Over the past year, as global uncertainty stemming from war and terrorism has curtailed transport in many regions of the world, Australia and New Zealand have been an exception to transportation problems. Far from most of the globe's conflicts, relatively safe from terrorism, and blessed with cutting-edge transportation infrastructure, Australia and New Zealand actually have witnessed a growth in shipping links over the past year. Though some dangers to transportation in Australasia (the common term for Australia and New Zealand) remain, the region remains among the most stable transportation environments on earth.

Australasia does confront several transport problems. This year's outbreak of Severe Acute Respiratory Syndrome (SARS) in Asia, combined with the continued economic sluggishness in the U.S., the main market for Asian exports, could depress shipments of goods from developing Asia through Australasian ports and waters.

The U.S. continues to absorb foreign goods and capital at a rapid pace, but ultimately this is going to slow down, says Robert E. Scott, international economist at the Economic Policy Institute, a think-tank. And, some companies in Australia and New Zealand worry that a slowdown in Asian exports could force shipping lines to raise their cargo rates.

What's more, several air carriers serving Australia and New Zealand recently have hit a rocky patch, putting air transport links in the region in question. Over the past six months, struggling United Airlines has eliminated its service between North America and New Zealand, while Air New Zealand, the nation's flagship carrier, has posted the worst quarterly losses in its history.

As a solution, Air New Zealand has proposed an alliance with Qantas, Australia's largest air carrier. However, some executives and companies shipping air cargo through Australasia worry that this will give the new Air New Zealand-Qantas entity a monopoly over air links, allowing them to raise prices for travelers and for cargo. Yet optimists note that the market for air cargo in Asia has been strong over the past year, so other competitors, sensing the profit potential, likely will emerge to challenge Air New Zealand-Qantas's cargo routes.

Most dangerous to transport, the region has become rife with pirates. According to the International Maritime Bureau (IMB)'s Piracy Reporting Center, which is based in Malaysia, piracy has made the waters off Indonesia, Australia's near neighbor, the most dangerous in the world for merchant ships. In fact, the center reported that in the first three months of 2003 alone, there were 28 recorded pirate attacks against ships in Indonesian waters. In February, the Australian government and the IMB warned all merchant ships to exercise extreme caution in these areas and to adopt safety measures including maintaining anti-piracy watches when transiting channels like the Gaspar Straits, purchasing satellite tracking systems, and installing Secure-Ship, an electric fence that prevents would-be attackers from boarding a vessel.

Yet despite the potential for piracy, Australasia remains an extremely stable area, due largely to its geographic isolation from most of the world's trouble spots. Because of the relative safety of Australian and New Zealand waters, ports, and airlines, as well as the region's strong economic growth--over the past two years, Australia has posted the highest growth rates of any developed economy--shipping firms actually have been expanding their Australasia operations.

In the past year, French shipping line Delmas has established a new service between Australia and Europe, while South Africa-based Mediterranean Shipping Company, the world's second-largest container shipper, has launched a new weekly service between the region and Europe, via the Suez Canal and the Middle East. Mediterranean Shipping said that it would make Lyttelton, a port on New Zealand's South Island, the main hub for its service between Australasia, Asia, and Europe. Meanwhile, P&O Nedlloyd has in the past six months also introduced a new service between Australasia and Europe; P&O boasts that its service uses ships that can carry nearly twice as many containers as other lines' vessels.

Not to be outdone, a consortium of major lines including Maersk Sealand, the world's biggest container shipper, announced in April that it would inaugurate the first direct container service from southern Australia to the United States and Canada. Maersk is further catering to Australasia by offering, later this year, faster shipping services from New Zealand to the east coast of the United States. To prepare for this potential increase in shipping, several major New Zealand and Australian ports, already among the most technologically advanced in the world, are planning expansions.

The Port of Melbourne, which expects trade through its docks to nearly double by 2010, is planning to expand its docks and deepen its channels. "There is a sense of urgency" in the need to upgrade, Melbourne Port managing director Chris Whitaker told reporters. Meanwhile, Auckland, New Zealand's largest port, is installing high-tech wireless telecommunications technology that will provide pilots entering or exiting New Zealand waters with live shipping departure and arrival information.

This shipping growth is likely to continue. Sydney's port operator, for example, has projected that trade through the port will rise in 2003, and the longer-term trends appear favorable as well. Australia's treasury predicts that the country's economy will grow by more than 3 percent in 2003, solid growth in a weak global economic environment. Furthermore, Australia and New Zealand have been global leaders in trade and transport liberalization.

Australia recently inked a free trade agreement with Singapore and is currently negotiating with the U.S. over a bilateral free trade agreement, which might come into force in 2004. According to Singapore's ambassador to the U.S. Chan Heng Chee, both Canberra and Singapore should profit significantly from the Singapore-Australia trade deal, which will also help promote multilateral trade deals in Asia. In addition, if the U.S.-Australia trade deal goes through--a strong possibility, since Australia and America have developed closer relations on account of their joint participation in the Iraq war--the two countries would probably slash tariffs worth nearly billions of dollars, significantly expanding trade in beef, dairy, and other agricultural products, and dwarfing trade deals the U.S. is inking with Chile, Singapore, and other small nations.

Sidebar: Down Under Transport Deals for Biotech & Pharm Take Hold
By Patrick Burnson

Australasia has been the scene for a number of significant transport announcements of late, particularly in regard to the movement of high value pharmaceutical and health care products. Here are few of the most recent developments:

Weber Distribution, a third party logistics provider has been contracted by pH Beauty Labs, a manufacturer of health and beauty products, to assist with the distribution of its product line to major drug and retail chains in both Australia and New Zealand. The beauty product maker uses the distributor's warehouse facility in La Mirada, California.

According to a spokesman for pH Beauty Labs, "Weber handles the warehousing and order staging for all of our products, as well as the logistics for approximately 330 shipments per month, which are shipped throughout the western United States and internationally," adding, "Weber is able to master pack and apply UPC and barcode labels to meet our customers' specific requirements. They also have 24-hour staffing, which would be difficult and expensive to replicate in our own facility."

Availability of spare parts and fastest possible delivery are crucial success factors to many industries, especially the sensitive health care sector. Siemens Medical Solutions uses Schenker's Integrated Logistics Center in Singapore to ensure parts supply throughout Australasia.

Siemens and Schenker have established an IT interface between Siemens' SAP system and Schenker's warehouse management system, facilitating permanent online order processing. The goods are picked and packed within 30 minutes. Schenker uses barcode scanning to identify products and capture serial numbers.

Singapore is the logistics hub with the highest flight frequency within the region. Schenker handles the overnight deliveries to Australia and New Zealand within their own airfreight network. For other destinations, a courier service is being used.

Schenker's 24/7 emergency services ensure order processing as well as pick & pack and deliveries on weekends and public holidays.

Lansinoh Laboratories, which provides products for new mothers, relies on four UPS business units to support its growth while it focuses its internal resources on product development and sales.

UPS Logistics Group provides inventory and order management. UPS Freight Services provides global transportation management, including ocean freight and customs brokerage of Lansinoh's products from its manufacturing sites in Thailand and the U.K. to its offices and customers in Australia. UPS Capital, meanwhile, provides a secured revolving line of credit for use as working capital. UPS also will continue to provide small package delivery services.

"After years of being buried in operations, it was a tremendous relief to know that we could turn those important functions over to someone with the capabilities of UPS," said Lansinoh founder Resheda Hagen. "That means our group can focus their energies on developing quality products while UPS handles our distribution needs as we grow." The company has not only tripled in size in the last five years, but also expanded internationally.

The vast resources available through UPS contrast sharply to the early days of Lansinoh in the mid-1980s, when Hagen and her husband would fill customer orders at their kitchen table. Their first product was a lanolin treatment for nursing mothers. Their offerings now include such diverse products as nursing pads, breast pumps, milk storage systems and other products that promote breastfeeding. The products are sold to major retailers and healthcare facilities in the Australia.

"UPS provides a completely integrated solution that is flexible to our business needs and allows us to grow, both here in the U.S. and abroad," Hagen added. Lansinoh is one of a growing number of healthcare companies that UPS serves through its supply chain services portfolio.