company directors right across the supply chain. A master code will effectively hold all parties of the supply chain accountable for breaches of road transport, mass dimension loading, speed compliance and work-hour laws. “Freight is important to the state and I am constantly reminding people that I am not only the roads minister but also minister for roads, maritime and freight, and they are all of equal
26 | Logistics&MaterialsHandling December 2017/January 2018
Melinda Pavey, Minister for Roads, Maritime and Freight – New South Wales, called for recognition of how highcapacity heavy vehicles can promote safety.
importance,” Melinda continued. “I am honoured to be Minister at a time when our government in New South Wales is investing in historic levels of freight infrastructure to ensure the transit and transfer of goods on our network is smooth and, above all, safe. “And that is not without its challenges, at this time. We have seen an increase in heavy-vehicle incidents and fatalities over recent months and it is important that we look at those statistics.” The minister said that road users are five times more likely to die in a crash in regional New South Wales than in metropolitan areas, with 10 fatalities for every 100,000 people. In the city, an average of two in every 100,000 people die on the roads. The divide, Melinda said, is similar to statistics recorded in the US.
“I am often told that this is not an achievable task and will never happen but we must work towards zero,” the Minister said. “The New South Wales road toll isn’t only a number – it is people and is closer to home than you may think. “It is a number that is unacceptable – however small it is – until that number gets to zero. How many fatalities would you, as operators, be willing to accept in your company each year? “Under the Chain of Responsibility, complying with transport law is a shared responsibility where all parties in the road transport supply chain are responsible for preventing breaches. “We should be working together to push the number of deaths on New South Wales’ roads towards zero and I will, however, recognise the work of industry to achieve this.”.
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Technology
Blockchain: an introduction In the future, Blockchain will help simplify and secure local and global transactions. Yet, for such a potentially disruptive technology, RMIT University researcher Chris Berg notes that very little is truly understood about the way it works and the benefits it can bring.
Blockchain technology will be used across the supply chain sooner than people imagine, says RMIT University’s Chris Berg.
28 | Logistics&MaterialsHandling December 2017/January 2018
Technology
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here are three types of people when it comes to understanding Blockchain, Chris Berg – Lead Researcher at RMIT University’s brand new Blockchain Innovation Hub – tells Logistics & Materials Handling. “The first type struggles to grasp the concept – after all, it is a complicated
technology and a lot of explanations out there sound like a lot of technical mumbo jumbo leading into magic,” he says. The second type is distrustful of Blockchain – they understand that its origins are in cryptocurrentcy Bitcoin, another revolutionary technology, which gained notoriety due to several highly publicised cases of its use for buying and selling drugs over the Internet anonymously. “The third type has at least a basic understanding of the technology and is incredibly excited about it,” he adds. “For those in this group, it’s our job to educate the others about Blockchain’s underlying technology and then I think they will be as excited as we are.”
What is a Blockchain? “A Blockchain refers to a distributed and decentralised ledger,” says Chris. “Now, that sounds technical – if a little pedantic, but it is important as ledgers are important throughout the economy, for property titles, money records, electoral rolls and even customs, where the
it is extremely unlikely to suffer from problems or fraud or control issues.” He notes that there is high interest in the technology in the agricultural logistics space, as it will provide a simple and robust method of tracking provenance of goods, particularly those travelling across borders. “We in Australia want to be able to demonstrate that the cattle that we’re sending into Asia and the Middle East is of high quality,” he says. “Blockchain technology makes that possible. People across the supply chain who we may not have ever met, or that we may not have a formal relationship with, will be able to trust that what we’re saying about our products is true.” The adoption of Blockchain technology could lead to a raft of benefits for the industry and beyond, he notes. “I think we’re going to see a smoother logistical side of the economy, as it makes the transactions that underpin so much of what we do so much easier. It’s going to be faster, more efficient, more reliable and less risky.”
“Given the number of firms that have found use cases for it, seen its potential value and started experimenting, I think it will come up quicker than you would expect.” Chris Berg Lead Researcher at RMIT University’s Blockchain Innovation Hub.
Government tracks who’s entering and leaving the country.” What’s exciting about Blockchain technology, he explains, is that these ledgers no longer need to be managed by a central authority, they can manage themselves. “They can’t be altered, they can’t be censored and they can’t be manipulated by bad actors,” he adds. “We now don’t have to rely on governments and firms to run these ledgers, we can run them ourselves.”
What can it do for logistics? Chris shares that the logistics industry is among those that will benefit the most when Blockchain reaches maturity, along with the manufacturing and financial sectors and government, for use in identity management. “Blockchain will be valuable for logistics, particularly in the area of provenance,” he says. “It will provide greater, more reliable information both about where goods came from and where they are. As it can’t be manipulated,
How will it work? A transaction using Blockchain technology will not look different from the outside, Chris says. “We want Blockchain applications to have the same useability that we already enjoy,” he adds. He gives the example of banking applications created for use on smartphones – while the apps are user friendly, the technology behind them is dated, so it can take weeks for a credit payment to clear through the international credit card unions. “What we will be able to see soon, I suspect, is Blockchain clearing networks that will clear payment in minutes, or even quicker,” he says. “If you’re buying beef at a supermarket, you’re not going to see how your transaction has been enabled by Blockchain technology, but the quality of the product will be higher and more reliable because the underlying logistics has been supported by Blockchain.” Chris notes that while some larger firms may opt to develop and implement their logisticsmagazine.com.au | 29
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own Blockchains in-house, SMEs will likely end up outsourcing to firms focused on the underlying logistics of transactions. “These will be specialist networks run by Blockchain specialists – you need a substantial number of developers and a lot of expertise to run a Blockchain network, so smaller firms won’t be setting up their own,” he says. Essentially, firms won’t necessarily need to understand how to set up a Blockchain to be able to benefit from it, they will be able to employ external firms with the expertise. There is debate in the industry about whether Blockchains should be private or open access, Chris shares. “A lot of private Blockchain solutions are being developed, though some are critical that when you’re not using an open-access service it’s not a Blockchain,” he says. “There are pros and cons to both solutions – I think we’re going to find that the open-access, public Blockchains will be more efficient, adaptable and powerful, but we’re in an experimental phase with this technology and the end point might be a mixture of public, open-access networks and private, closed-access networks.”
Chris Berg, Lead Researcher at RMIT University’s Blockchain Innovation Hub, says the Hub will work to educate governments, individuals and the industry on the potential of Blockchain technology.
The next steps While several firms are already experimenting with Blockchain technology, confusion around regulation and its potential will need to be surmounted before it can roll out across supply chains, though according to Chris this will happen faster than people imagine. “The underlying technology of Blockchain is very valuable, reliable and exciting,” he says. “Given the number of firms that have found use cases for it, seen its potential value and started experimenting, I think it will come up quicker than you would expect.” RMIT University’s recently launched Blockchain Innovation Hub will work to dispel the confusion about regulation and operation of Blockchain technology, Chris explains. “We see that this is a very interesting research area with significant implications for the Australian and the global economy,” he says. “Its purpose is to support industry by training to train people up in Blockchain technology and giving them an understanding of the possibilities it creates.” The team at the Hub has started a major research program into, what it dubs, institutional cryptoeconomics – where cryptoeconomics is the economic study of the Blockchain, institutional cryptoeconomics looks at how it affects societal institutions.
“We’re looking to learn more about what governments should or shouldn’t be doing, how firms can exploit the technology to make themselves more competitive,” he says. “Then we’ll develop courses so we can start to pass this information on to individuals and industry. “We’ve got a lot of regulatory uncertainty in this space, so it’s not clear how government will treat Blockchain technologies from a regulation or taxation perspective. The Hub will share its research with government to help it navigate this area so that it can get the regulatory
outcomes it wants without strangling the technology at such an early stage.” Chris says it’s hard to say whether Blockchain will reach maturity in two years or ten, and he is excited to be part of the team spreading the knowledge. “I think for people to start to use and be comfortable with Blockchain, they need to understand it more, and a public education program needs to be done – by the industry, by those who use Blockchain and by those who are excited by it, and we’re more than happy to start that conversation,” he adds. logisticsmagazine.com.au | 31
Technology
Changing
times
The Internet of Things promises to make life easier in the workplace, on the street and in the home. While it may mean a leap for efficiency and visibility, organisations and individuals will need to step up their cyber security, says RIoT Solutions Managing Director, Rob Merkowitza.
I
n the October/November issue, Logistics & Materials Handling spoke to two cyber security experts to get their thoughts on the cyber-threat readiness of Australian businesses. In short – following the worldwide impact of the WannaCry and NotPetya ransomware attacks in mid-2017, the experts believed businesses should be updating their security measures and remaining vigilant. Now, Logistics & Materials Handling sits down with network security expert Rob Merkowitza, Managing Director and Founder of RIoT Solutions, to learn more about
32 | Logistics&MaterialsHandling December 2017/January 2018
the opportunities and dangers of connected, smart workplaces, supply chains and cities. “Technology is significantly changing the way we do business – in fact, you can’t be in business without it now,” says Rob. “In the late 1990s, the Internet used to be a bit of a luxury – we in the IT world used to refer to it as a ‘non-critical’ service. Imagine turning the Internet off in any organisation now – you might as well just send everyone home.” Rob explains that he believes the next disruptor – the Internet of Things (IoT) – will have as significant an impact as the Internet
has had, though much quicker. “The Internet of Things won’t just touch our work life, it’s going to touch every consumer, every voter, every person at home – it’s going to be totally widespread, as the Internet has been,” he says. “The difference is the Internet has had nearly 20 years to come into its own and we’re going to see developments in the Internet of Things space in the next three to five years. It will be wider, larger and will likely have a bigger impact in terms of work than the Internet ever had.”
Technology Living smart
Rising complexity
Rob notes that smart networks will change the way we travel, shop and consume. “The smart city vision is all about providing more and more visibility to the end-user,” he adds. “In the future, you might be able to order a custom item online and track its progress through the manufacturing process, then storage and logistics, watching each stage as it makes its way to you. Lost luggage may be a thing of the past if you can track your suitcase with an app.” Maintenance needs of domestic appliances and industrial machines will be easily monitored, he explains, with data shared between all relevant parties automatically, enabling repairs to take place before a breakdown can occur. “The main thing for logistics will be compliance,” he says. “The Internet of Things will make keeping an electronic work diary a breeze for transport operators, since the information to be logged will come from the vehicle itself, without need for manual input. “In the warehouse, automation is well under way, though better access to and analysis of data is improving efficiency greatly.” While the possibilities of application of data analytics, or ‘Big Data’, are endless, Rob warns that a failure to plan ahead will cause serious headaches down the track.
While a society filled with traffic lights and street lamps that talk to vehicles – or machines that make a mayday call when something goes wrong – might seem like science fiction, it isn’t far off, Rob says. In fact, the technology is already in place in various industries – manufacturing and mining being two of the more advanced, with logistics not far behind. While at present these smart networks can control and monitor entire processes, in the future the networks will be connected, representing a boon for visibility but a threat to security. “Right now, these smart networks are all contained, separate solutions,” says Rob. “The problem is when you plug all those things together, you end up with a complete nightmare. The more complex it is, the more security holes there are and the higher the chance of being compromised.” Rob explains that RIoT Solutions focuses on both the architecture of smart infrastructure, and cyber security implications. “One day, all of these smart systems that have been designed in isolation will be connected and expected to run together – one huge consideration that many companies seem to be missing is vulnerability to cyber crime,” says Rob. “There’s a lot of pressure on boards and CEOs to do something ‘smart’, and what’s
Rob Merkowitza, Managing Director and Founder, RIoT Solutions, shares that smart networks will change the way we travel, shop and consume.
happening is people are purchasing off-the-rack ‘end solutions’, not realising that this could open up their processes and confidential data to attack or infiltration in the future. “We’re talking about operational-type organisations that have never had to rely on IT whatsoever, they’ve quickly been automated and now they’re collecting data from maybe 100,000 devices across their facility and putting it into a network. He notes that these ‘critical infrastructure’ networks will become key targets for hackers when connected to organisations’ networks. “It’s not going to be about stealing money or credit card details, it will be espionage-type attacks,” says Rob. “Hackers will go right back to the point where an item is designed and either tamper with it or steal the information to do something more sinister, so it’s critical to design the networks with security and compatibility in mind – or get the ‘digital plumbing’ right – then manage ongoing security needs.” He notes that the evolution of the IT business unit over the past 15 years has been gradual – initially building networks, then plugging computers into it and adding various systems. “We don’t have that luxury in the IoT space,” he says. “All systems need to be secured by design or else we’re going to have a very big problem on our hands in 10 years’ time when networks designed now start rolling into smart structures.”
INTERNET OF THINGS The Internet of Things (IoT) refers to devices sharing data over the Internet, such as handheld scanning devices reporting inventory data in a warehouse, and fleet management software tracking vehicles. Also known as the Industrial Internet, the Industrial Internet of Things (IIoT) incorporates machine learning and ‘Big Data’ technology, harnessing the sensor data, machine-to-machine (M2M) communication and automation technologies that have existed in industrial settings for years. This data can enable companies to pick up on inefficiencies and problems sooner, saving time and money and supporting business intelligence efforts. In manufacturing specifically, the IIoT holds great potential for quality control, sustainable practices, supply-chain traceability and overall supply-chain efficiency.
logisticsmagazine.com.au | 33
Industry insight Ports
The expansion plan Five minutes with Port of Melbourne CEO, Brendan Bourke. Q. One year into your role at the head of the Port of Melbourne, what do you see as the more significant issue to address? A. Projections from the 2016 census tell us that Melbourne will become Australia’s most populated city over the next three decades. By 2051, Melbourne will be a city of around eight million people. For those of us in the freight and logistics sector, this is only half the equation, for alongside this population growth, compound annual container trade is forecast to grow by three to four per cent. From the Port of Melbourne’s perspective, sustained population growth has its immediate challenges for our business, with over 400 planned dwellings and developments with heightened community amenity expectations right on our doorstep. So not only will the logistics industry be required to service a steadily increasing population, it will do so in an environment where this same growth exerts competing pressures. Within this context, it is crucial that ports, freight and the city are planned together to achieve an appropriate balance.
Q. How important will input from stakeholders across the supply chain be to the future prosperity of Melbourne’s – and Australia’s – supply chains? A. By better understanding freight flows, integrating supply chain elements, and leveraging private sector efficiencies, we can work to futureproof the supply chain. It is crucial that industry, government and the community are involved at every stage. Planning also means building community awareness and creating a shared vision of what the port industry will look like in the Melbourne to come. This process needs to take place not just in the suburbs that surround the port but also in freight corridors and regional hubs, to ensure the broader supply chain can also grow and prosper. There is no doubt that technology will offer us some solutions, but unless we proceed with a cohesive, structured approach where all the key players are at the table at the earliest stages, we are limiting our chances of success before we even begin. Q. What is the Port of Melbourne’s strategy for preparing itself for this task in the short term? A. The development of Fishermans Bend (see breakout box) presents a case study of where these competing pressures meet, right at the port boundary. Consideration of how this area will be developed is of course crucial for the future of Melbourne, but any comprehensive
plan must seek to balance population growth with the task of adequately servicing it. As cities grow, the assets and services that support the city will also need to grow. This is a challenge, but we should also view it as an opportunity. The 50-year lease of the Port of Melbourne creates certainty in terms of planning and investment, and gives us – not only the port but the industry as a whole – an opportunity to take a longer view. We cannot simply expand, we must plan and we must adapt.
FISHERMANS BEND URBAN RENEWAL AREA A 455-hectare site in Fishermans Bend, in the Port of Melbourne area, has been rezoned and earmarked for residential and commercial construction over the next three decades. The development will connect the CBD to the bay and is forecast to provide housing and employment for approximately 80,000 people by 2050.
According to Port of Melbourne CEO Brendan Bourke, industry, government and the community must be on the same page in order to develop future-proof supply chains. 34 | Logistics&MaterialsHandling December 2017/January 2018
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