SOME LOGIC ON LO­GIS­TICS

OVER­COM­ING NEW ZEALAND’S UNIQUE F&L CHAL­LENGES

Exporter - - FRONT PAGE - By Glenn Baker.

Look up the mean­ing of the word lo­gis­tics in a dic­tionary and it reads ‘de­tailed plan­ning and or­gan­i­sa­tion of

a large op­er­a­tion’. For New Zealand, I can’t think of any big­ger, more com­pli­cated on­go­ing op­er­a­tion than the coun­try’s trade with in­ter­na­tional mar­kets. It is the lifeblood of the econ­omy, and there­fore of all our lives.

We may only be a small coun­try, but few na­tions ri­val us in terms of de­pen­dence on in­ter­na­tional trade. Ours is an ex­port-driven, com­pet­i­tive econ­omy with ex­ports of goods and ser­vices ac­count­ing for just un­der 30 per­cent of GDP (Source: World Bank, 2014).

From our com­par­a­tively iso­lated po­si­tion in the South Pa­cific, thou­sands of in­no­va­tive, en­tre­pre­neur­ial en­ter­prises do busi­ness with part­ners and cus­tomers world­wide – and the lo­gis­tics in­volved is stag­ger­ing in its com­plex­ity and its ef­fi­ciency.

He­len Masters, VP South Asia for In­for ANZ and ASEAN, a com­pany that au­to­mates crit­i­cal pro­cesses for in­dus­tries through cloud ap­pli­ca­tions, sums the sit­u­a­tion up suc­cinctly when she says the in­creas­ing glob­al­i­sa­tion of New Zealand’s man­u­fac­tur­ing in­dus­try has been a boon for lo­cal com­pa­nies but a real chal­lenge for lo­gis­tics man­agers across dif­fer­ent sec­tors.

“As an ex­am­ple, even small food man­u­fac­tur­ers are likely to source raw ma­te­ri­als at home, process in, say, Sin­ga­pore and sell to cus­tomers in the China. With more than 50 per­cent

of New Zealand’s man­u­fac­tur­ing bound for over­seas mar­kets, lo­cal lo­gis­tics man­agers need to man­age an on­go­ing phys­i­cal flow of ma­te­ri­als us­ing a com­plex work­flow that in­cludes sched­ul­ing, quo­ta­tion, ware­hous­ing, re­sourc­ing and sup­plier man­age­ment.

“This big ex­port fo­cus and ge­o­graphic re­mote­ness means New Zealand man­agers have some of the most chal­leng­ing lo­gis­tics jobs any­where in the world,” she says.

Pro­duc­ing goods and ship­ping them by sea or air to world mar­kets, or sourc­ing goods for con­sump­tion here, is by no means a sim­ple straight­for­ward process. And there are al­ways ma­jor is­sues that can po­ten­tially put a span­ner in the works.

Peter Webb, CEO of In­de­pen­dent Ver­i­fi­ca­tion Ser­vices (IVS), a lo­cal con­tainer-han­dling sup­port com­pany heav­ily in­volved in train­ing and cer­ti­fi­ca­tion, reels off just some of the is­sues cur­rently im­pact­ing the mar­ket as he sees it. They in­clude: • A lack of good tal­ent in the lo­gis­tics

in­dus­try, par­tic­u­larly in ware­hous­ing. • In­creased com­pli­ance charges. • The in­creas­ingly com­pet­i­tive in­ter­na­tional mar­ket­place (re­flected in fluc­tu­at­ing dairy prices). • Peak sea­son car­rier sur­charges – specif­i­cally ship­ping lines. Start­ing around Septem­ber 1st it gen­er­ally means in­creased con­tainer rates with­out any im­prove­ments in ser­vice. • De­clin­ing con­tainer vol­umes world­wide – threat­en­ing con­tainer ser­vices into New Zealand. • The ex­change rate and ris­ing dol­lar val­ues against the USD – re­sult­ing in lower sale prices for ex­porters. • New Zealand’s trucking in­dus­try strug­gling to re­cruit qual­ity and com­pe­tent long haul driv­ers. • Space lim­i­ta­tions in Tran­si­tional Fa­cil­i­ties re­gard­ing con­tainer place­ment and in­ter­nal ware­house stor­age.

Con­tainer han­dling is­sues

Specif­i­cally on con­tainer han­dling, Webb be­lieves the big­gest chal­lenges are around higher costs and en­sur­ing com­pli­ance while keep­ing op­er­a­tions run­ning smoothly.

Im­porters are find­ing it more ex­pen­sive to run their Tran­si­tional Fa­cil­i­ties. While for ex­porters the new Ver­i­fied Gross Mass (VGM) re­quire­ment means con­tain­ers must now be weighed be­fore en­ter­ing the port of ori­gin gates. Ex­porters who didn’t have the con­tainer weigh­ing equip­ment have had to ei­ther in­vest in some, pay the freight com­pany to take the con­tainer to a weigh­bridge (which can mean de­lays and ex­tra costs) or book a mo­bile con­tainer weigh ser­vice.

“One of the main rea­sons the VGM re­quire­ment was im­ple­mented is to avoid ac­ci­dents, dam­age to equip­ment and dan­ger­ous ves­sel load­ing,” ex­plains Webb. “The new regime was wel­comed as it ob­vi­ously in­tends to pro­tect peo­ple and cargo, but at the same time, there was un­cer­tainty about what to ex­pect.

“The ports have been strict. Many were al­ready weigh­ing the con­tain­ers, so the ad­just­ment was small. Oth­ers have opted to use a mo­bile weigh­ing ser­vice, which has proven to be more con­ve­nient and re­li­able than the weigh­bridges.”

Webb says his IVS in­spec­tion team is work­ing closely with cus­toms bro­kers and trans­port op­er­a­tors to en­sure that VGM obli­ga­tions are met.

“The IVS Con­tainer Weigh sys­tem is trans­portable and flex­i­ble and al­lows IVS per­son­nel to weigh each cor­ner of the con­tainer to en­sure even load­ing has oc­curred, whilst as­sist­ing the ex­porter to meet their le­gal obli­ga­tions un­der the new leg­is­la­tion.”

From De­cem­ber 16, new Tran­si­tional Fa­cil­ity Stan­dards (MPI-STD-TFGEN) will come into ef­fect.

“To co­in­cide with th­ese changes MPI has an­nounced that the Tran­si­tional Fa­cil­ity Op­er­a­tor train­ing course will ex­tend to a full day,” ex­plains Webb. “This move by MPI sets a prece­dence that all fa­cil­i­ties ap­proved un­der the Biose­cu­rity Act are to be com­pli­ant.”

IVS an­tic­i­pates that some im­porters may pre­fer to utilise other means of re­ceiv­ing sea con­tain­ers. There is, for ex­am­ple, the Multi-Tran­si­tional Fa­cil­ity Ser­vice, where im­porters can still re­ceive low risk con­tain­ers on site.

“IVS sends an in­spec­tor to ev­ery con­tainer clear­ance, so there is no need to train staff,” says Webb. “The in­spec­tor takes all the equip­ment re­quired and deals with any con­tam­i­na­tion found. We also take care of all re­port­ing to MPI.”

Webb’s ad­vice for im­porters and ex­porters is to call IVS, CBAFF or your freight for­warder if you’re un­sure about any pro­cesses or re­quire­ments.

“En­force­ment and penal­ties are a real risk and the reg­u­la­tors won’t ac­cept ex­cuses if the lack of pro­cesses, lack

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