Slide 1

TAURANGA TRANSPORT & LOGISTICS FORUM“Unlocking the North Island freight

network for growth”

Bay of Plenty Polytechnic Friday 16 November 2012

Address by:Hon Ken Shirley

CEO Road Transport Forum NZ

“The likely role of Road Transport in the Upper North Island Future Freight Task”

Slide 2

TOPICSTOPICS

Improving and expanding the road network in the Upper North Island – investment in roads and funding

Improving access to the network for more productive trucks

Improved connectivity between transport modes

Slide 3

INVESTMENT IN ROADS AND FUNDINGINVESTMENT IN ROADS AND FUNDING

Decades of under-investment

RTF supports the overall policy direction

Emphasis on:

– Economic growth and productivity

– Value for money

– Road safety

Slide 4

2012-15 National Land Transport Programme

FUNDING $ SPENDING $

Local Body Rates $2,607m Road Policing & Safety promotion

$1,026m

Fuel Excise Duty (Petrol)

$4,900m Public Transport $1,736m

RUC $3,700m Road maintenance and renewal

$4,826m

Motor Vehicle Registration

$570m New road infrastructure $4,449m

Property sales & leases

$270m Systems management $166m

Other:Canterbury earthquakeSuper gold cardDebt funding

$155m$23m

$115m

Miscellaneous & debt reduction

$77m

TOTAL $12.28b TOTAL $12.28b

Investment in Roads & Funding(Cont’d)Investment in Roads & Funding(Cont’d)

Slide 5

2012-15 National Land Transport Programme

Investment in Roads & Funding(Cont’d)Investment in Roads & Funding(Cont’d)

Road maintenance and renewal $4,826m

New road infrastructure $4,449m

TOTAL $9,275m

Northland $225m

Auckland Western Ring Route $1,150m

Auckland maintenance and renewal $865m

Waikato (including $590m Waikato Expressway) $1,300m

Bay of Plenty (including $300m Tauranga Eastern Link)

$800m

TOTAL $4,370m

47% to be spent in Upper North Island

Slide 6

Some current and future issues::

1. The interaction between

Northport - Whangarei

Ports of Auckland - Auckland CBD

Ports of Tauranga - Tauranga

2. Freight hubs and intermodal connectivity

3. The role of rail and coastal shipping

Investment in Roads & Funding(Cont’d)Investment in Roads & Funding(Cont’d)

Slide 7

4. New projects

- Kaimai road tunnel

5. Expanded funding options and mechanisms:

- Distance + mass

distance, mass, time and location

- Tolling

- Reduced dependency on PAYGO

Investment in Roads & Funding(Cont’d)Investment in Roads & Funding(Cont’d)

Slide 8

HPMVHPMV

The 2010 High Productivity Motor Vehicle (HPMV’s) amendment to the Vehicle Dimensions and Mass Rule (VDAM) enables heavy vehicles to operate under permit at weights above the standard legal maximum (typically 44 tonnes) on specified routes where the bridges are capable of coping with the additional load

Slide 9

Road transport costs in NZ much higher than other developed countries

Road taxes in NZ 180-200% higher than Australia, USA and Canada

Heavy vehicle road taxes as a percentage of road expenditure:

NZ - 48%

Australia - 23%

USA - 35%

Canada - 25%

(Importance of improving . . . Cont’d)

Slide 10

Comparison findings:

– NZ comparable freight costs are 25% to 30% higher

than Australia

– NZ B-train freight costs are 90% to 100% higher than

Australia (62 tonne versus 44 tonne)

– NZ higher costs are due to RUC levels and gross

weight limits in NZ

– Australia can afford to pay drivers 30% more

(Importance of an efficient . . cont'd)

Slide 11

COMPARISONS OF ROAD TAXES BETWEEN COMPARISONS OF ROAD TAXES BETWEEN AUSTRALIA & NEW ZEALANDAUSTRALIA & NEW ZEALAND

COMBINATION TYPE NEW ZEALANDCOST**

AUSTRALIACOST**

% DIFF

5 AXLE B TRAIN and 6x4 TRACTOR $34,230 $28,542*** 20 %

6 AXLE B TRAIN and 6x4 TRACTOR $31,570 $30,764 2.6 %

8x4 TRUCK and 3 (or more) axle trailer $34,230 $16,917 102 %

QUAD-AXLE SEMI TRAILER and 8x4 TRACTOR $34,230 $20,914 64 %TRI- AXLE SEMI and 6x4 TRACTOR $35,280 $20,588 71%

** based on 70,000 km annual travel distance *** 7 axle B Double- 4 axle B train and 6x4 tractor unit. This was the closest Australian configuration that could be used as a comparison to the NZ 5 axle B Train. The 6 axle Australian B Double costs compared to the NZ 5 axle B Train highlight the cost inequities between AUS and NZ. 

Slide 12

HPMV (Cont’d)HPMV (Cont’d)

Slide 13

HPMV (Cont’d)HPMV (Cont’d)

Slide 14 14

HPMV (Cont’d)HPMV (Cont’d)

Slide 15

HPMV (Cont’d)HPMV (Cont’d)

200 Tonne

Slide 16

Increased lengthIncreased length

22m log-truck22m log-truck

Longer Longer = Lower = Lower

= Safer= Safer

HPMV (Cont’d)HPMV (Cont’d)

Slide 17

HPMV (Cont’d)HPMV (Cont’d)

Slide 18

Local Implications of HPMVLocal Implications of HPMV

One forest owner alone transports into or through Rotorua

@ 44 tonne = 400 loads per week of standard loads @ 53 tonne = 300 loads per week of HPMV trucks

ie. 20 less loaded trucks “per day”= 40 less truck movements per day on Sala St

Slide 19

High Productivity LogtruckHigh Productivity Logtruck

55.8 tonnes – 23.3m – able to cart 3 x 6.1m55.8 tonnes – 23.3m – able to cart 3 x 6.1m

Slide 20

LOWER BOUND HPMVLOWER BOUND HPMV

Proposal to refine the HPMV Rule to create a LB HPMV permit that would enable vehicles configurations of up to 50 tonnes operate across all routes accessible to class 1 vehicles (up to 44 tonnes) which do not require a permit

Slide 21

Truck, Train or Ship

IMPROVED CONNECTIVITY BETWEEN TRANSPORT MODES

Slide 22

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

ROAD RAIL INLANDWATERWAY

TRANSPORT SERVICE

% O

F F

RE

IGH

T M

AR

KE

T

tonnes-lifted

tonne-km

FREIGHT MODAL SPLIT IN THE EU27:MEASURED BY TONNES-LIFTED AND TONNE-KM

Source: Eurostat-2009

(Improved connectivity… Cont’d)

Slide 23

Futility of modal competition debate:– Political Posturing v Economic Reasoning

All transport modes need to expand to meet the projected freight task

(Improved connectivity… Cont’d)

Slide 24

Why most freight is moved by truck1. Geographic flexibility:

– country wide point to point pick-up and delivery– 93,000 km roads v 4,000 km railway

2. Time flexibility:– responsive to “just in time” requirements of

customers– not constrained by railway timetable or shipping

schedule

3. Responsive to unforeseen changes in:– volume, type, origin and destination

4. Avoidance of transhipping:– quicker, safer, cheaper

5. Readily adaptable to specialist and unusual consignments

(Improved connectivity … Cont’d)

Slide 25

Trucks are the only way to reach most factories, stores, restaurants or homes.

“Only 3-7% of the road freight task is contestable by rail”

Conversely:“Most of the freight currently travelling by rail is contestable by

road – with the notable exception of coal transport over the Southern Alps.”

Source: Mackie, Baas and MANZ (2006)

(Improved connectivity … Cont’d)

Slide 26

MARKET LED MODE CHOICEMARKET LED MODE CHOICE

Complex logistics require a market led response

Rigid prescriptive planning and misguided political intervention will result in:– Massive mis-investment– An inefficient transport sector– Bad economic outcomes

Slide 27

Markets need information:

– Transparency of true and full costs

Choice based on efficient pricing

– No distorting subsidies

– Removal of stifling regulation

(Market led mode choice… Cont’d)