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1 $7.50 Logistics & Transportnz THE OFFICIAL PUBLICATION OF CILT NEW ZEALAND Volume 11 Issue 4 JUNE 2013 NEW ZEALAND S FREIGHT TASK Connecting road, rail, sea and air for productivity Developing a shared blueprint for improving NZ freight supply chains Wellington paving its way to capture transport-related growth South Pacific strategic architecture

2 LOGISTICS & TRANSPORT NZ IS THE OFFICIAL JOURNAL OF THE CHARTERED INSTITUTE OF LOGISTICS & TRANSPORT NZ ON THE COVER KiwiRail Freight s forestry business is experiencing strong growth in response to international demand for export logs, and the key to maintaining this growth is to continue to build capacity see page 4. Photo by Michael Kilgour 13 8 Contents Guest editorial: Greg Steed 1 Small country, smart thinking 2 Growth through investment and improved performance 4 The CILT UK Knowledge Centre 5 Developing a shared blueprint for improving NZ freight supply chains 6 Looking at freight through a different lens 8 Trucks, certificates of fitness and public reassurance 9 FIGS now has data for all of Supply chain management as a team sport 12 Wellington paving its way to capture transport-related growth 13 Value delivery to customers through network optimisation 14 Letter to the editor 15 South Pacific strategic architecture 16 4 In the next edition The editorial team welcomes expressions of interest for submitting an article for the September 2013 edition, which will focus on funding Auckland s transport future. Contributors should in the first instance contact the editorial convenor, Murray King ( murray.king@xtra.co.nz) to discuss their article. Deadline for the September 2013 edition: 23 August CILT NZ National Office: PO Box 1281, Shortland Street, Auckland Tel: , Fax: Advertising Contact: CILT national office Tel: , info@cilt.co.nz Editorial Contact: Lynne Richardson, Aston Publishing Ltd Tel: , lrichardson@astonpublishing.co.nz Published under contract by: Aston Publishing Ltd PO Box , Birkenhead, Auckland 0746, New Zealand Fax: lrichardson@astonpublishing.co.nz Disclaimer: This publication is the official magazine of the Chartered Institute of Logistics and Transport New Zealand Inc (CILT NZ). It is published quarterly. All material appearing in this publication is copyright and may not be reproduced without the permission of CILT NZ. The views expressed in this publication are not those of the editorial committee, CILT NZ, its council, officers or Aston Publishing Ltd, unless expressly stated as such.

3 June BIGGER SHIPS Guest editorial Greg Steed WHAT S HAPPENED to the bigger ships? In August 2010, the New Zealand Shippers Council released a report calling for bigger ships to call at New Zealand ports. It identified economic value, infrastructure investment requirements (mainly around ports), supply chain vulnerabilities and constraints faced by all those involved in the supply chain for the next 10 years. As a case study to answer questions about the feasibility and cost benefits of bigger ships, we focused on bigger ship services between New Zealand and South East Asia, being the biggest route by volume. The net benefit after all costs (including infrastructure investments and aggregation costs) was estimated at $144 million per year from having ships between 5000 and 7000 TEU operating on the South East Asian trade route calling at two ports in New Zealand by 2015/16. It was also recognised that if New Zealand ports are not capable of handling bigger ships, these benefits will not be realised and there is a risk that shipping services would hub through Australia increasing net supply chain costs by $194 million per year. So the real value of bigger ships to New Zealand is $338 million per year. So how are we positioned now to cater for bigger ships? The answer is we are proceeding forward diligently. Are the ports making progress? The main requirement is for the four major ports in Auckland, Tauranga, Lyttelton and Dunedin to invest to become big ship capable. All four will be needed by 2020 even at modest cargo growth rates. Progress has been mixed on an individual basis: Ports of Auckland updated development plan released subject to consultation; funding to be confirmed Port of Tauranga capital plans and funding in place; berth extension complete and a new crane commissioned; resource consent for dredging finally achieved March 2013 Lyttelton Port of Christchurch earthquakes have required remedial work and altered development plans; funding to be confirmed; resource consent for dredging in process Port Otago development plan finalised; While ports are readying themselves to become capable of handling bigger ships, surface transportation modes need to plan for the increase in cargo movements that will inevitably arise. Road, rail and coastal shipping will all have a role to play. funding confirmed; resource consent appeal close to agreement. Can cargo volumes support bigger ships? The answer to this is yes. The Bigger Ships report analysed data from Statistics NZ for the 2008 calendar year, then used growth forecasts supplied by a number of sources. From there we chose mid-points of 4% for export growth and 5% for import growth to estimate future volumes. To update this, we obtained high-level volume figures for the 2009, 2010 and recently the 2011 years. Total container growth being exports is estimated to have increased 10% in the 2009 year, 11% in 2010, but decreased by 4% in Imports have decreased by 4% in the 2009 year, but increased by 11% in 2010 and 5% in Growth is therefore on track. Is non-port infrastructure investing for bigger ships? While ports are readying themselves to become capable of handling bigger ships, surface transportation modes need to plan for the increase in cargo movements that will inevitably arise. Road, rail and coastal shipping will all have a role to play. Roads have been allocated $10.7 billion over 10 years, with the Roads of National Significance grabbing the lion s share. Specific improvements dedicated to freight have not been numerous, but freight has shared in upgrades or new corridors for all types of vehicles. The linkages required to meet container exchanges of over 4000 TEU need reviewing and planning to ensure gridlock is prevented, particularly at the four major ports. The use of inland ports and night running must be considered. In 2010, rail track capacity was sufficient to move significantly larger volumes of cargo on the existing network. Since then, KiwiRail has made significant investments both above and below tracks, particularly on the line between Auckland and Tauranga. New passing loops and coupling equipment upgrades have been steadily completed. At the same time, new rolling stock and locomotives have been purchased. Coastal shipping is likely to increase with big ships. The introduction of a new vessel by Pacifica is encouraging. Infrastructure investments are therefore heading in the right direction. Are there ships of the right size and configuration available to meet our needs? According to Alphaliner, 69% of the global container fleet vessels are larger than 4000 TEU, and if the ships in the order book are all delivered, the total rises to 78%. In the 4000 to 7500 TEU range, the figures are 38% currently in service, but only increasing to 40% as ships greater than 10,000 TEU dominate ordering. The economies of scale associated with larger fuel-efficient ships are too compelling to resist for ship owners, as well as expansion in the Panama Canal to allow 10,000 TEU ships to pass through. If we look individually, there are ships being delivered right now that would suit our trade. The 7450 TEU Maersk Laguna was delivered in December 2011, eighth of 16 ships. It has 1700 reefer plugs and is aimed at the East Coast South America trade lane. Hamburg Sud also has similar ships. Bigger ships are on their way and New Zealand can look forward to benefiting from them. Greg Steed has been the chairman of the NZ Shippers Council since January 2008; he can be contacted at greg.steed@xtra.co.nz

4 2 Logistics & Transport NZ CLOSING THE GAP Small country, smart thinking Although as an economy we are small and remote, we are relatively smart and in recent years there has been an increasing level of smart thinking demonstrated across the logistics and supply chain sector Turnaround Plan. Fronting up with large amounts of money isn t easy, even at the best of times. I suspect therefore that having the necessary confidence to invest in New Zealand s rail operation would not have been easy, especially given that the fallout from the global financial crisis was still at the forefront of everyone s thinking when key decisions needed to be made. Had not visibility as to the magnitude of the pending freight task been available in the form of the NFDS, would we have received the commitment required to enable investment in key assets such as locomotives and wagon renewals? Regulations and systems Supply chains aren t only about physical assets; industry also needs the right regulation and systems in place. The government has shown a lead on this front also, with the NZ Customs Service progressing their Trade Single Window (TSW) initiative. TSW is a major component of a system that ultimately will enable parties involved in international trade and transport to submit clearance data that is required by our border agencies electronically, just once, through one entry point. On the regulation front, progress is also being made. Maritime NZ (with support from the New Zealand Shippers Council) championed the cause of New Zealand exporters when it came to an IMO (International Maritime Organisation) proposal for the compulsory weighing of shipping containers. If not familiar with the issue, Denmark, The Netherlands and surprisingly Australia tabled a proposal with the IMO requiring the mandatory weighing of every shipping container prior to loading. There is ample justification for clamping down on erroneous declaration of conby Nigel Jones NEW ZEALAND is the most remote country in the developed world. Compared with key competing nations, our supply chains lack scale, flexibility and responsiveness. Our export supply chains are disadvantaged by the balance of trade in volume terms we export more than we import. In relative terms they have to carry high costs, and competing economies are becoming more competitive every day. This means New Zealand needs to pursue the most effective and efficient supply chains practicably possible, not to improve our competitive position, but to ensure it is not eroded any further. We must constantly work just to keep the international playing field level (or as near level as we can hope for). Although as an economy we are small and remote, we are relatively smart, which in theory should work in our favour when it comes to collectively innovating to close this gap. In recent years there has been an increasing level of smart thinking demonstrated across the logistics and supply chain sector. Future potential Leading the charge six years ago was the Ministry of Transport when they undertook the National Freight Demands Study (NFDS), for the first time developing a consolidated long-term view of the country s potential future freight activity. It is good to see that the NFDS is to be refreshed over the coming months. Building upon and complementing the NFDS, the MoT has also established its Freight Information Gathering System (FIGS). This system was developed to provide an overview of containerised freight movements around New Zealand. Building upon information currently provided by Statistics New Zealand, the system makes valuable new information on freight movements available for the first time (more on FIGS on pages 10 11). The role good-quality, reliable information and data have to play in helping us work and think smarter should not be underestimated. I had the privilege of being part of the team that researched and then wrote the New Zealand Shippers Council s report, The Question of Bigger Ships. Having the sort of data now being collated and published by the MoT to hand then could have dramatically reduced the time to produce such a piece of work. Enabling smarter planning and strategy through access to good data is a positive start, but action needs to follow. Rather than excuses and procrastination from its supply chain community, New Zealand and its economy need to see progress that will deliver the efficiencies that will keep the country competitive. Infrastructure investments It s really encouraging therefore to witness how the port sector has responded to the discussion relating to bigger ships. It has to be appreciated when looking at large, step-change infrastructure initiatives that approvals can take a while. Undertaking dialogue and initiating the resource consent processes must start years before any particular asset may eventually be required. It has literally taken years, but finally the country now has two ports with the required consents to dredge, hopefully helping to future-proof New Zealand Inc s links with the world. Action hasn t only come from the ports. Reinforcing the value of quality information has been the New Zealand government s preparedness to support the KiwiRail

5 June tainer weights. Safety through the entire supply chain has to be non-negotiable, and unfortunately around the world there are numerous occasions when safety has been jeopardised through blatant, at times intentional mis-declarations being made. The approach initially put forward, however, would have penalised all and added costs, even for those exporters who can and do already declare weights accurately. The final form is still pending, but at a meeting late last year, a provision was put forward for an alternative to include the use of a certified method approved by the competent authority of the State in which packing of the freight container was completed. Although perhaps resulting in a further audit process, this will enable the majority of New Zealand exporters who are reputable and able to measure weights to avoid the costs and inefficiencies that would have otherwise been associated with the weighing of every individual container. International freight It is not only transport-related departments who have been active. We ve also had the Productivity Commission undertake its International Freight Transport inquiry. Historically, supply chain practitioners perhaps with some justification felt freight was left off the agenda when it came to government policy (freight doesn t vote), yet here we were, second cab off the rank with the Productivity Commission s report. A key recommendation made by the Productivity Commission was the proposal to reform the Commerce Act, removing liner shipping s exemption from collective rate-setting legislation. The proposal welcomed and supported by shippers requires shipping companies wishing to collaborate to fix prices or limit capacity to demonstrate to the Commerce Commission that there will be a public benefit which will outweigh any anti-competitive effects. Equally (and perhaps more importantly), the Productivity Commission report acknowledged the efficiencies and benefits realised by shippers from carriers being still able to enter into operational arrangements such as vessel-sharing agreements. As legislation and supporting guidelines are developed, of critical importance to New Zealand importers and exporters over the coming months is that the Productivity Commission s original intent is not lost or eroded. Whatever form the final guidelines take, they have to recognise the role vessel-sharing arrangements have to play ensuring adequacy of services to and from New Zealand. This needs to be achieved by still enabling carriers to develop and revise vessel-sharing arrangements with a level of agility and responsiveness that reflects the dynamics of the international world of shipping, while at the same time avoiding a costly and potentially bureaucratic compliance regime either of which would not be in New Zealand s interests. Collaboration Using good data and quality information to ensure we have the right infrastructure and regulations in place are great starting points, but collectively these are only enablers (be they very important ones). Operationally, business needs to ensure the supply chain is then utilised and optimised appropriately. A more collaborative approach towards how we manage freight and use infrastructure is the only way this will be achieved. If New Zealand is truly serious about being a global player, its shippers need to come together and take the New Zealand economy to the world. Acknowledgment of this challenge was behind Fonterra and Silver Fern Farms coming together to form Kotahi. Perhaps unique in the world, Kotahi represents a key piece of the jigsaw that will help lift the performance of the country s supply chains. It s only by working collaboratively through arrangements such as this, across a variety of importers and exporters, that New Zealand will be able to create the necessary efficiencies along the entire supply chain. Through thinking Photo courtesy of the NZ Customs Service NZ Customs Joint Border Management System (JBMS) will ultimately provide the Trade Single Window, through which importers and exporters can deal directly with government agencies, and Customs and the Ministry for Primary Industries can more effectively manage risks for goods crossing the border and working smarter, reducing waste and improving utilisation, New Zealand will ultimately have more sustainable and international competitive links with its global markets. Compared with only six or seven years ago we ve come a long way, not only defining what is required to future-proof our supply chains, but taking some significant steps to deliver them. As a logistics and supply chain community, we can look back with some pride as to what has been happening, and the progress that is being made. We shouldn t, however, sit back as there is still much to be done. New Zealand is and will continue to be a country whose economy is more dependent in relative terms upon seaborne trade than most other comparable or competing economies. Just as many in our primary industries view their businesses and investments on a multigenerational basis, then so must the logistics and supply chain community too. This will mean we must at times be prepared to challenge populist debate on topics such as port footprints and the corridors serving them. For trade to operate, we need access to adequate infrastructure and capacity, not just today but long term. Just as efforts are going into enhancing our infrastructure, effort is needed to ensure existing assets that are hard to replace are protected. Nigel Jones is the general manager of strategy for NZ milk products, Fonterra, and a fellow of CILT NZ; he can be contacted at nigel.jones@fonterra.com

6 4 Logistics & Transport NZ KIWIRAIL FREIGHT Growth through investment and improved performance by Leonard Sampson The new DL locomotives have enabled KiwiRail to meet increased demand in two areas of strong growth forestry traffic out of the eastern Bay of Plenty and MetroPort services from Tauranga to Auckland Photo by Michael Kilgour THE NUMBERS tell a very positive story for KiwiRail as our freight business, constituting approximately 65% of KiwiRail group revenue, continues to grow both revenue and volumes. Overall, there was an 8% growth in freight revenue in the first half of this financial year (FY), which in turn followed a 25% increase in freight revenue over the previous two years. Over the same period, there has been an increase of just under 3 million tonnes in rail freight volumes from 14.7 million tonnes in FY 2010 to 17.4 million tonnes in FY The biggest success story is in the import/export market segment which as at 1 May was 12% ahead of the same period last year and has seen positive growth of 34% from Our forestry business is also experiencing strong growth, showing a 12% increase in the same period in response to international demand for export logs, along with the development of log-hubs in the lower North Island and increased volume from the eastern Bay of Plenty as harvests mature. Unfortunately, over the past 12 months our bulk sector has not achieved the same results, largely due to the Solid Energy closure of the Spring Creek mine. This, however, has been partially offset by growth in domestic coal and strong early A dedicated log train operating on the key eastern Bay of Plenty route season bulk milk volumes which have now obviously finished with the drought in the North Island. Whilst we have also seen some growth in our domestic market segment, this has been flatter than in the export sector a reflection of the subdued retail market in New Zealand. Nevertheless, we have recorded a 6% increase over the previous 12 months, and there are promising signs of further growth as existing customers commit more volumes to rail and returning or new customers use our services. Locomotives This growth across all our markets is driven by the provision of additional capacity through investment into new equipment, technology and infrastructure, and the resulting improvements in our performance. The key to maintaining this growth is to ensure we continue to build our capacity and strengthen our performance. Investment already made in new rolling stock has led to significant improvements in the on-time performance needed for customers to be confident of a reliable rail freight service. The new DL locomotives have proven their worth over the past 18 months with their performance being amongst the best in our fleet. They have Photo by Michael Kilgour enabled us to meet the increased demands in the two areas where we have seen strong growth forestry traffic out of the eastern Bay of Plenty and MetroPort services from Tauranga to Auckland. A further 20 locomotives are currently in production and due to arrive in New Zealand mid-year. Their arrival will allow the deployment of DLs to the lower North Island to support growing demand through those regions. It also allows the transfer of locomotives to the South Island and retirement of older locomotives. A further 10 DLs are proposed for the next financial year, with the longer-term intention to build the fleet to 80 locomotives over the next five to 10 years. Containers and logs Already tonne container flat wagons are in operation around the network, and a further 300 will be in the country and in use for the 2013 peak. The intention is to continue to build the fleet progressively, adding a year over the next five years to form the backbone of our fleet. Complementing these has been the provision of intermodal equipment that gives us the flexibility to meet seasonal demands across differing market sectors and the specific requirements of customers. Our long-term strategy to build a standardised container wagon fleet complemented by intermodal containers is already driving operating efficiencies as we are able to merge seasonal demand from the import/export and domestic market sectors to provide both greater capacity and improved utilisation of wagon assets. Further log bolsters, a proven technology widely used throughout Europe, have been acquired to meet demands for growing forestry traffic complementing the fleet of 100 wagons we already have in service. The bolsters allow for up to three bunks of short logs on a 15 m deck, fitted onto

7 June older container wagons, providing a costeffective option to cater for increasing export log demand. Partnering for freight As we continue to see Key New Zealand ports invest in new infrastructure, along with larger vessels becoming the norm in global fleets, it is inevitable that the effects will cascade to New Zealand. From a rail perspective, our role is to continue to partner with the country s major exporters and shippers to ensure we are able to provide the appropriate investment in both infrastructure and rolling stock in the right areas to meet further consolidation of freight to meet these larger vessels. Leonard Sampson is the general manager, sales, for KiwiRail Freight Log bolsters allow for up to three bunks of short logs on a 15 m deck, fitted onto older container wagons, and provide a cost-effective option to cater for increasing export log demand The CILT UK Knowledge Centre by Murray King ONE OF the benefits of CILT NZ membership is access to the CILT UK Knowledge Centre. To gain access, you become an e-member of CILT UK (unfortunately though through the payment of an additional fee of 40). The Knowledge Centre has a normal bricks and mortar library The John Williams Library which is at Corby in Northamptonshire in England, somewhat inconveniently located for New Zealand members. But it does lend books, which might be useful to us. However, the Knowledge Centre offers extensive online services, with 4600 journals and 37,000 journal abstracts, 1400 country economic reports, and 5200 fulltext industry reports. It also has access to a worldwide database of 10,000 companies. So if you want to find information on Maersk, there s a company profile. So too is there one for Fonterra, along with a 35-page report from Datamonitor. There are further links to periodical articles relating to each company, and even to academic journal articles. So if you want to know about Characteristics of Ice Cream containing Flax Seed Oil, you can find it there. Media and legal There are 2200 full-text newspapers from 97 countries, including 112 from New Zealand, not only the majors, but also provincial newspapers and give-aways. The papers are right up to date, and there is a 90-day archive. There is a legal database, and even legal advice, though this is likely to be UK oriented. A list of links to other transport websites (freely accessible), and to various logistics, supply chain, and transport glossaries of terms; book reviews; and discounted transport-related publications complete the offering. As well, the membership includes a weekly current awareness bulletin, albeit with a UK focus. Staff are available to help with queries and searches, and users report that the online resources, including this help, is what makes the Knowledge Centre valuable to them. Further details are to be found at CILT NZ s national office can assist with arranging membership. And look out for Global Logistics and Transport News an online TV channel in conjunction with the UK ITN channel. This is promised to give news and insights into the key issues in transport and logistics. Check out from June this year. Logistics and Transport New Zealand wishes to formally acknowledge the following organisations for their national sponsorship of CILT NZ. It is because of this support that this forum for transport and logistics professionals is possible.

8 6 Logistics & Transport NZ A COORDINATED APPROACH Developing a shared blueprint for improving NZ freight supply chains by Marinus LaRooij The use of high productivity motor vehicles (HPMVs) is seen as a quick win to achieve greater freight efficiency Photo courtesy of the Road Transport Forum NZ IT HAS been over a year since the Productivity Commission released its report into international freight transport services. One of its key recommendations was for the government to play a greater role in coordinating investment planning across the freight transport system. The freight system, being the infrastructure and services that make New Zealand s freight supply chains work, contains many different public and private components. Each component has its own decisionmakers, which include those that own the freight (freight producers), organise its storage and distribution (logistics providers), move it (transport operators), as well as the private and public sector organisations that provide infrastructure and services to enable commercial activity (port companies, KiwiRail, local, regional and central government). Because our freight system is complex with many decision-makers, there is a risk of what the Commission called coordination failures. These may result in poor or inadequate investment, missed efficiency opportunities, or insufficient/excessive regulation. The Commission s call for a government coordination role was a response to submissions it received asking for greater certainty around the government s long-term intentions for investment and regulation. Greater certainty would give industry a better idea of what investments they could make to improve productivity and grow their businesses. The Commission found that the public sector also needed to understand private sector intentions to plan its investment. This more coordinated approach was a middle ground between having an atmosphere of investment uncertainty, which could reduce business confidence, or a return to centralised planning where well-intentioned public agencies sought to mould how the private sector manages its freight task. Developing a national freight discussion The NZTA has been involved in coordinated freight planning processes around the country in the Upper North Island Freight Story development led by the Upper North Island Strategic Alliance (UNISA), as well as in Central New Zealand and the South Island (both facilitated by the NZTA). The processes have involved engaging through workshops with people from across the freight system to discuss the challenges and opportunities they face, and the strengths and barriers they see in their businesses and regions. Through this we have gained a much richer insight into the critical questions that need to be addressed to ensure our freight system is effective, efficient, resilient and safe. Much of the feedback was about local or regional issues, such as providing more efficient access to and from ports and their economic hinterland. However, a number of critical questions are emerging that are national in scope see below. These questions may not be new, but through bringing everyone into the discussion with good information we can better test our assumptions. Challenges and opportunities What will New Zealand s freight task look like in 30 years? The forecasts are for a 100% increase in freight moved by This squares with the growth in heavy vehicle kilometres travelled over the last 10 years (about 2% on average every year). The Commission recommended the need for better freight data to better inform planning, so the Ministry of Transport has work underway on this. But to better understand this data, we will need insights and information from decision-makers across the freight system. What impact would changes in international shipping and ports have on the land transport system (including coastal shipping)? Most agree that significant changes to international shipping services are coming (if not already happening). But there is little agreement on how fast change will happen, the form it will take, and its impact on access to markets, the cost of moving freight and the investments needed in the freight system to respond. How do we improve the options businesses have in moving their freight, including recognising the value of competition and modal choice? All the modes in New Zealand s freight system (air, coastal and international shipping, rail and road) have a role in getting goods to market. Most see the value in the modes going forward, but how do we ensure better connectivity between the modes, as well as encouraging greater choice? Importance of the strategic freight network Another major question is how do we deliver a high-performing strategic freight network? Investing in the strategic freight network and better connecting New Zealand is something the government has already identified as a priority.

9 June The NZTA is delivering improved connectivity on the strategic national network through delivering the Roads of National Significance (RoNS) programme. The RoNS will provide significantly improved network capacity and enhanced safety on critical parts of the state highway system, while also improving connectivity to ports, airports, areas of significant freight production, storage/distribution and consumption. Those moving freight, together with other road users, will have improved travel times, greater travel reliability, reduced fuel costs and a safer transport system. KiwiRail is also focusing, through the Turnaround Plan, on improving capability and capacity on key rail lines. Building on these improvements is the next step. How can we take further advantage of these network improvements, identify further significant blockages that remain, and ensure the strategic freight network is protected for its critical freight function? Another major question is ensuring land-use planning (especially private sector investment in new freight facilities) is integrated with network planning. Knowing what New Zealand s future industrial land-use needs are, and how this land should be integrated into the strategic freight network, is a significant question. Fewer truck trips to move more freight We are also hearing about the value of moving more freight with fewer truck trips. Using high productivity motor vehicles (HPMVs being heavier and/or longer trucks) is seen as a quick win to achieve greater freight efficiency. A review of HPMVs, undertaken in 2011, concluded that these trucks allow for productivity improvements of around 20% decrease in truck trips (for over-mass HPMVs) and 14% decrease in trips (for over-dimensioned HPMVs). These efficiencies include reduced fuel consumption, vehicle operating costs and driver hours (per unit of freight moved). HPMVs also provide safety benefits as fewer truck trips reduce the crash risk exposure of these trucks on our roads. Accelerating the uptake of HPMVs is therefore something that can be done now. The current National Land Transport Programme (NLTP) has signalled investment of around $45 million over three years to deliver a strategic HPMV network across the country. This network of 4500 km of state highways and local roads will allow HPMV access up to 62 tonnes. While these kilometres represent only a small proportion of the overall network, they account for around 50% of heavy PORT LOCAL ROAD The NZTA s freight planning approach takes a whole of supply chain perspective that recognises that the private sector makes many of the key decisions about how freight is moved road freight movements. Consolidating this freight onto fewer truck trips will have significant economic and safety benefits. For the remainder of the road network, in cases where heavier HPMV access is not feasible, the NZTA has developed the 50MAX HPMV concept. This innovative truck design allows for the carriage of an extra five tonnes of freight, with minimal infrastructure upgrades. The design of 50MAX HPMVs, which uses nine axles to spread out the load (the ninth axle making up the other tonne), will mean its impact on pavements and bridges will be comparable to the current 44-tonne trucks operating across the network. 50MAX HPMVs have the potential to provide safety and efficiency benefits through reduced truck travel in areas where the road infrastructure is not suitable for full HPMVs. Work is underway with local councils and industry to further develop this concept. Smarter regulation and moving beyond compliance Another major national theme is the idea of developing a new regulatory paradigm that encourages, and even rewards, operators for making the right choices and operating at best practice. Land transport regulations are designed to ensure public safety, protect infrastructure from damage and enable fair market RAIL STATE HIGHWAY STATE HIGHWAY LOCAL ROAD competition. In developing a refreshed regulatory model we have the opportunity, particularly with the use of intelligent transport systems (ITS), to better focus on areas of significant risk. We also have the opportunity, working with the NZ Police, local government and transport operators, to better recognise and reward compliance and free up resources to focus on non-compliance. While there is much to work through, the economic and safety benefits could be significant to industry and most importantly to the New Zealand public as a whole. A coordinated approach Our task ahead is to ensure an ongoing coordinated approach that ensures the exchange of information and ideas. This coordinated approach also needs to produce clear actions as the answers to critical questions emerge. While we have made progress, there is more work to be done and this work is not something that the public sector can or should tackle on its own. We therefore look forward to developing a national discussion, with those working across New Zealand s freight system, on what we can do to improve the safety and efficiency of freight movements. Marinus LaRooij is the portfolio manager freight, strategy & performance for the NZTA, and is on the committee of the CILT NZ Central Section; to contact the NZTA freight team, FreightPortfolio@nzta.govt.nz

10 8 Logistics & Transport NZ UPPER NORTH ISLAND FREIGHT STORY Looking at freight through a different lens THE UPPER North Island Strategic Alliance (UNISA) is a local government collaboration initiative which consists of elected representatives and senior staff from Northland Regional Council, Whangarei District Council, Auckland Council, Waikato Regional Council, Hamilton City Council, Bay of Plenty Regional Council and Tauranga City Council. The overall objective of UNISA is to maximise sustainable development opportunities for all of the upper North Island and its contribution to New Zealand. Due to the potential economic gains, UNISA s 2012 work programme focused primarily on the priority areas of transport and ports (mainly in a freight context), through two pieces of work: An independent investigation of current and future freight demand and supply and scenarios to meet that demand in the context of ports and other associated infrastructure for the upper North Island (led by Auckland Council) An Upper North Island Freight Story in partnership with the NZTA, KiwiRail and Auckland Transport. Developing the Story The Upper North Island (UNI) Freight Story (the Story) is designed to identify land-based freight system issues at a UNI scale and provide supporting evidence so that decisionmakers can then make more informed land use and transport planning and investment decisions. The aim has been to reduce the cost of doing business in New Zealand though an upper North Island lens. A collaborative facilitated discussion approach has been taken to develop the Story, allowing key decision-makers to be better informed and able to agree on a shared evidence base to support decisions on critical issues. This included regional workshops with local and central government partners (e.g. other territorial authorities) and stakeholders (e.g. industry) facilitated during the preparation of the Story. As an example, three of the four regions in the UNI identified the need to improve implementation of the high productivity motor vehicles (HPMV) programme as a critical issue as it has potential to undermine economic productivity in New Zealand. A summary of the seven confirmed critical The Upper North Island Freight Story is designed to identify land-based freight system issues and support decision-makers to make more informed land use and transport planning and investment choices issues for the UNI identified through the Story are summarised below: Strategic road and rail network constraints Delivery of an HPMV programme Utilisation of industrial land Lack of strategic, integrated land use and transport planning and investment Lack of shared and accurate data Need to understand cost of freight supply chains for critical industries in UNI Challenging local government and central government funding structures. Copies of the UNI Freight Story s Summary of Critical Issues and Summary Evidence Base documents can be sourced from the project partners websites. Constraints and benefits Key considerations for the Waikato region related to the Story include the amount of industrial land zoned and/or planned in the UNI, the management of HPMV routes and permits, and the role of key strategic road by Greg Morton and rail corridors in the region in providing gateway port options for exporters moving freight across the UNI area, given the region s geographic location. Waikato Regional Council, like other project partners, realised there are benefits in having a clearer understanding of neighbouring region characteristics and issues to appreciate where constraints and benefits lie at a UNI scale. The council has noted that while the Story isn t a statutory process or recognised strategy or plan, it has raised awareness and made transparent for all partners the key freight system issues (and related evidence) and can be used as an input to statutory planning processes across the UNI area. The project has also identified key strategic questions that are beyond project partners ability to answer. As an example: How do we develop a robust, integrated way in New Zealand to gather, share, monitor and use freight data across public and private sectors? This strategic question has relevance to more than one of the critical issues identified in the Story. Other initiatives On reflection, while different in approach, the UNI Freight Story is of similar value to and compatible with industry-led initiatives such as the Bay of Plenty-based Bay of Connections Freight Logistics Advisory Group (FLAG) the Waikato Regional Council is a participant. The FLAG has been an illustration for the council of the effective pragmatic action that can come from industry and services collaboration and effective leadership within the freight logistics sector. The two pieces of work to be undertaken by UNISA in the 2013/14 financial year pick up on the two critical issues identified in the Story that local government is best placed to progress, relating to the integration of land use and infrastructure, and the provision of industrial land. The latter will include working with industry to better understand the need and future plans for this land, as well as identify what attracts (and/or places barriers on) industry to develop across the UNI area. Greg Morton is a senior transport planner with the Waikato Regional Council; he can be contacted at greg.morton@waikatoregion.govt.nz

11 June ROAD FREIGHT Trucks, certificates of fitness and public reassurance by Ken Shirley Under proposed changes for CoF inspections, operators will have more choice over where inspections take place and by whom which is good news for rural operators THE ROAD freight sector has a fundamental difference from virtually every other industry. Its principal workplace is a public place, the road, which it shares with literally millions of other users every day. They rightly need reassurance that the trucks on the road with them meet suitable safety standards. Certificates of fitness (CoF) for heavy vehicles help provide that comfort. The Road Transport Forum strongly favours retention of regular CoF testing. What it wants, and has long argued for, is more choice in vehicle inspection services, not just because we are a strong supporter of competition in the provision of services to the trucking industry, but mainly because of the time and cost implications of a limited number of vehicle testing providers. The current restriction to bricks and mortar service providers has major implications for rural operators who may have to travel a considerable distance to an accredited service provider. It s also an issue for the industry generally, with the wait times for pre-cof and CoF inspections. The government has certainly picked up on these points. It has calculated that about $20 million in time is spent annually getting a CoF. It also says the benefits from its proposed changes are estimated to be between $160 and $460 million over 30 years. This isn t covered in the current proposed amendment to the Land Transport Rule, but good news for the industry and their customers that the NZ Transport Agency has been tasked with reviewing its policies to make more inspection options available. More choice As usual, the devil will be in the detail. The government, in its previous discussion Vehicle licensing reform THE VEHICLE LICENSING REFORM PROJECT is a joint Ministry of Transport and NZ Transport Agency initiative that is looking to reform warrant of fitness/certificate of fitness, annual vehicle licensing (commonly known as registration), and transport services licensing. Work on the reforms was announced by Transport Minister Gerry Brownlee in March Recommendations for change were developed following an in-depth process involving research, analysis and modelling, discussions with transport sector stakeholders and wideranging public consultation. Changes to the WoF and CoF systems were documents, has said that operators will have more choice over where inspections take place and by whom. It mentioned that inspections will be able to be carried out at the place where vehicles are serviced, and is also proposing operator workshops be used. The RTF has reservations about this, basically on the grounds of possible public perceptions, so the auditing and monitoring of in-house CoF testing will be critical. It is significant that the government papers acknowledge that what it calls robust auditing and monitoring of approved inspection providers is a transition risk. Greater flexibility in the periods for CoFs is a good idea, and extending the maximum period to 12 months will reward operators with good safety records while announced in January this year. The current six-monthly CoF default inspection frequency will be retained, with the NZTA able to apply a different frequency between three and 12 months, depending on the operator s safety record. In addition, there will be opportunities for a broader range of CoF inspecting organisations and sites, including allowing providers to do vehicle maintenance as well. Changes to the CoF system will be made through the Land Transport Rule: Vehicle Standards Compliance 2002 and are expected to be in place by July 2014 or earlier. potentially focusing attention on operators with poor CoF or roadside inspection records. However, in practice the NZTA has only sporadically used its current powers to require a three-monthly CoF check, so again it will come down to the resources available to make it work in a worthwhile way. Agricultural vehicles What does concern the RTF, and should concern other road users, is the proposed removal of WoF or CoF requirements for agricultural vehicles operated at speeds under 40 kmh on the open road and only an annual WoF inspection for those travelling at over 40 kmh. These vehicles can easily be carrying loads of 25 tonnes or more as much as a heavy truck. The RTF is firmly of the opinion that all vehicles carrying such loads should be required to meet the same standards, for the safety of all road users. Ken Shirley is the chief executive officer of the Road Transport Forum NZ

12 10 Logistics & Transport NZ FREIGHT INFORMATION FIGS now has data for all of 2012 Port of Tauranga is New Zealand s largest export port, both by volume and value its current investment programme in its container terminal is the largest expenditure since the facility opened two decades ago by Murray King THE MINISTRY of Transport s freight information gathering system (FIGS) was introduced in an article in this journal in December last year. The MoT now has a full year s worth of data from more participants than previously, and so their quarterly information report (published in March 2013) has extensive information on movements for all of The report is available online (see below) and this includes extensive data in spreadsheet form, allowing users to easily make their own calculations from the data. New in this report, as well as the full year s data, are import and export information on air freight from New Zealand Customs records, information on container services calling at New Zealand ports in the year, and a full year of rail freight data. Sea trade Customs data provides a rich source of information on what comes in and out of our ports. FIGS summarises this both by commodity and by port, and in terms of volume and value. There are no surprises on the commodity side. Wood products (principally logs) are the single biggest export by volume. Dairy products are the biggest by value. For imports, minerals, coal and fuels (mainly oil) dominate both volume and value. Tauranga is the largest export port, both by volume and value, and Auckland the largest import port by value (by volume it is beaten by North Port, for oil). An interesting analysis is the average value of freight per tonne, Auckland having the highest value for both imports and exports. A valuable part of FIGS is its information on coastal cargo, not available for several decades until FIGS started to gather it. There are figures for oil deliveries by coastal tanker, and container movements for general cargo. Coastal containers are subdivided into transhipments of exports and imports, and domestic cargo. Of the 1,653,831 containers handled at New Zealand ports in 2012, 16% were domestic; 81% of all coastal containers (half of them empty) were carried on international ships. The overwhelming majority of containers, 71%, were imports or exports that were not transhipped to or from coastal vessels. FIGS gives data for net weight of containers, so the load per container can be calculated. The average load for a 20 ft container was tonnes, and for a 40 ft tonnes. There is even an analysis of the types of containers used for each commodity, although there are a large number of containers where the commodity is not known. The ship call information shows not only the number of container ships that visited New Zealand, but also how many port calls were made, and how many containers were exchanged during those calls, by port. During 2012, 925 ships made 2481 port calls. The average number of containers handled per ship visit varied from 1271 in Auckland to 350 in Taranaki. There are also figures breaking this down into ship sizes. There is further information on the number of visits by other types of ship, including cruise liners. Road dominates the land side of port traffic: 72% of traffic into ports and 77% of traffic from ports went by road. There are time series by port of containers handled, and productivity numbers. Auckland has the best ship rate, the number of containers moved on or off a ship per hour (and a sharply improving trend), but Tauranga and Wellington have the best crane rate, the number of containers lifted on and off a ship per crane per hour. Our best ports exceed the average for the top five Australian ports. Rail traffic Apart from the data in the 2008 National Freight Demands Study (NFDS), there has been a drought of detailed information on rail traffic since it ceased to be published in rail s annual reports as far back as 1962.