Business Activity Harmonisation Study (BAHS) Freight Congress 2005

1. Business Activity Harmonisation Study (BAHS) Freight Congress 2005

2. The BAHS project Background • Victoria will remain the regions logistics hub and the Port of Melbourne will continue to be Australia’s leading Port via investment in the infrastructure that supports growth. • Infrastructure investment must be accompanied by management, policy and supply chain practises that optimises the States position.

3. The BAHS project Growth- Australia World

4. The BAHS project

5. The BAHS project Objectives • The extent of a mismatch of operating hours; • The factors and issues affecting hours of operation and the rationale for current operations; • The significance of the mismatch to port efficiency in the receival and delivery of containers on the landside; • Whether a change in operating hours throughout the supply chain is realistic and relevant to the businesses relying on sea freight transport, and • Are other solutions possible?

6. BAHS project Delivery Summary

7. BAHS Outcomes • Establishing the business reality and testing assumptions at each point of the logistics chains and the supply chain. • Identifying the issues from supply and demand side perspectives. • Identifying the issues as they effect operators along the chain. • Identifying sets of solutions for practical implementation and policy formation.

8. BAHS Key Stakeholders

9. BAHS Stage 1 Methodology • Stage 1 Data Collection. • Surveys • Face to Face interviews with Stakeholders. • Electronic Questionnaire via VFLC & Industry Association. • Focus Group sessions. • Workshops with all Stakeholders participating (5 half day sessions).

10. Customs Cleared Arrange Transport Schedules Ship arrives on Schedule Load wharf ‘Daytime’ Travel to DC Dehire Empty Container Park Travel to Empty Container Park Unload DC The BAHS project Optimised Logistics Flow

11. Re-align Tpt plan Re-align DC unload plans Load wharf DC can’t receive Direct delivery Travel to staging depot Customs Cleared Ship arrives on Schedule Unload DC Travel to DC Load Depot Lift box on for delivery Unload Depot Lift off boxes. Store on power in depot Travel back to Depot Travel to Container Park to Dehire Dehire Container Empty Lift off Empty boxes Lift on Empty boxes Actual Logistics Flow

12. Re-align Tpt plan Re-align DC unload plans Load wharf DC can’t receive Direct delivery Travel to staging depot Customs Cleared Ship arrives on Schedule Unload DC Travel to DC Load Depot Lift box on for delivery Unload Depot Lift off boxes. Store on power in depot Travel back to Depot Travel to Container Park to Dehire Dehire Container Empty Lift off Empty boxes Lift on Empty boxes Costly Impacts Of Mismatch X X X X X X X

13. The BAHS project Stage 1 Results – Issues identification Responses were classified into two groups relating to either: • Operating Hours. • Other Issues / Impediments to Supply Chain efficiency. Responses were collated and counted by frequency raised across all Stakeholder Groups.

14. BAHS Stage 2 “One of the issues is . . . there are too many issues.” . . . . BAHS Stage 1 (workshop 3)

15. BAHS Stakeholders typical Hours of Work Monday to Friday

16. BAHS- Summary of responses from Stakeholders

17. BAHS Stage 1 Where were the issues and impediments identified?

18. BAHS Stage 1 - Emerging Themes 1. Mismatch of Hours. Operating hours are a part of a number of core issues that impede optimisation. 2. Broader understanding of sea freight supply chain required International Supply chains are seen as complex. 3. Container Management. Management of Empty Containers, Empty Container Park operating hours and performance. 4. Shipping Lines Pivotal role. 5. Commercial Relationships. 6. Information Technology / Communication.

19. Complexity exists in the Sea Freight Supply Chain

20. BAHS Emerging Themes 1. Mismatch of Hours Operating hours are a part of a number of core issues that impede optimisation. 2. Broader understanding of sea freight supply chain required International Supply chains are seen as complex. 3. Container Management Management of Empty Containers, Empty Container Park operating hours and performance. 4. Shipping Lines Pivotal role 5. Commercial Relationships 6. Information Technology / Communication

21. BAHS Study Commercial Relationships Commercial Relationship Operational relationship Shipping Line Empty Container Park Operator Stevedore Customs Broker Importer / Exporter Distribution Centre Transport

22. BAHS Emerging Themes 1. Mismatch of Hours Operating hours are a part of a number of core issues that impede optimisation. 2. Broader understanding of sea freight supply chain required International Supply chains are seen as complex. 3. Container Management Management of Empty Containers, Empty Container Park operating hours and performance. 4. Shipping Lines Pivotal role 5. Commercial Relationships 6. Information Technology / Communication

23. BAHS Stage 2 Solutions

24. BAHS Stage 2 Aims To unlock the knowledge and expertise that exists within the industry to identify ideas and solutions that will assist supply chain efficiency through the Port of Melbourne.

25. Stage 1 Issues Documented Solutions identified by stakeholders Focus Group Review (Industry Experts) Industry Workshops Identified solutions Focus Group Review (Test solutions) Solutions Documented BAHS Stage 2 Methodology Delphi Technique

26. BAHS Stage 2 “Port congestion is not a problem in search of a solution, It’s multiple problems in search of multiple solutions. In this industry, financial success is nearly always linked to supply chain excellence. That’s why we have to look for means to chip away at this issue.” . . . . Port of Los Angeles CEO

27. BAHS Stage 2 Victoria’s approach has been unique. All participants in the industry have come together to look for genuine answers to the impediments. Recognised there must be a collaborative approach.

28. BAHS Stage 2 The fundamental mismatch of hours was illustrated in BAHS Stage 1 Report. Each participant in the sea freight supply chain is driven by their own imperatives. In isolation key drivers mitigate against change until it is forced upon them.

29. AVERAGE ALLOCATED CAPACITY PER SHIFT Volume VOL 2500 2000 Day 6.30 - 14.30 1500 Afternoon 14.30 - 22.30 1000 500 Night 22.30 - 6.30 0 SHIFTS BAHS Stage 2 Stevedores allocate equipment and labour to meet their planned operations which largely reflect the lower take up of slots on the night shift.

30. BAHS Stage 2 Most carriers, distribution centre operators and service operators are prepared to extend hours on the basis that: • Empty container issues can be managed. • Costs are recovered either up front or via efficiency improvements.

31. BAHS Stage 2 Historically service providers have been unable to convince importers / exporters that they should pay for the extra costs. Who pays ………… ?

32. BAHS Stage 2 “The management of empty containers, empty container park operating hours and empty container park performance are central to any improvement strategies.” . . . . (Focus Group, BAHS Stage 1)

33. BAHS Stage 2 Change to average Container Park participants over the past decade.

34. BAHS Stage 2 Industry estimates indicate current storage capacity in depots to be around 48,600 TEU with average daily gate capacity estimated at around 4650 TEU.

35. BAHS Stage 2 The most pressing issue for the efficient management of empty containers is container parks’ short term ability to cope with volumes.

36. BAHS Stage 2 Pressure on parks to extend hours will be exacerbated when, inevitably, Sunday becomes a normal receival day at the wharf. Storage capacity Gate capacity

37. BAHS Stage 2 • Solution(s) to Empty Container Park Capacity Constraints. • Short term – Extension of hours from existing Parks. • Medium Term – Extension of existing container parks where practicable and introduction of new facilities on or adjacent to intermodal hubs with access to rail. - planning /zoning policy support under a broader strategic plan. - Intermodal hubs. - rail track access. - some empty container parks to be located close to the port. - the PoMC’s policy on land needs to be visible to industry. • Long Term – Expansion of Empty Container Parks on or adjacent to intermodal hubs.

38. BAHS Stage 2 Solutions related to capacity issues: cont’d • Government / PoMC to consider levy to all import and export containers to fund container parks after hours operations in the short term. • Shipping lines introduce a charge to all import and export containers to fund container parks after hours operations in the short term.

39. BAHS Stage 2 Empty Container Park – capacity • Future empty park locations needs to be assessed on industry needs to ensure they are developed in the right location(s) with long term expansion capacity including planning / zoning / residential buffers etc.

40. BAHS Stage 2 • Intermodal Hub(s) development. • There is no definitive plan or timeline on Empty Container Park developments. Solution(s) • PoMC and Government need to provide clear policy and planning strategies to encourage developments that meet the port’s overall supply chain efficiency objectives.

41. BAHS Stage 2 • Container Booking & Release Numbers. • Confusion exists over reference numbers. • Shipping lines issue a booking number and later a release number. • Exporters provide carriers with the wrong reference number. Solution(s) • Container parks require a standard shipping line booking number / release number procedure. • SAL to review shipping line(s) process and, - Establish one clear reference. - Educate exporters. - Incorporate into container visibility solutions.

42. BAHS Stage 2 • Equipment ‘Hand Over’ agreements. • Transport companies arrive without import container ‘Hand Over’ agreement documentation. Solution(s) • Shipping lines to pre-advise container depots of all containers by vessel and voyage to assist prompt de-hire; • Carriers need to be educated to ensure the hand over paperwork is correct, or • Non compliance penalty to be introduced by empty container parks to encourage accuracy.

43. BAHS Stage 2 • Transport delays / queues as a result of short notice issues. Solution(s) • Install cameras at container parks, stevedores & rail interfaces with web based access. • Extension to main arterial points (via Smart Freight program). • E Tag technology to be deployed at all interface points.

44. BAHS Stage 2 • Confirmation of container release details prior to pick up. Solution(s) • Carriers need to be educated to ensure release numbers are pre-advised and correct, or • Non compliance penalty to be introduced by empty container parks to force inefficiency and cost where it belongs in the chain.

45. BAHS Stage 2 • Communication technology from shipping lines. • Many shipping lines are still not using electronic data interface (EDI). • Of around 42 shipping companies regularly operating through the Port of Melbourne some 40% are still using manual /fax advice for bookings. Solution(s) • SAL to address the communications issue with it’s members. • Empty parks to charge appropriate rate /additional administrative costs associated with old technology, errors and delays.

46. BAHS Stage 2 • Container Availability. • Poor forecasting results in insufficient stocks being available... • Delays in empty container returns. • Vessel delays. • Customers book cargo with more than one shipping line. Solution(s) • Industry associations must establish an educative process to increase importers and exporter’s knowledge / awareness of the impact and costs of these issues.

47. BAHS Stage 2 • Container Availability. Solution(s) cont’d • Improved visibility of container location via system connections. • Exporters to be discouraged from booking the same cargo with multiple shipping companies via penalties for cancellation. • If exporters /importers are not deterred, shipping lines could introduce a booking fee.

48. BAHS Stage 2 • Container Availability. Solution(s) cont’d • Import container demurrage could be adjusted to encourage reduced import container cycle times but through a fairer system. • The system should have the capacity to recognise delays created externally via ACS & AQIS & VBS • Ensure regional exporters get release numbers early to enable cycle time to be pressure free.

49. BAHS Stage 2 • Container Visibility. • Container parks have little control over vehicle flow in and out of their facilities. Solution(s) • Introduce an IT interface that could provide visibility of available stock. The industry needs complete visibility of the process, i.e.: - Vessel ETA - Availability date - Time up - Return depot - In gate / out gate at depot - Container detention clock - Booking number /release number with qty /size /type • Options for development must be driven as minimum cost /industry solution model.

50. BAHS Stage 2 • Australian Quarantine and Inspection Service (AQIS) hours. • Industry needs to be able to clarify and resolve ‘holds’ on cargo after hours. Solution(s) • AQIS need to open longer hours to meet needs of Port operations (Requirement applies to both AQIS Office and Field Operations). • AQIS officers available to inspect rail containers after hours to avoid the need to stack / re-handle and delay to transit time. • AQIS help desk required to enable after hours operational enquiries (preferably located in port vicinity). ...........................