CONSEQUENCES OF LCL TIME SLOT BOOKINGS

In recent months, Freight & Trade Alliance (FTA) have received concerns from members in terms of costs associated with the delivery of LCL consignments.

This has raised the question as to whether vehicle booking systems will provide the required remedy as they have done elsewhere in the supply chain in managing the collection and dispatch of sea freight containers and import / export consignments.

Up until about eighteen months ago, vehicle booking systems have had limited uptake at LCL and airfreight depots.

While some depots are notably operating smoothly without this level of technology, several are at times struggling with unacceptable delays in servicing transport operators.

Other depots have demonstrated that their vehicle booking systems are achieving cost savings, operational efficiencies and a safer environment minimising truck waiting time.

Based on preliminary discussion with key stakeholders, the following observations are made:

WAITING TIMES

Recent examples of 90 to 120 minute delays remain at some larger facilities that have adopted vehicle booking systems.

This is more the exception, with most transport operators agreeing that waiting times have improved at depots deploying this technology.

Furthermore, notifications are provided ensuring there are no impediments to release and largely avoiding futile trips.

This is a positive development meaning that transport operators are generally seeing a reduction in wait time costs that would otherwise cascade down the supply chain.

TIME ZONE SLOTS

Current LCL vehicle booking systems mandate one house bill of lading per slot booking.

This poses significant inefficiencies for transport operators who would otherwise collect multiple consignments on one truck and commonly, deliver to a general geographic zone.

As crazy as it sounds, we have heard repeated accounts where a truck will enter a depot, pick up as many house bill consignments they can book for one time zone, leave the depot, and immediately queue up again for their next time zone to collect the remaining consignments.

Some transport operators claim they are constantly operating trucks at half capacity due to the need to meet the time slot disciplines. Whilst acknowledging that wait times have improved, many claim that the additional associated administration and the inability to maximise multi-load and consolidate freight has added to overall operating costs.

To counter this, it has been suggested by some depots that transport operators should consider an afternoon 'sweep' (utilising larger vehicles to collect multiple house bill consignments per time zone when plenty of slots are generally available), return to their own facility, 'cross-dock' consignments and make next day deliveries.

Again, feedback on this proposal by transport companies varies from it being 'unworkable', due to the risks of mishandling and damaging freight, to being possible with significant process re-design and substantial additional cost.

COSTS PER SLOTS

This is an area of significant concern.

We have witnessed over recent years that stevedores and empty container parks have introduced vehicle booking systems fees from what started as a few dollars to now exceeding $140 per container per facility.

Evidence from competition regulators suggests that stevedores (and presumably empty container parks) are paying less to their commercial client shipping lines and instead are recovering costs from third party transport operators. Foreign owned shipping lines are clearly the winners of this arrangement, paying less to their contracted suppliers with savings contributing to multi-billion dollar profits.

Similarly, it appears as though depots are also taking advantage of this opportunity of using a vehicle booking system to recover a percentage of operating costs from transport operators rather than their commercial client being the freight forwarder.

Based on our experiences, you do not have to be Nostradamus to visualise a depot fee that is currently a $10 to $15 per house bill will grow to be $50 to $100 within a few short years.

FTA and the Australian Peak Shippers Association (APSA) will continue an advocacy position to the Productivity Commission that cargo handling facilities (including stevedores, empty container parks and now depots) be regulated to enforce operational cost recovery from their contracted commercial clients.

CONCLUDING REMARKS

It is likely that LCL vehicle booking systems and industry practices will continue to evolve, and over time, will deliver similar operational benefits to that we have witnessed at our waterfront.

Whilst reported efficiencies delivered to depots and freight forwarders is a positive outcome, to be truly embraced by all of industry, there needs to be a move away from the revenue design feature that mandates access charges be paid up front from third party transport operators that have no influence on service or price.  

Paul Zalai - Director FTA | Secretariat APSA | Director GSF