Companies based in Victoria, can find sales growth in NSW and QLD is adding extra costs to their logistics.
Interstate line haul costs can make or break businesses that typically send larger type products, where cubic weight measurements play a significant factor.
History shows that Victoria’s commercial real estate prices have remained steady (Colliers Industrial Report, Q4 2014), however freight & logistics costs have risen against standard CPI increases when shipping products to both NSW & QLD. The Businesses that are positioning there freight & logistics hub in NSW are taking advantage of the decreased freight costs within NSW & QLD, whilst also increasing efficiency with lead time improvements across the eastern sea board.
Benefits of NSW based freight & logistics businesses:
- Overnight road lead time into Victoria and Queensland
- Reduced freight costs into NSW and QLD
- Same day service available into Sydney, which has Australia’s largest population.
Challenges faced by NSW based freight & logistics businesses:
- Higher storage prices, as commercial real estate prices are generally higher than VIC.
- Longer lead time into WA.
- Higher costs for containers ex Ports (especially for outer West sites)
The typical freight comparisons are shown below, when switching freight & logistics operations from VIC to NSW:
Example based on customer with $100,000 freight spend.
| State | Ex VIC $ | Ex NSW $ | Change % |
| QLD | 30,000 | 20,000 | -33% |
| NSW | 35,000 | 20,000 | -43% |
| VIC | 20,000 | 30,000 | 50% |
| WA/SA | 15,000 | 15,000 | 0% |
| Total | 100,000 | 85,000 | -15% |
Shifting warehouse operations requires in depth planning to reduce costs and order processing downtime. A good strategy is to fulfill all orders to stores/customers ex incumbent warehouse and run stock down. With new containers being sent to the new interstate warehouse, once stock has run down, arrange for full load transfer to the new site.