Port move makes no sense

Anyone who has been to Rotterdam in the Netherlands will know it is a port city that embraces both its rich history, and its future as Europe’s largest sea port. Real estate with a view of the port is prized. Government has always considered the enormous economic might of the port in making decisions about Rotterdam’s development.

It would be good to see the New Zealand Government holding such pride in, and support for, the port in our largest city of Auckland, which is a critical part of the country’s infrastructure. Instead, Ports of Auckland has become a political football.

In December, the Cabinet of the New Zealand Government will consider relocating to Northport, in Northland, the movement of goods currently carried out by Ports of Auckland. The economic advice behind that proposal has been called into question by two reviews from economic analysts, released by Ports of Auckland this week.

Castalia’s report says it will cost about $6.7 billion to move the freight activities of the port in Auckland to Northland. That is almost four times higher than EY’s predicted net cost of $1.8 billion that has been used to sell the idea of the move.

As representatives of freight movers, the RTF strongly urges the Government to take a good look at all the facts and figures before making a decision. If the aim is to boost Northland’s economy, does that really stack up against the impacts for Auckland and the rest of New Zealand?

It’s clear that making Northport the main port for Auckland will require massive investment in road and rail, and frankly, it makes little sense from either an economics or a logistics position. Why would you move goods destined for delivery in Auckland and further south away from the closest port, when the road and rail infrastructure required to then get those goods from that far away port back to Auckland and beyond does not even exist?

You can’t just one day close a major port and open another one that same day. There would need to be overlapping operations for years, with costs galore that would have to be passed on down the line to the end consumer. New Zealand’s location at the bottom of the earth already makes it expensive to import and export goods; we can’t really afford to add to that.

Rather bizarrely, those advocating to relocate the port operations are only talking about freight. They want to keep the economic benefits of having cruise ships and their many well-heeled passengers spending their cash in Auckland. The port has to remain in some capacity, which defies logic.

It smacks of a desire to kick out the blue-collar industries because inner-city businesses and residents don’t like the look of them. Reverse sensitivity seems to be a peculiarity of New Zealanders. People move to the inner city and then don’t like the noise, or bars, or trucks, or cars, or people. International city dwellers at least understand where more than a million people gather – and let’s remember Auckland is a very small city in global terms – there is noise and a changing landscape.

Castalia says the freight that currently flows out of Ports of Auckland would have to travel an extra distance to and from Northport of about 200km by rail and 150km by road. The additional freight task (approximately 400,000 twenty-foot container equivalent unit round trips between Auckland and Northport) will require additional transport infrastructure. On the possibly inaccurate assumption that 70 percent of the additional freight task was handled by rail, there would be more than 500 additional truck journeys per day travelling between Auckland and Northport for container traffic only, with more if the car import business uses the road network. This is just not feasible with the current road network between Auckland and Northport.

The freight task is increasing and the upper North Island is expected to account for most of New Zealand’s population and economic growth over the next 30 years. Ports of Auckland has a 30-year plan, which gives it the capacity to handle the expected freight increases.

On one hand you have an established business with a plan to match growth and on the other you have a pipe dream. The Government cannot sink billions of dollars into this without much better analysis than it currently has before it. New Zealand has to remember its place in the world and not price itself off the market on an act of sheer folly.

– Nick Leggett, CEO, Road Transport Forum

Road trumps rail to meet customer demands

The 2017-18 National Freight Demand Study was released, without fanfare, a couple of weeks ago. This is the first such study in five years and it’s a significant reminder of just how important road transport is to the New Zealand economy.

It’s important to get it straight up front, New Zealand’s freight network works best when there is a balance between rail and road. Each have their benefits, but as the stats show us, road freight is increasing its share because of the flexibility and reliability it offers in getting goods to market.

Most significantly from the report, the growth across the board in our freight task is large; up 18 percent in six years, from 236 million to 278.7 million tonnes per year. This demonstrates the growth New Zealand has enjoyed in our population and economy.

We are guessing that the absence of a trumpeted announcement on the release of the report is because changes to the proportional split across transport modes flies in the face of the rhetoric and indeed, the billions of dollars invested in rail by the Government. I’m talking about the increase in the amount of freight that road transport carries, versus that of rail.

In 2012, road transport was responsible for 215.6 million tonnes or 91 percent of freight movements and 70 percent of tonnes transported per kilometre. Despite a concerted anti-road campaign, and a Government elected in 2017 with an anti-road agenda, road freight’s proportion has increased in the recent study to nearly 93 percent of the freight task, and 75 percent when it comes to tonnes-per-kilometre.

Rail, on the other hand, has retreated from seven to six percent of freight movements. On a tonnes-per-kilometre basis, rail is down from 16 percent down to 12 percent of the freight task. The rationale given by the pro-rail authors of the report is that this drop is down to the Kaikoura earthquake, which knocked out rail in the upper South Island for a long time. But it also reflects a reduction in volume of rail-suitable commodities, such as coal.

Losing a rail line happens far more regularly than people might think. A section of rail line parallel to SH7, the main road linking Reefton and Greymouth, has been closed due to a slip. KiwiRail has been stopping the TranzAlpine at Arthur’s Pass and offering buses for people wanting to continue on to the West Coast. Freight deliveries of coal and milk have been transported by road, instead of rail. Media attention has focused on the corresponding road failure, rather than that of the rail. I guess because if rail fails, there are always other transport options.

The most significant reason for the swing towards road freight is improvement of truck payload efficiency – that means bigger trucks that carry more load, reducing the number of truck trips. Over the past six years, efficiency gains through the uptake of HPMV and 50 MAX have been realised in dairy, logs, livestock, aggregates, and petroleum distribution.

The growth in road freight makes the Government’s decisions to rob the National Land Transport Fund, using road user charges (RUCs) and fuel excise to artificially support rail projects, seem all the more short-sighted. This re-engineering of our transport system to satisfy ideology is not only costly, but flies in the face of economic reality. It is even more short-sighted to turn the tap off on new roads critical to the national freight task, such as the East-West Link, in order to put money into rail projects of dubious economic benefit.

Don’t get me wrong; we support asset renewal in rail as it’s badly overdue for this critical infrastructure. What we don’t support, is the Government continually selling that investment as a way to reduce “dangerous” truck movements on our roads. We also reject this investment in rail over new, safer roads. There should be investment in both road and rail infrastructure.

Roads are more flexible and immediate than rail will ever be. There are 93,000 kms of road in New Zealand and only 4,000 kms of rail track. That split isn’t changing and what’s more, the market is making its choice.

Fewer trucks on the road means fewer jobs, less economic activity and less money in the pockets of all New Zealanders. The National Freight Demand Study proves that people and businesses choose the transport mode that best suits their requirements. In the 21st century economy where timeliness and responsiveness is everything, more often than not, that is delivered via road.

– Nick Leggett, CEO, Road Transport Forum