National freight strategy
Future growth and current investment opportunities highlighted in industry submissions
Future growth and current investment opportunities highlighted in industry submissions
Australia has been seeing unprecedented and complex challenges owing to an overall growing freight task. The federal government says a need to tackle these challenges led to the idea of a freight and supply chain strategy with a national focus that streamlines and integrates the various aspects of transport and logistics (T&L) so that the industry is capable of efficiently moving freight domestically, and to and from the international gateways.
The federal government’s inquiry into the National Freight and Supply Chain Strategy (NFSCS) – a key recommendation of Infrastructure Australia – has attracted more than 100 submissions from industry representative bodies and other stakeholders.
Federal infrastructure and transport
minister Darren Chester said this input will be considered by the Department of Infrastructure and Regional Development (DIRD) before it formulates a national strategy next year.
“The strategy will ensure the right policy and regulatory settings are in place to optimise long-term infrastructure investments, boost Australia’s prosperity, and meet community expectations for safety, security, and environmental amenity,” Chester says.
Some of the key recommendations by road transport industry bodies include issues like vehicle charging system overhaul, supply chain integration, infrastructure investment and growth opportunities. The industry wants government action to free up delivery fulfilment in a society reliant on it more than ever before.
With more than 75 per cent of non-bulk domestic freight currently carried on roads, road transport industry representative bodies are calling for more focus on planned investments and projects that are able to withstand the challenges of future freight volume. Victorian Transport Association (VTA) CEO Peter Anderson says the ability of infrastructure to be functional in the future environments will be key to its success.
The shipping industry is calling for improved links between land and ports to unlock the full potential of the freight sector. The submissions emphasise initiatives such as long-term planning of port infrastructure, better visibility with the use of new technologies and mapping nationally significant freight routes.
While the use of air freight as a means of transport is on the increase, it still makes up a relatively small part of Australia’s overall freight task. At present, it is mainly being used to transport time-sensitive goods.
URBAN GROWTH PRESSURES
Linfox Australian and New Zealand CEO Annett Carey says forecasts suggest road congestion, particularly in inner urban areas, is expected to aggravate problems unless proper planning is undertaken to replace decades-old delivery windows with round-the-clock supply chain permits. It is one of the seven recommendations presented by Linfox.
The issue echoes in submissions from the National Transport Commission (NTC), the Australian Logistics Council (ALC) and Australian T&L consulting business Gilead Logistics.
Gilead director Ross Delaney states that “dysfunctional” urban planning has pushed warehouse and distribution facilities to sub-optimal locations that are generally farther
“The shipping industry is calling for improved links between land and ports to unlock the full potential of the freight sector”
away from urban centres. So far, urban planners have presumed that Australian cities can be logistically supported from the perimeter without giving much thought to the “reality and logistical consequence imposed by our urban sprawl”, Delaney notes.
As a result, road congestion in urban area increases with more number of small vehicles travelling between distant warehouse facilities and urban centres. Gilead recommends governments should consider logistical needs of inner urban regions while making urban and freight movement planning decisions.
Delaney also notes the increase in the number of small delivery vehicles as a result of an ever-increasing e-commerce sector. ALC agrees.
With a growing trend in retails and grocery sectors offering convenient last mile delivery services to their customers, road networks are expected to get busier than ever.
E-commerce growth is fuelling consumer expectations for faster delivery timeframes and lower shipping costs that result in increased vehicular congestion on roads, ALC notes. “To help ease the pressures on CBD freight delivery, Australia could examine the trialling of urban consolidation centres,” it suggests.
ALC recommends infrastructure investments that support freight delivery in urban centres, particularly the CBDs, such as truck-only lanes that can help improve supply chain efficiency and decrease congestion and emissions in high-demand environments.
Meanwhile, NTC notes that the current provisions of the Heavy Vehicle National Law (HVNL) including fatigue management and chain of responsibility (COR) requirements do not cover many of the smaller delivery vehicles and their drivers – something decision-makers should consider while developing the national strategy.
In May, federal urban infrastructure minister Paul Fletcher, who is the nominal ‘minister for road charging reform’, released a discussion paper on options for an independent price regulator for heavy vehicle charges. While several industry bodies submitted their feedback to that discussion, many have raised the subject in their national strategy submissions.
ALC suggests an independent economic regulator, in association with the transport industry, must develop a road-pricing model for vehicles. It calls for an inquiry to determine whether the pricing arrangements for toll roads should be subject to supervision from an independent entity, such as the Australian Competition and Consumer Commission (ACCC). The suggestion has been previously supported by other industry bodies including the Australian Trucking Association, Road Freight New South Wales (RFNSW), the Container Transport Alliance of Australia (CTAA) and VTA.
All want an independent economic regulator – ultimately ACCC – to manage toll road and landside port charges for heavy vehicles.
The ATA, VTA and the Australian Livestock and Rural Transporters Association (ALRTA) have asked the federal government to consider the impact of the current heavy vehicle charging regime on the trucking sector. They assert that the current system unfairly burdens the trucking industry, which not only affects transport operators’ profit margins but also the industry’s overall international competitiveness.
VTA suggests transport operators should be eligible for a discount on the current tolling rates “to encourage full usage of the system”.
CTAA recommends a reformed road pricing mechanism based on a mass, distance and location formula to ensure heavy vehicles involved in haulage across metropolitan regions pay less than under the current pay as you go (PAYGO) system. Both CTAA and the Australasian Railway Association (ARA) recommend a similar approach of access pricing review for rail to “encourage certainty and commercially viable outcomes”.
“The ARA endorses an economically competitive level playing field between rail and road and seeks a mass-distance-location charging mechanism for heavy vehicles to be adopted along major interstate routes, which will allow road to compete equally with rail,” the rail association submission notes.
ALC recommends road access provisions of the HVNL must be reviewed to “identify and enact improvements to the system so as to improve consistency and speed in decision making”.
Delaney suggests equitable future road usage charges that take into account logistical factors such as location of distribution centres (DC) and need for small or large vehicles to carry goods
back into the city across road corridors that are also used by commuters. He says governments must consider this supply chain reality when reviewing environmental and congestion claims made by urban bypass corridor users.
NTC states that the National Policy Framework for Land Transport Technology: Action Plan: 2016-2019 outlines the role that government intends to play in the technology space, including promoting awareness and acceptance of new technologies.
It calls for an inquiry that considers the potential benefits of incentivising the adoption of new technologies such as blockchain to improve supply chain efficiency. In a paper published last year, Land Transport Regulation 2040: Technology, trends and other factors of change, NTC had suggested that blockchain technology could help achieve a secure and well-connected supply chain system.
Meanwhile, ALC recommends government ensure increased uptake in technology is not burdened by “unnecessary or outmoded” regulations.
In line with a recommendation from the Western Australian Road Transport Association (WARTA), ALC suggests the government must consider ways to help small and medium T&L operators adopt global data standards in their supply chains.
“The Australian Government should work with industry to promote the benefits of adoption of global data standards through industry research and awareness programs and promotion of the value of global data standards in Australian supply chains,” ALC states.
SUPPLY CHAIN INTEGRATION
VTA CEO Peter Anderson says a well-connected supply chain is the answer to a productive industry. He says the federal government must examine current regulations in road, rail and shipping sectors while finding better ways to improve supply chain productivity.
The industry bodies are calling for installation of additional heavy-vehicle classifications that encompass the inclusion of high-productivity freight vehicles (HPFV) on toll roads, bridges and other road networks that currently do not allow HPFV movement.
ATA says it is important to consider the impact of road infrastructure gaps, particularly in regional and remote areas to ensure the success of the industry. ATA’s recommendation has also received backing from WARTA, which recommends detailed audit of road maintenance and investment priorities.
Anderson recommends developing intermodal connection areas, improving access to ports, rail link with all ports, and more emphasis on addressing ‘last mile’ issues.
On behalf of the shipping and container transport sector, CTAA and Shipping Australia Limited (SAL) are calling for improved supply chain links. Both CTAA and SAL suggest that the national strategy should consider the impact of current policies on the overall transport network. CTAA directors Gerard Langes and Neil Chambers, and SAL CEO Rod Nairn press for the need of an integrated supply chain network that efficiently links container transport with intermodal and road freight sectors.
The SAL submission notes a disparity between current transport modes, stating the current system favours road and rail investment over shipping. Calling it the “most environmentally efficient, cost efficient and safest mode of long haul freight transport”, Nairn says governments must undertake more planning and works to support shipping. He says integration of coastal shipping in the domestic supply chain can “dramatically” reduce transport costs, and points to lack of effort to measure these savings.
SAL recommends “redirecting infrastructure resources committed to networks parallel to the coastline to create hyper-efficient and resilient networks perpendicular to the coast”, which will help reduce freight costs across the supply chain network.
CTAA concurs with this view. It recommends the national strategy to find ways to improve
“A well-connected supply chain is the answer to a productive industry”
connectivity between ports, intermodal and road freight sectors to improve the overall productivity of the Australian supply chain.
CTAA backs road transport representative bodies in their call for improved access and permit rights for high-productivity freight vehicles (HPFV). “These vehicles meet the national Performance Based Standards (PBS), are Intelligent Access Program (IAP) route compliant, and are fitted with (interim) on-board mass monitoring devices,” CTAA notes. “In this way, government has a high degree of safety and infrastructure protection compliance assurance.”
ATA suggests federal and state governments should accelerate road investment to improve the maintenance of the existing network and protection of current and future corridors to reduce the overall life cycle costs of the road network. It recommends that any infrastructure investment of more than $100 million must be assessed by Infrastructure Australia before being approved.
“Government would play a critical role in road funds by setting the funding criteria and network objectives, and then allow the independent and transparent selection of projects,” the ATA submission notes. “Road funds would serve to increase community confidence that charges collected for the maintenance and improvement of the road network will go to that purpose. This reform would be consistent with the approach of the Australian Government to improve the quality of infrastructure investments by requiring projects of $100 million or more to first be assessed by Infrastructure Australia.”
WARTA has endorsed ATA’s view, adding that poor maintenance on regional roads ends up costing road transport operators “substantially” in fleet maintenance and operating costs.
ALRTA says the federal government should commit to a dedicated national funding system for road service level improvements in regional Australia. It recommends:
• “that the Australian Government establish a national fund of at least $1billion to improve the standard of key rural freight and tourism roads
• “that the Australian Government develop a plan and sustainable funding mechanism for establishing managed roadside livestock effluent disposal sites on key livestock freight routes in Australia.”
CTAA calls on the governments to consider solutions to problems associated with increasing urban development near major ports, which exerts “significant operational and commercial pressure”, and the freight transport sector.
“With the exception of Brisbane, all Australian ports are land constrained by significant urban encroachment. Whereas historically, the vast majority of container logistics activity (e.g. cargo freight station pack/unpack, bonded warehousing, empty container management) occurred in, or around the Port, today these activities are increasingly occurring tens of kilometres away,” CTAA notes.
The national strategy should support improved “urban planning, freight land use buffering and freight corridor protection” to allow peaceful coexistence of efficient supply chains and communities.
RAIL TO PORTS
ALC suggests governments at all levels must take measures to ensure improved rail access to major ports. It calls for “greater government focus and investment in the use of port shuttle/ short-haul rail infrastructure as a means to improve supply chain efficiency and reduce congestion. Governments should support accelerated investment plans for intermodal terminals, including work towards integrating freight rail and logistics freight hubs.”
Meanwhile, ARA is pushing for a national framework for corridor protection. It is asking the relevant governments to: • prepare agreed, robust plans • prepare feasibility studies on the corridors
arising from those plans
“With the exception of Brisbane, all Australian ports are land constrained by signicant urban encroachment”
• establish joint funding and governance arrangements to protect and capture the value in these corridors. ARA says states and territories should have dedicated freight and passenger lines to help rail operators improve service, reliability and price offering. It also recommends the need for more planning and investment on existing networks with an aim to remove congestion, reduce operational costs and improve safety.
ROAD VS OTHER TRANSPORT SECTORS
SAL points to the “regulatory failure” of the government and the assessment of infrastructure investment projects (IIPs) that support road and rail freight transport sectors over shipping.
The submission notes that the current system subsidises land freight transport sector and uses taxpayer dollars to fund new projects and maintenance of existing infrastructure at the expense of local businesses.
“As a society, Australia cannot afford to continue to subsidise the land freight transport sector and continue to be denied access to such an abundant resource as coastal shipping. Not only does it commit taxpayers to the funding of tens of billions of dollars in infrastructure construction and maintenance annually, it denies cost savings to domestic businesses and removes the stepping stone required for them to become exporters and more prosperous,” Nairn states.
While ARA’s submission reflects a similar view to SAL, albeit for rail. The submission is calling for a competitively neutral policy approach between the different modes of transport.
“Domestic rail freight markets should operate as far as possible on a level footing with other modal choices by creating an environment where there is an equitable and comparable regulatory environment and/or competitive neutrality between competing modes of transport,” it suggests.
The submissions recommend planning committees to consider the benefits of efficient supply chain movement and create improved links between freight generation points and significant transport infrastructure such as rail, port and airports. The recommenda- tions are calling for greater focus on the development of practical and effective solutions to resolve current inefficiencies in the systems.
Linfox has welcomed government support for “big ticket” infrastructure items such as the Melbourne to Brisbane Inland Rail project and the Greater Western Sydney Airport at Badgery’s Creek. “These are projects of national significance that have to one extent or another enjoyed bipartisan and cross-jurisdictional support at various stages over several decades,” Carey states.
Apart from investment, government must also consider factors such as labour, infrastructure access and future growth opportunities while developing specific supply chains, VTA recommends.
While fresh opportunities will arise from the development of new infrastructure, the ability of that infrastructure to be functional in the future environment will be key, he says.
“For example, the introduction of the Inland Rail system should not just be limited to Brisbane and Melbourne, but also be a part of a larger perspective that takes in the connection of all capital cities by an open system linked to intermodal satellite hubs,” Anderson says.
“It is just not the supply chain efficiencies that large-scale infrastructure developments bring to the industry but also the indirect value to all of the markets and industry sectors that are reliant on the efficiency of these networks.”
ALC suggests the federal government to set up a dedicated Freight Strategy and Planning Division within the DIRD. It is calling for special focus on transport corridor protection that allows efficient freight movement in the future. It asks decision makers to support the “preservation of potential intermodal terminal sites, and ensure proper planning for future road and rail connections”.
WARTA executive director Cam Dumesny says the NFSCS must be developed with a clear understanding of the heterogeneous nature of Australian T&L industry. Apart from nationally-significant aspects, decision-makers must also factor in the “unique differences to grow regional and remote Australia at a pace commensurate with global demands. The imperative of national regulation must be productive and safe facilitation of trade, not national regulation in and of itself.”
Below: Minister Darren Chester says the feedback received will feed into the development of a comprehensive national strategy
Opposite top and bottom: Minister Paul Fletcher has sought feedback on the independent price regulation for heavy vehicle charges; ALC MD Michael Kilgariff has long supported the need to develop a National Freight and Supply Chain Strategy Above: VTA...
Above: CTAA director Neil Chambers says urban encroachment around ports is a major obstacle in efficient freight movement Opposite: WARTA executive officer Cam Dumesny says national strategy should weigh in regional and rural transport needs