Ansett / US attack hits Australian supply chain

Ansett Australia collapseMajor delays of critical goods to industries

The transport of critical goods to Australian industry had been severely affected by the collapse of Ansett and the US terrorism attacks, Logistics Bureau director Maurice Sinclair said today.

“Many requests from big companies, in mining, agriculture, manufacturing, are based on access to emergency spares to keep machinery operating,” he said.

“Other forms of transport, such as road, rail and small commercial planes, will have to be explored to meet the demand but at a higher cost.”

Mr Sinclair said US-made goods bound for Australia had suffered major delays because of the grounding of all US flights and a backlog of orders was building.

Combined with the Ansett collapse, this has severely hit the Australian supply chain.

“Failure to procure the goods in a short time frame can cost big companies millions of dollars through loss of production,” Mr Sinclair said.

“Without a viable air freight alternative the lead time associated with procuring goods through the more conventional methods of rail and road will be considerable.”

This in turn will require some companies to hold an inventory of high dollar value spares to compensate the “just in case” risk.

“More inventory means reduced asset utilisation and greater deployment of funds into non-cash working capital, all of which have an impact on profit.”

Mr Sinclair said the overnight parcel delivery service market relies on passenger planes, and although Qantas will take on a bulk of Ansett’s deliveries should the freight business not be resurrected, there would be an impact on these services as well.

“Despite the boom in electronic messaging there is still a major demand for the overnight delivery of documents and parcels, regionally and interstate,” he said.

“The collapse of Ansett freight will affect both domestic and international services as other major international freight forwarders often rely on company’s like Ansett for feeder services into capital cities.”

This may provide opportunities for smaller air-based transport companies to step in and deliver these commercially-essential services.

“Given the limited competition in the domestic air freight market, the Ansett demise will place pressure on what customers will pay for these services.”

 

Best Regards,

Rob O'ByrneRob O’Byrne
Group Managing Director
Email: [email protected]
Phone: +61 417 417 307

About Logistics Bureau
Logistics Bureau is a management consultancy specialising in logistics, the supply chain and e-fulfillment. Logistics Bureau’s portfolio boasts multinational and Australian blue-chip companies and household names, and the company holds strategic alliances with market leaders around the world.