The Hidden Cost of Automation to Businesses

The Hidden Cost of Automation to Businesses

September 13, 2022 0 Comments

As a small-business, we are well aware of the various costs required to operate, however an area which is starting to have an increased impact is automation – with many businesses likely finding that what they might save in terms of time and labour, is quickly eaten up in terms of cost.

There is no question that automation throughout the shipping and logistics sector has created efficiencies in processing time and reduced the amount of manual data input required.

We’ve been able to become a paperless business, and created efficiencies in terms of data input, however I don’t think the wider public is aware that automation is a pricey process, and it’s becoming more expensive each year.

Automation is now used throughout the supply chain to lodge a wide variety of documentation including container details, load and unload data, vessel scheduling and customs and quarantine clearances, but each piece of electronic data generally attracts some kind of fee.

While there’s a clear time and labour benefit to not having to manually lodge all that data and cross-check reference numbers, we generally have to pay for each individual software program, and even then, we sometimes have to pay a per transaction cost.

It’s not just our industry, this is being experienced across all sectors.

And unfortunately, at some point companies are unable to simply absorb more fees, they have to be passed on to the customer.

As businesses increasingly move toward becoming paperless, and there’s an increased appetite for digital documentation, returning to manual processing simply isn’t an option.

We’re caught between a rock and a hard place at the moment. IT providers are basically able to charge what they like, and we don’t have any other choice but to pay.

In some cases we can’t even change to alternative software because systems ‘talk’ to one another, and changing one might mean disruptions somewhere else down the line.

There a number of fees and charges related to automation processes;

  • Licenses: Licence fees for each different software program being used, whether it be an annual or monthly subscription. Most of these licenses attract an STL which is a Seat & Transaction Licence – so this means a ‘per log-in’ fee, meaning you’re charged for every employee who needs an account as well as per transactions.
  • Booking Fees: Where we could previously simply return empty containers, the task now attracts a ‘booking fee’ which has risen from $0 to around $80 in the past five years.
  • Customs and Quarantine Lodgement Fees: Lodging customs & quarantine entries online also attracts a multitude of fees, even including quarantine documents to declare automatic entry for approved cargoes.
  • Container / Shipment Tracking: The Electronic Data Interchange (EDI) required to track shipments from full containers, to smaller LCL shipments & also airfreight all have a per container or shipment transaction fee.

You can see how the costs can and do quickly add up for a small business, and can add an extra $100-$150 dollars for each invoice generated.

These are costs we just can’t absorb, and so unfortunately, they have to be reflected in the fees we charge our clients.

There’s also a downside to automation, because despite all the efficiencies generated, there remains a risk and cost to businesses when technology crashes.

We all know the impact when software crashes or glitches, both in terms of disruption and lost time and business, and this is simply another cost businesses cannot afford.

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