The new Regional Comprehensive Economic Partnership signed by Australia and other Asia-Pacific countries is not expected to help alleviate high volume demand on trade which is forecast to continue escalating beyond 2021.
According to the Australian Government Labour Market Information Portal, the transport, postal and warehousing sector was projected to grow 6.6 per cent in the five years to May 2024 even before the so-called COVID-19 pandemic.
Last November, ministers from 15 countries signed the Agreement which Australia is working towards ratifying this year. Despite reluctance on behalf of India to join RCEP it is still the world’s largest free trade agreement.
Driven by the Association of Southeast Asian Nations (ASEAN), which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, RCEP, after eight years of negotiating, has brought in Australia, China, Japan, New Zealand and South Korea into the regional trading block.
Nor could it have come at a more vital time, as a spectre of trade uncertainty hangs over the global economy.
While the new trade agreement covers 30 per cent of global GDP, it is expected to apply further pressure on providers in logistics and supply chains whose businesses will struggle under the new agreement if they fail to pivot when the occasion demands it.
The Australian Bureau of Statistics confirmed that parcel delivery companies were reporting 70-80 per cent growth in volumes.
In October the national retail turnover rose 7.3 per cent while sales in Victoria, which had the harshest government imposed lockdowns, were up 11.9 per cent.
According to the World Economic Forum, demand for urban last-mile delivery, fueled by e-commerce, is expected to grow to 78 per cent by 2030, leading to a 36 per cent increase in delivery vehicles in the world’s top 100 cities of which Sydney and Melbourne are both counted.
Just last year Salesforce reported that contactless delivery had seen a huge uptick, with 37 per cent of US consumers now opting for it.
In the US, total online sales reached $US73.2 billion in June year-on-year, up 76.2 per cent compared with $41.5 billion the year previous.
This historic surge in e-commerce adds immense pressure on logistics operations. Because of these unique circumstances consumers have been driven to buy online rather than in store which has given the logistics sector and especially last mile providers little time to assess customer demand.
In the new fluid sink or swim environment they have subsequently been compelled to solve shortages in staffing, transportation, distribution capacity or employee PPE as they occurred, sometimes all at once, which has, in turn, brought about delays in deliveries.
Most of these vehicles are operating relatively short haul, inside a 100km radius.
In fact the 2021 estimate for online shopping making up 12 per cent of total Australian retail was reached as early as April 2020.
Total online sales during the month of Easter in 2020 was higher than in the month of November 2019.
The reduction of heavy vehicle movements in cities, often touted by governments as a virtuous undertaking on our behalf, is fast invalidated when viewed through the lens of those accelerated volumes.