Export freight is one thing, but when you factor in our own freight infrastructure, too, it’s a whole new ball game. Joe Parkes examines the issues, takes note of possible freight solutions on the horizon, and checks that all the paperwork exporters need is in order to get your exports to market.
An ancient Chinese proverb declares that a journey of a thousand miles begins with a single step. For Australian exporters that single step usually involves moving products from the factory, the orchard, the farm or the processing plant, to a ship or plane bound for markets overseas.
It’s not a simple process. To begin with, the exporter has to organise appropriate packaging, essential paperwork and insurance cover, product testing and export permits, and then decide whether to use truck, rail or air to move the goods to port.
Does the exporter try to handle it all himself or pass it to a logistics supplier? Does he try to cope with imponderables like transport failures, booking foul-ups and accidents, or would using a freight distribution centre be a better idea?
Stuart St Clair, CEO of the trucking industry’s peak body, the Australian Trucking Association (ATA), advises exporters to talk first to Customs agents who deal with freight movements. He also suggests searching the internet to find transport companies with specialist freight capabilities.
“Some specialise in container traffic, others in bulk, so check out their expertise,” St Clair suggests. “Price is important, but so is the safe and timely delivery of your products to port. So go for operators with special skills in getting exports to the ship or plane.”
This can be a boon to smaller exporters in regional areas, like Westend Estate wines at Griffith in southern NSW, which sells to 30 countries. Paul Lenon, Westend’s export manager, says the company exports either in full container loads (sent by rail to Melbourne) or in LCL part-container loads by road to Melbourne or Sydney.
“The inland freight system has improved and the entire process is getting easier and more efficient,” he says. “Our LCL shipments are palletised and shrink-wrapped, and full container loads go on slip sheets,” Lenon says. “The wines are packed in cardboard boxes with dividers and we try to fill our containers to maximum capacity so nothing moves around. There’s an occasional delay when there is not enough LCL freight to fill a full container.”
Across the NSW-Victoria border at Mildura, the Angus Park/Sunshine group exports dried fruit and citrus juices to Europe, Asia, and the Pacific. Export manager, John Orwell, says he relies on the company’s locally based logistics supplier to consign loaded containers to Melbourne where they are transferred to trucks at an inter-modal exchange about a kilometre from Port Melbourne.
“They are now working on a rail link right into Port Melbourne that will deliver uninterrupted 24-hour road and rail access,” Orwell says.
Rail currently carries 75 percent of freight on Australia’s major east-west route but only 20 percent of east coast freight. The major problem seems to be the need to move rail freight through Sydney, turning the Melbourne-Brisbane run into a 34-hour journey.
David Hensher, director of the Institute of Transport Studies at the University of Sydney, says urban congestion is a major factor in escalating distribution costs.
And the Australian Industry Group (AIG), a not-for-profit association aimed at helping industry become more competitive, has released a report suggesting Australia’s “inefficient transport network” is pushing up manufacturing costs and undermining competitiveness.
But things could be about to start changing.
Freight Infrastructure
The Federal Government has put a $120 million downpayment on an ambitious plan to build a ‘steel Mississippi’ rail link between Melbourne and Brisbane through inland Victoria, New South Wales, and Queensland, which will meet Australia’s east-west rail line at the NSW mid-west town of Parkes.
A new company called Asciano Ltd—formed from the infrastructure assets of the mammoth Toll Holding group and which controls a hefty slice of Australia’s rail freight business through Pacific National as well half the nation’s docks and cranes—will be based at Parkes and the town is set to become Australia’s freight rail hub.
The inland north-south link is part of the Commonwealth’s $22 billion Auslink transport plan which predicts enormous rail freight growth on the east coast. The rail industry is also demanding that government policy favouring trucks over trains be changed so that rail gets to carry a bigger share of freight.
The National Transport Commission (NTC) says it wants a single economic regulator to oversee freight pricing to create a level playing field between road and rail.
“Road transporters support a competitive and efficient rail industry that pays its way,” says Stuart St Clair. “We know rail has to double its freight load over the next 20 years just to stay in the same position it occupies today, but the growth in freight must be shared among all modes of transport.”
He says a lot of thought is going into the question of how Australia will deal with a projected massive increase in road freight, doubling by 2020 according to the Bureau of Transport.
“Do we build more trucks and put them on roads where they are already in competition with millions of cars?” St Clair asks. “The answer is no. We need to build bigger and safer road vehicles that will be more productive without putting more traffic on the roads. That’s the direction the industry is moving in and we can expect greater productivity to be passed onto our customers.”
Deputy Prime Minister Mark Vaile backs the idea of bigger freight vehicles on our roads and has warned state transport ministers that it is now time for trucks the size of road trains to be brought to the outskirts of cities like Sydney to help ease predicted increases in traffic congestion.
And in June, NSW Premier Morris Iemma announced that a freight terminal will be built in western Sydney to transfer freight from rail to roads while opting not to impose a freight charge on trucks using the state’s main port at Botany. The Victorian Government has also begun letting contracts for a major freight rail upgrade in that state.
Significantly, the AIG survey pointed to the growing popularity—and cost effectiveness—of outsourcing logistics which, it said, saved Australian firms about $640 million over two years.
Distribution centres are opening all over Australia and are playing an increasing role in the export planning of many exporters, large and small.
Phillip Taylor, chief operating officer of Northline, a major freightforwarding operator, says distribution centres can be a boon to smaller exporters, especially those doing business in Asia.
“Say you’re a smaller, self-owned business like a winery that needs to manage its export stock very carefully,” says Taylor. “Sending one full container load overseas would probably deplete the entire stock of a small winegrower, but by putting the stock into one of our distribution centres we can complete the company’s orders and send them off very quickly in loads that may be much less than a full container load.
“Companies can keep their products in Australia rather than having them sit somewhere overseas for long periods of time. This considerably reduces risks, allows for the careful servicing of markets, and lessens the lead time in getting products to market.”
Northline’s network of integrated distribution centres in almost all Australian capitals is reporting growing interest among exporters in moving their goods through Perth and Darwin because both are currently operating below capacity and export processing is fast and efficient.
Taylor explains that Northline does a lot of business with Indonesia, generally moving goods by road and rail from southern Australia to its Darwin distribution centre. The Indonesian Government has established its own clearance centre in Darwin so goods can be cleared prior to export.
“Operating as an international freightforwarder round the country with our own equipment allows us to pick and chose the best solutions for our clients, who export everything from food to ceramic tiles, business machines to mining equipment,” Taylor says. “By using a distribution centre that can handle a broad range of goods under cover, an exporter opens up his business to a much broader customer base. Our software system allows clients to manage their stocks through a web interface and lets them see instantly what products they have in specific locations.
“They can send requests to us, generate their own consignments, and we do the work for them while they track and trace every element of their shipments right through to final delivery. It also allows them to operate as close as possible to a just-in-time consignment strategy—and demand for it is growing very fast.”
Some exporters face very different conditions that demand unique solutions to their export transport needs, such as Riversun, an umbrella global sales organisation established by small and medium-sized citrus exporters and packers in South Australia’s Riverland and Victoria’s Mildura Fruit Company.
Each year it ships out 2.4 million tonnes of citrus to the United States from regions around the Murray River. The flow of citrus is so massive that it charters its own ships at $1.7 million a time to move product from Port Adelaide or Port Melbourne to San Diego on America’s west coast.
Riversun’s managing director, Steve Allen, explains that to get the company’s oranges, lemons and grapefruit to port, it organises every truck it can get its hands on—usually a fleet of up to 30 local vehicles—to collect fruit from orchards and cool-rooms at 20-minute intervals for delivery to the wharf in Adelaide or to the nearest rail-head for railing to Melbourne. “AQIS inspection takes place when the fruit is packed and it doesn’t hold us up. Our pallets are lifted and manhandled at least 50 times before they are delivered to our American buyers so packaging is probably the most important element in ensuring safe and efficient delivery to the wharf and on to market. Each pallet of fruit is worth about US$2,500. Who would jeopardise this for the sake of saving 20 or 30 cents on packing costs?”
Who indeed. Stuart St Clair wants exporters—especially in the food and beverage industry—to acknowledge the need for superior packaging and to work closely with transporters to ensure they get it right.
“The fact is that exporters don’t always consult as much as they should about the transport process and they need to understand that they can benefit from talking to people with expertise, like transport operators,” he says.
Necessary Paperwork for Shipments
There are more than just trucks, trains, and planes involved in getting your exports shipped overseas. There’s a paper trail as well. To begin with, an exporter needs:
*An export declaration number (EDN), available online from Customs, for “unrestricted” goods.
*Before an EDN for restricted agricultural exports is issued, you first need a permit number from AQIS (along with sanitary or phytosanitary certificates, where necessary).
*Now move your goods to port and prepare draft invoices for buyers with shipping details and a goods description so Letters of Credit can be prepared and the products cleared through Customs overseas.
*Give your financing bank packing lists, insurance and origin certificates, commercial invoices (with comprehensive details of the goods, sellers and buyers, shipping arrangements, EDNs or export permits, total price and—separately—freight and insurance costs.
*Banks and buyers may need more details about packaging materials for quarantine officials plus a copy of the packing list if they’re in containers. A copy also goes inside the container.
*Consider 12-month marine insurance to cover all shipments during a year.
*Generate a Certificate of Australian Origin and have it authenticated by an authority like a state Chamber of Commerce.
*Give port authorities your pre-receival advice (PRA) certificates and interim receipts (forwarding instructions for sea freight and Letters of Instruction, or SLI) for air-bearing vessel and booking numbers, shipment dates, container particulars and details of the seal placed on the container when they’re ready to move to the wharf. Without a PRA your shipment won’t be allowed on the wharf.
*Give your shipping company or airline interim receipts with forwarding instructions, embarkation port details, export destinations, aircraft or ship names and a goods description so Bills of Lading or Waybills can be prepared.
Your container of exports can now be loaded on-board and shipped off overseas.
