Australia-China Services Trade: Opportunities and Challenges of a Free Trade Agreement
Beijing, 24 April 2006
Session Four: Transport and Logistics
Presentation by Mr Ivan Backman, Chairman, Australian Logistics Council
Agenda
- Introduction to the Australian Logistics Council
- Overview of Australia’s expertise in freight logistics
- Specific way in which Australian and China logistics industries can benefit from the FTA
- Linfox – a case study of a successful Australian Company expanding rapidly into the Asia-Pacific area
Australian Logistics Council
- A partnership between all Australian Governments and senior industry leaders of the logistics industry providing advice to central and state governments on ways to make the logistics sector as efficient as possible
- Focused on preparing the industry to handle the massive forecast growth in demand as customers demand more integrated supply chains in both domestic and international logistics.
Overview of Logistics in Australia
- A$79 billion pa
- 9% of GDP, which is greater than Construction 5.9% or Retail 5.2%
- Employs 6.9% of Australian workers
Strengths of Australian Logistics
- Experienced world class transport and logistics providers
- Experience in Asia-Pacific Region, including China
- Strong niche market achievements
- Cool-chain management
- Fleet management
- Long distance supply chain management
- Mine supply logistics
- Supply chain information technology
Australian Companies (and ALC members) in China include:
- Qantas
- Toll
- Blue Scope Steel
- TNT Logistics
- Baulderstone Hornibrook
- Linfox
Our understanding of China’s needs
- Your rapid economic growth means increasing demand for logistics
- Investment in infrastructure and in new technology is crucial, as well as an imperative to make best use of existing infrastructure
- The skills of your staff and your managers are pivotal
- Global logistics requires a high level of skills
- Investment in capital equipment must be accelerated
Challenges facing China
- Heavy investment in transportation infrastructure but still need more integrated logistics regulatory framework
- Logistics is 20% of China’s GDP compared to 9% in Australia
- Less than 20% of China’s trucks are containerised; with most carrying an average weight of less than 2 tonnes
- This at a time when ships are carrying larger and larger containers
- Movement of freight from ports is costly and time-consuming.
- Transport and logistics costs in China are estimated to account for 20% or more of general retail prices and as much as 50-60% in the case of fresh produce.
Regulatory way ahead
- Regulation that deals with logistics on an integrated basis is very important, for example regulation that allow firms to provide combined logistics services such as road, warehousing and distribution means increased efficiency of the logistics supply chain
- Streamline regulation at the provincial levels is needed to lower costs of freight movement, for example, provinces could recognise each other’s licenses for road freight operators.
Progressing Logistics Together
- China is opening its transport services sector but there are many remaining challenges
- Australia’s experience in logistics can help China modernise
- We have experience in helping our trading partners in Asia modernise their logistics
- Australia can help China improve the skills of those working in logistics and the efficiency of China’s supply chain systems
- The FTA can address some of the regulatory challenges and contribute to lowering the costs of logistics in China.