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To say that 2020 brought changes to the way we live, work and shop like we've never experienced before would be an understatement quite like no other.
Not only has the rapid and unexpected changes caused by the COVID-19 pandemic transformed our day-to-day lives, it has also fundamentally changed how business operates across all industries, with a big spotlight on retail and its associated supply chain.
As Australia and the world started entering into global lockdowns in early 2020, in order to abide by new social distancing requirements, time spent at home was massively increased; the traditional office was swapped for home offices, kitchen tables were turned into classrooms and online stores became the preferred option for shopping, as opposed to the traditional brick and mortar varieties.
The reduction in foot traffic to stores saw an unexpected growth to eCommerce in Australia, as retailers and shoppers alike had to shift how goods were sold and purchased. In Australia, in the period up until 30 April 2020, online purchases were up 41% year-on-year, with the 8 weeks following the 11th March 2020 (the date COVID-19 was declared a pandemic by the World Health Organisation) showing online sales growth of 80% year-on-year.
With personal safety so topical in the current climate, Clint Wolff is a trusted authoritarian in constant demand. He founded Innovative Security and Data, in 1999, and has over 25 years of experience as a security sector expert, with a mandate to protect property and build safer communities. Clint’s Nationwide and NZ clients include major banks, distribution, manufacturing, retail and wholesale businesses, the Australian Defence Force, and some of Australia’s wealthiest families and A-list celebrities. Deeply respected for his corporate professionalism and commitment to deliver robust and state-of-the-art security solutions that work, Clint was also engaged as an International Consultant to the Indonesian Government for a $100m+ street surveillance project.
Clint Wolff, Managing Director of Innovative Security & Data
While e-commerce deliveries were increasing in Australia prior to COVID-19, the pandemic has accelerated the trend, resulting in an increase in expectation that goods will be delivered to doors as quickly as possible.
The pandemic has emphasised the importance of logistics as a key cog within the economy, and occupiers will have to further embrace changing consumer preferences.
Collier International
“The pandemic has emphasised the importance of logistics as a key cog within the economy, and occupiers will have to further embrace changing consumer preferences”, Collier International executives stated in a recent Q2 Industrial and Logistics market update.
Like other industries, the Australian industrial and logistics sector has not been immune to recent economic uncertainty. However, so far, they have proven to be resilient while underpinned by the rapid growth of eCommerce products and grocery items.
As business for the industry has continued throughout the pandemic, it’s not been ‘business as usual’, as new issues are being faced and considerations made for the future. In order to support the rebuild of our economy in a post- covid world, smart industrial businesses need to protect their operations through and against the pandemic and other potential dangers.
Nirovision recently sat down and spoke with Clint Wolff, Managing Director of Innovative Security and Data, to discuss how the pandemic has affected the Australian Warehousing and Logistics Industry, and what actions smart businesses are taking in order to increase protection, protect staff and business as a whole.
Prior to COVID-19, the Transport and Logistics (of which Warehousing falls under) sector in Australia had estimated annual revenue of $102.87 billion, with an operating profit of $10.4 billion in 2018, representing 8.6% of the nations GDP. Currently, the sector employs approximately 1.2 million people.
By contrast, eCommerce in Australia holds a 1.8% share in the nation’s GDP. It’s anticipated that consumers’ use of eCommerce services will continue to increase beyond the current public health crisis. In 2020, it was estimated that revenue for online shopping would increase by 11.1%. Prior to covid, this increase was only anticipated to be 2.4%.
Prior to the pandemic, The National Transport Commission projected that Australia’s freight task will grow by 26% by 2025, outpacing the growth of population. In 2016, the domestic freight task grew by 50%, whilst the countries’ population increased by 18% over the same period.
It’s become clear that unless corrective steps are taken, the safety and efficiency of Australia’s supply chains are at enormous risk. Recent rapid change in consumer behaviour and supply and demand as a result of the pandemic has highlighted that logistics is an end-to-end supply chain process, involving much more than just the transportation of goods.
While not immune to the impact of COVID-19, the Australian Warehousing and Logistics Industry have demonstrated a robust resilience as supply and demand for eCommerce products and grocery items surged in the early days of the pandemic.
Aside from warehouse supply shortages and demand on postal and courier services, businesses within the Industry were also having to manage a reduced workforce, as staff began working from home, as well as remote management of who is on and off site; ‘the biggest pain point’, according to Clint Wolff.
While businesses were having to quickly manage the immediate impacts of the virus on the industry, consideration for longer-term impacts beyond the crisis were also being considered.
The importance of the Australian freight and logistics industry in day-to-day life has never been as universally recognised as it has been during the past year, as the coronavirus has kept many people around the country inside their homes.
The ongoing effects of the COVID-19 pandemic has seen an exponential increase in parcel movements and eCommerce deliveries, which has put a huge strain on the pre-existing Australia post delivery system, as well as other freight and logistics businesses.
The pandemic quickly required Australian freight and logistics companies to change the way they operate in order to meet new patterns of demand and customer expectations.
In order to support the change in volume of parcel movement, Australia Post established an additional 16 parcel processing facilities across the country, employing more than 600 people.
Following the receipt of Submission 16 on 21 April 2020, the Australian Government announced temporary regulatory relief to Australia Post until 30 June 2021. This temporary relief has enabled Australia Post to retain thousands of posties to support the parcel growth, which in turn, will help to preserve these roles for longer.
A staple of the Australian weekend, in the face of the pandemic, Bunnings became something else entirely.
While clothing and footwear retailers like Myer and David Jones were seen heavily discounting excess supplies of office wear and cocktail dresses at the onset of the pandemic, other retailers like Kmart, JB Hi-Fi, and Bunnings were seen to be missing out on millions of dollars worth of sales after they’d fail to secure sufficient stock to keep up with the booming demand of consumers spending more time at home.
In the early weeks of the crisis, Bunnings noted a few distinct waves of buyers behaviour. To begin with, customers were buying protective equipment and cleaning supplies; then it was home office supplies; and finally home improvement products, as many Australians started to keep themselves occupied, or avoid “Zoom embarrassment” as Australian Retailers Association Chief Executive Paul Zahra referred to increase in homewares sales.
While keeping shelves stocked has been a challenge, the biggest task for Bunnings, according to Chief Executive, Mike Schneider, was keeping Bunnings staff and customers safe. In-store, physical distancing measures were introduced, including security guards monitoring the number of people in store; limits of customers in aisles; queueing procedures and (perhaps most noticeable) no sausage sizzles out the front.
Outside of the brick-and-mortar stores, Bunnings underwent a complete digital transformation. Within ten weeks, local delivery and a drive-and-collect service were added, which minimised the level of interaction between customers and staff; an app was launched that allows customers to find products in-store; and the Bunnings power pass trade account offering was ramped up, allowing Tradespeople to avoid queuing at registers.
While the effects of the virus haven’t been kind to all of Wesfarmers conglomerates, the sales growth for Bunnings in April 2020 was ahead 5.3% year on year.
Recent research commissioned by Nirovision found that 92% of supply chains had a COVID safe plan.
However, the challenge thereby faced moving forward is maintaining integrity, particularly as case numbers remain low. Clint Wolff suggests that risk is still high, especially as deliveries and products are still being transported and coming into warehouses and logistics work environments. It is therefore, the due diligence of management teams; encouraging the workforce to adhere to protocols while enforcing where necessary.
42% of warehousing and logistics respondents said that they believe everything will return to normal in less than 2 years, making them the most cautious group in the industry sectors.
Fortunately, tough initial covid-related restrictions in Australia has meant that we are now able to control any small outbreaks of the virus.
If a larger-scale outbreak was to occur in Australia again, we’re in a much better position for handling restrictions and should be able to continue to operate normally, however, this requires a level of readiness, particularly by way of contact tracing and risk management.
I have seen many companies that have been affected by COVID-19, but I also know of many that have benefited.
Clint Wolff, Managing Director of Innovative Security & Data
In the week following the World Health Organisation’s declaring of COVID-19 as a pandemic, online purchases in Australia increased 28% year-on-year, before continuing to climb and peaking at 135% year-on-year the week after Easter.
In the early stages of lockdown, the initial focus for shoppers was essential items. Then, as uncertainty increased, ‘panic buying’ set in, which saw mass amounts of groceries, pharmaceuticals, hygiene products, alcohol and toilet paper
being purchased. However, as government communications on the restrictions became more clear and people understood what could and couldn’t be obtained so easily, a more measured approach towards buying essentials was seen.
Following the initial panic, as Australians began to settle into life at home full-time, online purchases shifted towards entertainment, self-improvement, DIY, comfortable clothing and gifts for connecting with loved ones.
As a result of self-isolation, the majority of people were receiving online orders at home. In fact, 91% of all deliveries went to home addresses in April 2020; a 9% increase in comparison to the whole of 2019.
As a result of the pandemic and increase in online orders and deliveries, shoppers have become more particular than ever before about how their parcels are delivered. Parcel lockers have remained a popular choice (however, CBD usage of lockers was down 25% in the week commencing 3 May 2020, when compared to the week commencing 8 March 2020 – this shortfall was covered by an increase of 25% of parcel lockers used outside of CBD locations), as has Click and Collect, which has continued to grow; Click and Collect Shoppers grew by 7% between July 2019 and March 2020 when compared to the 2019 financial year.
Despite the quickly-adopted solutions to face-to-face delivery methods, caution still plays a part throughout the entire supply chain process; requiring businesses within the industry to introduce further workplace and workforce safety and security measures.
While differing by state (NSW Premier Gladys Berejiklian has warned of compulsory QR codes, while VIC State Governments have passed the responsibility of contact tracing on to businesses), businesses around Australia are being strongly encouraged to keep records that support contact tracing.
While the majority of the demand is pointed towards hospitality venues, facilities that have persons in attendance for more than 15 minutes (inclusive of staff) are being encouraged to keep records.
Given that there is a large array of technologies available, businesses shouldn’t have any troubles self-managing their contact tracing.
While we are lucky to have a smaller risk of COVID outbreaks in Australia at the moment, I believe there is still a high risk to the warehousing and logistics sector with new products being delivered into your workplace everyday from international sites. Its important to continue to protect your staff through such a process as visual contact tracing, especially when you don't know the safety steps that have been taken in other areas of the supply chain.
Clint Wolff, Managing Director of Innovative Security & Data
"... shift in supply chain strategies from a "just in time" inventory systems to increased levels of safety stock to bolster the need for industrial inventory and keep development pipelines active..."
Luke Crawford, Associate Director at Colliers International
The increase in new technologies and growth of eCommerce continues to transform the supply chain practices. In 2018, 864 million parcels were shipped in Australia (an increase of 10% YOY); this figure is expected to grow to one billion parcels per year by 2021.
Customers’ buying habits are also changing, with expectations increasing; customers are willing to pay more to have their online purchases delivered faster.
The increase in demand as a result of the pandemic has resulted in a ‘shift in supply chain strategies from a “just in time” inventory system to increased levels of safety stock to bolster the need for industrial inventory and keep development pipelines active.’ Luke Crawford, Associate Director at Colliers International.
As Maurice James, Chief Executive of ASX-listed company Qube recently stated; ‘COVID-19 has certainly heightened the importance of efficient supply chains’.
"...COVID-19 has certainly heightened the importance of efficient supply chains..."
Maurice James, Chief Executive of ASX listed company Qube
"...I believe the companies that create flexible work environments; combining work from home and in-office will do well in 2021 and beyond. It's so important to know how is on site and who is off site, this is why contact tracing is so integral."
Clint Wolff, Managing Director of Innovative Security & Data
In the year that showed just how quickly and easily a workplace could shut down while demands elsewhere increase, it comes with little surprise that the protection of warehousing and logistics workplaces and its people is absolutely paramount to continued production of goods.
New workplace safety initiatives such as temperature checking and recording, touchless check-in and contact tracing will become highly relied upon in ensuring the safety of warehousing and logistics facilities and its people.
While execution of workplace safety and contact tracing is yet to be made compulsory, forward planning and ensuring that details are compliant minimises the risk posed to workplaces, should the facility become exposed to the virus.
According to the Colliers International Q2 Market Update, online retail sales has grown 31.9% in the year to June 2020, an increase from 13.6 in January 2020. Organisations have quickly adapted to the changing market conditions, and recent demand has been placed on businesses focusing on future-proofing their supply chain capabilities.
Demand for custom-made goods has increased , which means that products are directly shipped from factories to customers, negating the need for warehouse space.
In the same vain, the lockdown period has elevated the demand for data centres as cloud storage requirements have grown rapidly. Anticipatory logistics provides a solution whereby big data analytics can help determine which logistic services will be needed in the future and in which areas, allowing retailers to predict orders based on prior customer behaviours.
Additionally, the Colliers International Q2 Market Update also revealed that co-warehousing and other flexible warehousing options are being explored in Australia to help cater towards large flucturations in demand and a shortage of viable space in key markets.
Similar to many other industries, the COVID-19 pandemic elevated the need for digital transformation. At current, the Warehousing and Logistics industry is undergoing rapid transformation, led by new technologies and automation.
Automated Logistics and Warehousing
Automation is helping the industry to meet heightened product demands, seasonal peaks and changing customer delivery expectations. Likewise, the adoption of robotics enables the industry to meet the growing demands of same-day delivery by being more efficient.
Digital Supply
Chain insightful interpretation of data offers a plethora of benefits to warehousing and logistics supply chain partners, including improved monitoring and surveillance technologies, better coordination and communication of connected fleet, dynamic route planning and improved delivery time resulting in an increase in customer satisfaction.
The National Action Plan for the freight and supply chain sector also considers the implementation of new technologies and re-skilling of the workforce a priority.
Use of Blockchain Systems
The use of blockchain technology systems will significantly increase the traceability of goods along the supply chain, adding value by identifying the origin of goods, price, date, location and quality and state of products. For new technologies like this to be implemented, there is a requirement that the workforce be properly equipped with the right skills that will enable them to maximise efficiency and ensure compliance.
While the collection of data in the workplace isn’t a new practice – businesses have always had to keep records of who is in their building in order to meet compliance requirements and governance obligations, not to mention it protects staff, inventory, information and assets – the recent push for tighter workplace protection regulations post-covid has meant that the collection of data has increased. As a result of this, there is the potential that staff could become concerned about their privacy.
As workplace safety initiatives start becoming enforced, it falls within the duty of care of the workplace to ensure that staff understand why these protocols are being implemented and what information is being collected. The Australian Privacy Act and Principles lay out clearly defined rules and obligations which all companies must comply with when collecting and using and storing personal information.
As Australia begins the long road to recovery following the economic downfalls that accompanied the coronavirus, there are promising signs that the job market is making progress.
According to SEEK, Australia’s top employment marketplace, new figures have revealed that manufacturing, transport and logistics are among the top industries for employment opportunities, which has seen a 59% increase in job advert growth when compared to April 2020.
"This pandemic has resulted in greatly slowing down the supply chain and the next big challenge to protecting your workforce is to boost morale and spirits. As we move into 2021, it's important that we ensure our staff, workplaces and assets are secured; this is where we need to pay attention..."
Clint Wolff, Managing Director of Innovative Security & Data
While the immediate impact of COVID-19 in Australia has lessened, industrial businesses are keen to continue to protect their operations as they don’t have the option of remote working. Therefore, it’s essential that we keep Australia open for business throughout not just this pandemic, but any other potential dangers.