Five shortlisted for the third terminal at Port Botany

Port Botany.

Five stevedoring groups have entered a bidding war over the third container terminal at Port Botany.

Sydney Ports Corporation has announced that five stevedoring companies have been invited to tender to operate the third container terminal at Port Botany.

The company’s CEO Grant Gilfillan said the invitation was the second part of a two-stage process for choosing the terminal operator for the Port Botany expansion project.

A total of 13 groups expressed interest in operating the terminal, responding to the call for expressions of interest due on September 1.

“The healthy response indicates there is strong industry confidence in the long-term commercial viability of Sydney’s container port,” Mr Gilfillan said.

The company asked the applicants to provide information concerning their financial and resource capacity, container terminal expertise and experience, as well as capacity to resource and manage the new terminal.

Ports Minister Joe Tripodi said bids would entail fixed and variable rental elements, and a level of investment and intended work volumes.

Mr Gilfillan said the shortlisted groups included domestic and international operators, without revealing their names.

“We regard the process as commercially confidential and will not be announcing the names of those who have been invited to tender.

“We expect the stevedore to be chosen by mid-2009, with the first berths available for trade from 2012,” he said.

It is speculated among the contenders were Patrick, DP World, Hong Kong-based Hutchison Port Holdings and the Singapore Ports Authority. Former Patrick chief Chris Corrigan was also reported to have expressed interest.

It is expected the selected operator will inject around $350 million into new facilities, with initial expenditure on gantries of about $150 million.

Economic meltdown to continue into the New Year

The New Year is expected to see the financial crisis continuing, with sales and profits expectations plummeting and selling prices expectations hitting record high.

According to the latest Dun & Bradstreet (D&B) business expectations survey, sales and profits expectations for the March quarter 2009 have sunken further into negative territory, down 50 points from the highs of the December quarter 2007.

The selling prices index has climbed 17 points to 79, the highest figure ever recorded by the survey, while the capital investment index has flat-lined.

About a quarter of executives indicated recent changes in credit market conditions hurt their businesses, with more than two-thirds of executives reporting the dramatic weakening the Australian dollar since July had a negative impact on their operations.

Despite a 25-per cent fall in the number of businesses affected by petrol prices, 68 per cent of firms still identified fuel costs as one of their concerns.

D&B corporate affairs director Damian Karmelich said Australia failed to escape the fallout of the global financial turmoil, leading to a persistent fall in executive expectations for the New Year.

“The credit crisis has made it more difficult for Australian businesses to access funds – it has also caused significant volatility in the Australian dollar. As a result, executive confidence has declined sharply, with expectations falling to levels not seen since the 1990s.

“Australia remains one of the few OECD economies in which central bank rates can influence the day-to-day functioning of national credit markets however with selling price expectations at record levels, inflationary pressures could weigh on the Reserve Bank’s decisions for further interest rate cuts,” Mr Karmelich said.

Interest rates have been named the top concern for executives, with 48 per cent expecting rates to be their key issue in the upcoming quarter.

Despite worsening business circumstances, D&B economic consultant Duncan Ironmonger said Australia would ward off a recession with GDP growth expected to remain positive in 2009.

“The Federal Government will provide further fiscal stimulus as necessary and the lower value of the Australian dollar will encourage domestic spending and exports whilst discouraging imports. This situation will help to maintain domestic production and jobs, with unemployment expected to stay below 5.5 per cent in 2009,” Dr Ironmonger said.

“Despite the slowdown in world growth, Australia will not experience a recession.”

National review to unblock the supply chain

The National Transport Commission (NTC) says current reviews of national supply chains would lead to real reforms that could unblock paths to efficiency.  

Speaking at Ports Australia’s conference in Brisbane, NTC chief executive Nick Dimopoulos said governments were committed to delivering a step-change in productivity.

“Australia can keep a toehold on global competitiveness, and tip the scales back in favour of domestic industries, by modernising its regulations and infrastructure,” Mr Dimopoulos said.

“Our clear objective is to remove regulatory, pricing, competition and infrastructure constraints that strangle supply chain efficiency.”

He said transport ministers across Australia were working in conjunction with the NTC to set up Australia’s first integrated national transport policy for all modes of freight and passenger transport.

The NTC, overseeing a review of rail productivity, is also conducting national pilot studies for intermodal transport, grain and coal supply chain under the South Australian-led capacity constraints and supply chain performance agenda.

With container trade handled by Australia’s ports projected to more than triple from 5.1 million units to 18 million by 2030, Mr Dimopoulos said nationally coordinated land-use planning was a key to support growing seaports and freight terminals, protecting adjacent logistics parks from urban encroachment.

He said rail was often mooted as an answer to manage the projected growth in container freight, with its modal share remaining low.

“Right now the volumes and economics for rail don’t stack up,” he said.

The rail productivity review, he said, would identify reform opportunities to better connect transport networks and enhance rail capacity and service.

He added early findings for the pilot studies showed collaborative efforts by supply chain parties to “sweat” infrastructure and transport assets further were delivering results, while commercial interests often impeding real change.

“No one wants to bear the cost of genuine collaboration. Coordination by consensus isn’t working well for Australia,” Mr Dimopoulos said.

The rail productivity review will be completed for consideration by transport ministers in early 2009.

The verdict on shorthaul

MEYRICK and ASSOCIATES defines the short haul or shuttle freight task before moving to an outline of the benefits and constraints on shuttle services.

We examine why short haul shuttle services are not a commercially viable option in Australian port-related freight systems in the short term.

We list obstacles to short haul, then consider how improved viability might occur, whether through government intervention or because of factors such as increasing road congestion and fuel prices.

We finish by posing actions that could or should be done to preserve short haul shuttle options.

Short haul in the import/export subsystem

Small freight trains of around 600 metres or less, operating over short haulage distances (sometimes as little as 20 or 30 kilometres) are an element in Australia’s import/export subsystem.

Typically these short haul or shuttle services operate at a port; between a city-located intermodal terminal and a port; or at some distance inland, linking the intermodal terminal to the port.

In the longer term, as congestion and fuel prices increase, the level of viability of potential supply chain arrangements involving short haul rail shuttles will improve.

In the short term however, what are the constraints?

Why doesn’t short haul do well?

Although supported in principle by most Australian governments, short haul shuttle services play a minor role in Australian port-related freight systems in the short term due to the significant obstacles they face.

Short haul services, perhaps with the exception of those operating at Sydney, could readily be replaced by trucks.

Some have argued that rail can not compete with road because heavy trucks do not pay their fair share of the cost of providing and maintaining roads.

But the Productivity Commission report on road and rail freight infrastructure pricing, released in April 2007, developed some very cogent arguments, independently supported by work commissioned by the National Transport Commission, that showed that road pricing has little effect on the share of freight enjoyed by rail.

The Commission’s findings conclude that on balance (given distortions in pricing of both road and rail infrastructure) there are no compelling competitive neutrality arguments that would justify government intervention in favour of rail.

At the heart of the problem is Australia’s port freight system, which has evolved since World War 11, and is built around road based landside distribution.

Every shipper’s production facility and warehouse has road access, while very few have rail access.

The road based distribution system has evolved in response to a series of commercial drivers.

Truck sizes have increased while the real cost of truck capital cost has decreased; globalised production management and the pressure to reduce inventories has resulted in Just In Time freight management.

This works best with road based systems for many manufacturers and shippers along the supply chain and allows responsiveness to consumers’ demands for ready access to goods and services.

The result has been a demand for more frequent freight services that are compatible with at least one of the vast range of heavy road vehicles on offer.

As a result of this evolution, in Australia today rail transport is infrequently used to service the port related freight system, particularly in the urban environment.

The limitations

While rail can be competitive with road on long-haul trips using double stacking on long trains, shuttle trains operating over short distances are generally not competitive.

The biggest impediment to urban rail shuttles between the port and outer suburban hubs is the need for an extra transport leg and double handling.

In addition, shuttles may require significant shunting on site if the rail siding within the terminal is constrained, which may cause a loss of time to other train movements.

Shuttle trips are slow because of the existing condition and arrangement of the rail freight network.

In and around cities, commuter rail services are given priority, constraining potential rail shuttles to only off-peak train paths.

Added to these constraints, shuttle trains may be competing with intrastate and interstate freight movements for the off-peak train paths that are available after commuter rail requirements have been satisfied.

Finally, shuttle routes may be constrained by lack of access.

This may occur if the rail passes through land whose owners deny access. Access is likely to be affected by interrelationships between groups and services such as forwarders, third party logistics providers (3PLs) and rail operators; owners of rail track; and lessees of intermodal terminals and abutting leases, in particular rail sidings.

Attempts to develop port-based intermodal businesses are often constrained by the existing design, condition and operational requirements relating to the rail infrastructure network.

Many and varied commercial relationships may have to be navigated in order to secure train paths, necessary access rights and time slots.

As a result of the associated inefficiencies, service times are increased.

In short, why take freight to a rail terminal and be constrained by cut off timetables and limited service frequency when you have the option of (once the container is on the truck) delivering it straight to the port, within the time frame that best suits you, without having to pay the expense of the double handling at the rail terminal?

The future of short haul

The future of short haul seems uncertain given the commercial reality presented by the limitations of the operating environment. There may be opportunities to cut costs and trim budgets.

Can costs be reduced by better planning for example?

We see evidence that logistics planning can ensure better utilisation of rolling stock, which in turn can reduce rail operating costs.

However, some would argue that at the heart of the problem is a requirement for more government intervention.

Arguments for government intervention centre on public objectives of improving mode split of freight movements to port in favour of rail in support of economic considerations.

These economic arguments look to the environmental and social benefits of rail.

They are not necessarily consistent with the commercial objectives of terminal operators or shippers.

It is possible that increasing fuel prices, especially when combined with increasing road congestion, will drive improved viability of short haul rail shuttles.

There have been signs for some time that industry may be feeling other cost pressures, notably the rise in fuel prices, that may encourage the move from road to rail.

Responding to the Neville Inquiry (June 2005), the Victorian Freight Logistics Council said that, ‘Rail usage for cargoes which may have previously been considered uneconomical because of short distance or time constraints is now under review by producers, manufacturers and wholesalers, given an expectation of continuing high fuel costs.’

It is possible that increasing fuel prices, especially when combined with increasing road congestion, will drive improved viability of short haul rail shuttles all else being constant — ‘all else being constant’, because it is possible that over time the obstacles to short haul rail shuttles might increase, not decrease.

For example, as the number of commuter rail services increase in response to growth in population we can expect that less and less train paths may be available for shuttle services.

What could or should governments do? If, in most cities, short haul rail is not at present commercially viable, then what, if anything, could (and should) governments do?

A strong case can be made for ensuring that the full costs of road use — including the cost of congestion and the effect of road use on the environment — are born by road users.

There is scope to reduce some of the impediments posed by the inadequacies of the current rail and intermodal terminal infrastructure, particularly where this can be done at modest cost.

Even if these things were done, it is unlikely that it would, at present, make much difference to short-haul rail volumes.

Providing direct subsidies to rail could make a difference, but, provided road users bear the full costs, the economic (and environment case) for doing so is weak.

Given the uncertainties in the current environment, these is more to be said for focusing on strategies that will keep our future options open.

These include planning to preserve potential intermodal terminal locations and buffers around them; preserving rail corridors that may be needed to transit between intermodal terminals and the ports.

It may also extend to landbanking to allow the release of land for intermodal terminal development in the future.

The future viability of short haul shuttle services will depend on the actions taken now in these areas.

[1] VFLC, Intermodal terminal discussion paper, Melbourne, Meyrick and Associates, draft May 2006, p.7

Apology:

“In the earlier version of this article published in Logistics Magazine e-Newsletter, Meyrick and Associates made an unauthorised reference to unpublished material that correctly belongs to the Victorian Freight Logistics Council.”

“Meyrick unreservedly apologises for this and for the concerns that it may have caused to VFLC or any of its members.”

Ready or not, employers must face psychological injury

Despite new laws, growing workers’ compensation payouts and alarming statistics regarding the debilitating effects of psychological injury, most employers are unaware of their obligations to help stressed employees, a lawyer has warned.

Ahead of his address to occupational health and safety practitioners at April’s Safety In Action Conference, Chris Molnar, partner at Harmers Workplace Lawyers, says many employers found “the whole issue of psychological injury a little bit difficult”.

“Employers can understand what they need to do when there’s a physical hazard, like putting a guard on a dangerous piece of machinery, but when it comes to potential psychological injury, most employers remain unaware of their obligations,” Molnar says.

“Even when they do become aware of potential injury, they generally fail to take prompt or appropriate action to properly manage the risk.”

With workplace injury rates at all-time lows, there’s a shift in focus away from the physical to the psychological.

Among the topics to be canvassed by occupational health and safety professionals at the Safety In Action Conference will be post-traumatic mental health, dangerous mental states, and decoding behaviour.

Mounting evidence shows workplace stress has a significant impact on the health of Victorians.

A 2003 VicHealth report on workplace stress estimated job strain could account for more than one-third of cardio-vascular disease in men and one in three cases of depression among women.

It said job stress had also been linked to increased absenteeism, employee turnover and workers’ compensation rates.

Concern about workplace stress has been reflected in legislation, with the revised Victorian OHS Act referring specifically to psychological injury.

“Meeting employer obligations under the OHS Act doesn’t mean sending people off to a health check every week,” says Chris Molnar, “but, depending on the industry and occupation, it certainly means being sensitive to your employee’s wellbeing.”

“There is an obligation on the employer to do a risk assessment, identify hazards in relation to the job, assess the potential for that to occur and to assess the potential damage — ultimately, that might be a psychiatric condition if there’s too much stress,” he says.

“Examples of hazards to psychological health are unreasonable workload expectations, unreasonable work hours, bullying and harassment by co-workers, lack of proper mentoring and supervision, lack of proper systems and processes, education and training.

“When people are depressed due to other causes, we need to be confident the working environment is not unduly adding to that and exacerbating the worker’s depression,” Molnar says.

Molnar will address the risk factors of psychological injury in service industries at the Safety In Action Conference on April 30.

Sponsored by WorkSafe Victoria and hosted by the Safety Institute of Australia (Victoria Division), the Safety In Action Conference will be held from April 29 to May 1 at the Melbourne Convention Centre, while the concurrently held Safety In Action trade show will be at the Melbourne Exhibition Centre.

Visit www.siaconference.com.au or phone (03) 9654 7773.

Apology

“In the earlier version of the article entitled “The verdict on shorthaul”, published in Logistics Magazine e-Newsletter, Meyrick and Associates made an unauthorised reference to unpublished material that correctly belongs to the Victorian Freight Logistics Council.”

“Meyrick unreservedly apologises for this and for the concerns that it may have caused to VFLC or any of its members.”

Bizcaps migrates clients to GS1net

Sydney software supplier Bizcaps has uploaded its 55th client to GS1net.

These clients account for more than 11,000 GTINS.

“Bizcaps took the GS1net migration exercise very seriously,” says Managing Director Rob Clifton-Steele.

“We devoted a lot of resources to the project over more than 18 months.”

“While Bizcaps understands understand that there have generally been migration delays, we had all of our existing clients ready to migrate to GS1net by the original deadline of 31 March 2008.”

Dairy Farmers was Bizcaps’ milestone 50th migration to GS1net.

It is one of Australia’s largest dairy manufacturers, supplying fresh and processed milk products including cheese and yogurt to both local and overseas markets.

Bizcaps’ client O’Cedar was the first catalogue uploaded to the GS1net datapool by a middleware software supplier.

O’Cedar’s name has been synonymous with premium timber furniture products in Australia for more than 100 years.

Bizcaps’ Gs1net Connect Engine was the first middleware software certified for use with GS1net.

It powers the both Bizcaps Eziform and Enterprise product ranges.

Bizcaps’ Development Director, Bill Blinco says the company’s design objective is to insulate users from the complexities of GS1net.

“Our support desk recently demonstrated our product to a potential customer,” Blinco recalls.

“The customer said: ‘That’s it? That’s all I have to do?’ and signed up immediately. That’s very satisfying feedback for any development team.”

Late last year, Bizcaps was awarded the prestigious Strategic Alliance Partner status by GS1.

In New Zealand, Bizcaps is represented by EDIS Technologies Ltd of Auckland

Automotive IT Landscape

A new Capgemini study provides a holistic view of the automotive IT application landscape, which can help manufacturers make more informed strategic decisions regarding their IT investments.

The automotive industry has been an early adopter of information technology due in large part to the complex, competitive and global environment in which automotive companies operate.

Over the past 30 to 40 years, IT within the industry has witnessed a rapid and somewhat unstructured growth, leading to a complex and fragmented landscape.

This landscape varies significantly across process areas, geographies and Original Equipment Manufacturers (OEMs).

Which solutions are used most extensively by OEMs?

Which application providers are active in a particular process area?

How does your company compare with your competitors in its use of bespoke and package applications?

To better understand the automotive IT landscape, Capgemini conducted a study designed to establish a singleview representation of the IT solutions used across OEMs.

The study seeks to identify which applications are most commonly deployed by vehicle manufacturers and examine how the IT landscape has evolved over time.

The research focused on two key segments of the automotive value chain: supply chain management (SCM) and sales, marketing and service.

These segments were studied across the top 10 OEMs (based on consolidated annual group revenues): BMW, Daimler1, Fiat, Ford, General Motors, Honda, PSA, Renault, Toyota and Volkswagen.

Download the full publication.

Transport Minister John Watkins calls it quits

NSW Transport Minister and Deputy Premier John Watkins has resigned after 13 years in the state politics.

Mr Watkins said the decision to retire came to regain the “work-family balance”.

“After more than 20 years in public life, I think it is the right time to move on to pursue new challenges and to give others the opportunity of experiencing the privileges that I have in my roles in public life,” he told The Australian.

“This job comes at some cost, both physically and emotionally and it impacts very strongly on your family and loved ones.”

Mr Watkins, who had recently lost both of his parents, said the public spotlight had been both “exhilarating and exhausting”.

“In recent times I have been counting these costs…I believe it is time to get that work-family balance back right,” he said.

He has been regarded as Premier Morris Iemma’s successor, but it is understood tensions with NSW Treasurer Michael Costa have become intensified recently over the plan to build a $17 billion metro line across north-west Sydney.

With his departure expected to prompt a cabinet reshuffle, it is unclear who would take over the transport department, which controls Railcorp and the freight lines in metropolitan Sydney.

Mr Iemma said Mr Watkins was “a voice of reason and commonsense”.

“John’s been one of the outstanding figures of modern Labor politics, a man who tackled some of the most demanding portfolios in government and never lost his sense of decency and compassion,” he said.

Truckers win historic case under Independent Contractors Act

Federal Magistrate Court has ruled in favour of owner-drivers, sending a warning to businesses that treat independent contractors unfairly.

The legal battle began when three owner-drivers, Keldote, L&D Lowe Transportation and Tambo Walters, challenged Riteway Transport’s attempt to replace their single trailers with new B-doubles without fair compensation in 2007.

“The company offered each of the three drivers compensation that was less per round trip than the additional costs associated with running the new trailers and less than the amount requested by the drivers to cover their costs,” Small Businesss Minister Craig Emerson said in a statement.

Federal Magistrate Robert Cameron ruled against Riteway Transport, finding the company’s contracts were unfair.

He found the contracts were “unilaterally imposed” by Riteway and the company attempted to make “a significant change to the equipment required to service the contract without making financial compensation to the applicants”.

Federal Magistrate Cameron has amended the contract with the truckers to limit Riteway’s power to require the owner-drivers to provide new vehicles.

Mr Emerson said: “The Independent Contractors Act allows an application to be made to the court to review a services contract on the grounds that it is unfair or harsh.

“This is an historic judgment – the first substantive action brought for an unfair contract under the Independent Contractors Act.”

Damage costs are still under consideration.

 

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