Game changer
INLAND PORTS AND LOGISTICS HUBS ALREADY EXIST IN New Zealand but not on the scale and with the significance which the new Ruakura Superhub will grow to deliver.
That’s the view of Tainui Group Holdings Supply Chain Strategy Director Dave Christie, who says Ruakura will be a game changer.
Christie says there are several key value propositions to attract prospective Ruakura tenants.
“There’s the strategic imperative around future-proofing your supply chain, being located within the ‘golden triangle’ but not actually being constrained by the traffic congestion that exists in Tauranga or Auckland, and the opportunity to scale.
“There is no other site in the ‘golden triangle’ where you have this level of scale and connectivity,” says Christie.
“Ruakura connects to the East Coast Main Trunk and North
Island Main Trunk and more importantly to State Highway 1 with the new Waikato Expressway. And the cost of land in Waikato is cheaper than Tauranga, let alone Auckland.”
Christie believes there is significant inefficiency in the New Zealand supply chain.
“What Ruakura does is bring the three supply chains together – import, export and domestic. And when you think of a supply chain, you can’t just think about what’s happening within New Zealand.
“You’ve got to think about what is happening outside of New Zealand. If you are a Fonterra for example, you’re exporting north of the equator. If you are a Farmers, a Warehouse or a K-mart you are importing products from north of the equator.
“From a supply chain point of view, it’s the end-to-end. It’s not just the individual transport piece or warehouse location piece.
“Currently, imports typically come into Auckland or Tauranga. In recent years Tauranga has picked up more volume,” says Christie.
“But because of our imbalance, for every three containers we export, two containers come in empty because we export more than we import as a country.
“In the macro view most of those containers go to Auckland. So, you are moving a lot of empty containers to Auckland. There is a lot of waste in the import network.
“In the domestic network the containers are de-vanned and products put into warehouses, predominantly in Auckland. And then trucks disappear out of Auckland to distribute these products throughout the country.
“And then many of them have an empty journey back to Auckland in order to fill up again. There’s an estimate that 30-40% of the trucks going back to Auckland are not fully loaded.
“If you look down on the North Island from above, the network has a lot of waste flowing around. A lot of empty trucks, multiple movements and inefficiencies,” says Christie.
“With Ruakura we are trying to change that game through a combination of aggregation, container de-coupling, a multi-modal network and a `base versus flex’ supply chain model. That’s the
concept that the part of your demand that is there every day, you flow through one mode, and the part that is flexible and variable, you flow through another mode.
“You have a major pipeline between Tauranga and Hamilton which is a rail pipeline to warehouses located in Ruakura. Instead of flowing inefficiently up to Auckland, you are doing your distribution out of the Waikato.
“You have future proofed your network, because by being at Ruakura you can connect to Auckland and Tauranga. You can lower your transport costs, both road and rail, because you are effectively paying for a one-way load rate rather than a return rate.
“By removing waste, you drive productivity and also deliver more tangible sustainability.
“That’s the value proposition for the whole precinct. It’s not just the delivery leg or the warehouse location, but the whole end-to end supply chain that goes beyond New Zealand’s borders as well.”
It’s the scale of Ruakura rather than the concept itself that makes it something new for the New Zealand economy.
“Multi-modal hubs are not a new thing. They have been established in multiple locations through Europe and in the US,” says Christie.
“We’ve got inland ports in other parts of the country, but they are not on this scale. And they are typically there to support that particular port.
“The Auckland one in Wiri supports Auckland and you can argue Ruakura supports Tauranga, which it does.
“But Tainui came up with this concept and said, ‘this is what we think is the value proposition for the flow throughout the North Island’. And then [Port of] Tauranga said, ‘we agree’ and that’s when we formed the strategic partnership with them.
“So, this concept is not new. The question is, how do you make it work in the New Zealand environment?
“In my view, the problem with other inland ports or hubs is that in order to work well they have to have that interconnectivity between road and rail and drive efficiencies across the whole network. Otherwise, they become a localised solution rather than a New Zealand Inc. solution.
“The value proposition, we believe for Ruakura is that it’s not that localised solution. It actually changes the game for North
Big Chill CEO Michael Roberts (left) and Freightways CEO Mark Troughear have announced the company’s tenth distribution facility will be located at Ruakura.
Island freight flows. We think that makes it more strategic than some of the other developments that have been done.”
Christie says it requires businesses to think into the mediumterm future.
“What we are asking them to do is cast their mind into the future and project what is going to be different in the New Zealand supply chain and transport landscape in five to 10 years,” he says.
“Some of the commercial benefits will happen right from day one because of the road and rail connectivity, but in terms of the scale it might take 5 to 10 years.
“That’s a challenge. We are asking people to be fortune tellers but the people who have decided to locate here have obviously bought into, and agree with, that view of the future.
“One of the next tenants we expect to announce soon will have people raise their eyebrows and it will start to highlight that message.”
Christie says the Ministry of Transport is currently carrying out an NZ Freight and Supply Chain Strategy Review with the key areas of focus being Decarbonisation, Resilience, Productivity and Innovation, and Well Being to generate policy out to 2050.
“We believe Ruakura double ticks all of those. It delivers on the government’s future vision of what the transport and logistics networks will look like in the future. Not just regionally, but nationally as well,” says Christie.