Possible Contents of a
National Freight and Supply
Chain Strategy An Industry View
Working Paper 1
May 2017
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POSSIBLE CONTENTS OF A NATIONAL FREIGHT AND SUPPLY
CHAIN STRATEGY – AN INDUSTRY VIEW
AN ALC WORKING PAPER
Background
This Working Paper consolidates the themes, issues and priorities which have thus far
emerged in discussions facilitated by the Australian Logistics Council (ALC) with
representatives of industry and government, regarding the possible contents of a National
Freight and Supply Chain Strategy (the Strategy).
Although the process of engagement is ongoing, it is clear there is already significant
agreement within the freight and logistics industry about the issues that must be addressed
by the Strategy.
The purpose of this Working Paper is to neatly synthesise the issues as currently viewed by
the industry, and to provide a starting point for a more detailed consideration of the
measures required to address the major challenges confronting the freight and logistics
industry, as the National Freight and Supply Chain Strategy is developed.
The material contained in this document is primarily drawn from two sources – ALC’s 2016
election priorities document, Getting the Supply Chain Right, and the extensive discussions
surrounding the potential content of the Strategy which occurred as part of ALC Forum
2017, held in Melbourne during March.
This Working Paper is intended to promote discussion within the industry, not to limit it. To
succeed, the National Freight and Supply Chain Strategy must be dynamic – and that must
also be true of the consultation process that informs its development.
Accordingly, ALC will continue to actively engage with our industry, with government
representatives and with other stakeholders over the coming weeks and months.
This will help ensure that the National Freight and Supply Chain Strategy which emerges
meets the needs of our industry, and is an effective mechanism for improving supply chain
safety and efficiency.
Australian Logistics Council
May 2017
Getting The Supply Chain Right
In May 2016, ALC published its election priorities document, Getting The Supply Chain
Right.
It identified six separate areas critical to ensuring Australia has appropriate national
regulation and infrastructure in place to meet Australia’s future freight challenges.
Those areas are:
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structure;
planning;
rail;
road pricing;
road safety; and
technology
The issues
In Getting the Supply Chain Right, ALC canvassed a number of pertinent issues, which it
said should be priorities for an incoming government.
With regards to urban encroachment, ALC observed:
An efficient freight chain needs to operate 24 hours, 7 days a week. Freight related activities
can generate traffic, noise and air quality impacts, and these issues will grow as trade
volumes increase. Urban encroachment, such as can be seen around the rail freight line
connecting the Port of Fremantle, has the ability to undermine the existing and future
operation of the freight supply chain.
The lack of buffer zones and land separation setbacks and design mitigation measures for
sensitive use developments have the ability to impact on the efficient operation of freightrelated infrastructure. More stringent environmental amenity criteria also make it difficult for
freight to comply with planning and environmental policies and requirements and thus restricts
the fully efficient use of freight infrastructure.
It is imperative that planning policies promote physical land separation and protection of
employment lands and freight infrastructure corridors from sensitive uses. Unfortunately, the
freight supply chain cannot sustainably support Australia’s growing freight demand if freight
facilities and infrastructure continue to be restricted in realising their optimal capacity, due to
restrictions imposed on their use or operating conditions. The imposition of restrictions on the
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operation and use of freight infrastructure will only add costs to consumers and businesses.
To address this, ALC urged the incoming government to support Infrastructure Australia’s
call to develop a National Corridor Protection Strategy.
1
ALC Getting the Supply Chain Right (2016) Page 13
2
It was further noted that to obtain greater efficiency from existing freight infrastructure, an
incoming government should require state and territory governments to ensure their planning
instruments necessitate provision of appropriate mitigation measures when sensitive use
developments (e.g. residential) are located close to freight infrastructure.2 This will ensure
freight activities can occur on a 24/7 basis.
On Inland Rail and short haul rail, it was said:
Inland Rail is critical to Australia’s freight future given the expectations of the growth in the
freight task. The Inland Rail Business Case has now been positively assessed by IA. The
business case confirmed economy-wide modelling indicating the Inland Rail Programme will
increase gross domestic product by $16 billion over the 10 year construction period and 50
years of operation. It is therefore important to look at this project in a holistic and genuinely
national manner.
For instance, Infrastructure Australia identified a dedicated freight rail connection to the Port
of Brisbane as a High Priority Initiative in its 15 Year Infrastructure Plan. A holistic approach
to Inland Rail would suggest that an incoming government would support a dedicated freight
rail connection to the Port of Brisbane. This project will also ultimately encourage the
development of inland rail hubs, and so it follows that the holistic approach would encompass
encouraging the delivery of efficient rail connections from these inland hubs to the NSW ports
of Newcastle, Port Botany and Port Kembla. This approach will permit users to choose the
best and most efficient freight chain to move goods from generation point to port. It is
important an incoming government continues to actively fund and manage this project so as
to bring it to fruition.
With regards short haul rail, ALC members are committed to operating in this market sector.
Moving more freight to rail, where it makes sense commercially, has the potential to
significantly improve freight efficiency, while at the same time, improving urban amenity,
reducing road congestion and decreasing queuing times at ports.
Accordingly, it is important that an incoming government has in place the capacity to identify
projects that can facilitate these productivity enhancing outcomes. This includes investing in
and promoting projects such as the duplication of the Port Botany rail line, which will assist in
addressing Sydney’s rising congestion issues and support the NSW Government’s vision to
double the amount of freight moving to and from Port Botany by rail, which currently sits at
16%; and NSW Ports’ target to move 3 million TEU by rail over the longer term.
The Bureau of Infrastructure, Transport and Economics has recently published a report
entitled Why Short Haul Intermodal Rail Services Succeed, which found that vibrant valueadding hinterland terminals can secure the traffic volumes that are required for short haul rail
to have competitive linehaul costs. BITRE also reports that relative competitiveness is
strengthened when there are deficiencies in truck haulage and that a coalition of diverse
interest groups may seek, and thus support, vibrant terminals and complementary rail
services. Governments are making tentative steps towards investing in suitable projects. The
Port Rail Shuttle in Victoria is one such example. The federal government committed $38
million of Commonwealth funds to the Port-Rail Shuttle project in Victoria, topped up by $20
million from the Victorian Government, which will create a rail connection between the Port of
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Melbourne and three inland ports.
2
3
ALC Getting The Supply Chain Right (2016) Page 13
ibid. Page 17
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ALC called on the incoming government to identify, support and promote opportunities
where short haul rail services may offer freight chain efficiencies.
This includes ensuring state-based planning instruments promote efficient linking of ports
with intermodal terminals, as well as buffer zones and land use setbacks from rail corridors. 4
Regarding road pricing, ALC said:
The Transport and Infrastructure Council, chaired by the Commonwealth, is developing a
road pricing system to replace the current PAYGO formula, with a view to adopting
independent price regulation for heavy vehicles by 2017-18. There have been a number of
government reports, including the Harper Review, that have called out Australia’s road
network as the least reformed of all infrastructure sectors. With the logistics industry, and the
overall Australian economy, absolutely reliant on an efficient road network this reform needs
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to be undertaken with due care and consultation with industry.
ALC further noted that in order to maintain the confidence of industry, it would be necessary
to ensure that any revenue raised is used on infrastructure investments that will enhance
productivity outcomes on National Key Freight Routes, and not diverted to general revenue.
To achieve this, ALC said the government must:
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ensure that the principles guiding the development of the road pricing model are clearly
articulated. An incoming government should show national leadership and require that the
principles guiding the development of the new road pricing system be finalised and publicly
published immediately after its first TIC meeting;
ensure that industry is involved in discussions as possible funding models are developed, and
not just presented as a fait accompli in a regulatory impact statement. Industry must be
involved in all aspects in the development of the road funding model to ensure its workability
and thus early implementation. This is a particularly important point given the shape of the
funding model is apparently starting to ‘crystallise’; and
determine that any community service obligations placed on road owners by Government
must be funded from the government’s general revenue and not from any new road user
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charge.
Finally, on technology issues, ALC noted the Government’s work to develop a revised road
user charging system through the Transport and Infrastructure Council, so that funds raised
from heavy vehicle charges are invested in productivity-enhancing infrastructure on key
freight routes. It was noted:
One of the great challenges for a road owner designing forward looking investment and
maintenance plans (like those prepared by electricity and telecommunication companies) is to
determine how many heavy vehicles use a particular road. It should also be noted estimating
patronage numbers was one of the complex issues that the previous HVCI process found too
difficult to solve. Information collected and retained by operators is the most pragmatic and
achievable way to allow road users to gather this difficult-to-collect data and use it as the
demand estimate in any investment and maintenance plan submitted for consideration to an
economic regulator.
4
ALC Getting The Supply Chain Right (2016) Page 17
ibid. Page 20
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ibid. Page 20
5
4
Finally, there has always been interest in the logistics industry to encourage the ability to
transfer non- proprietary information so as to improve the flow of freight from one end of a
freight chain to another in a manner similar to the Hunter Valley Coal Chain. ALC has long
recommended the development of policies to allow this to happen, with the economic
regulator with responsibility for land transport pricing and access decisions permitted to
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authorise such a practice, if it is regarded as being prima facie anticompetitive.
ALC expressed its continuing concern that as technology becomes more dynamic and
cheaper, different jurisdictional regulators will require heavy vehicles to use multiple pieces
of hardware prescribed by particular laws to capture data fields that may be identical to
information required by other regulators.8
ALC Forum – March 2017
ALC Forum 2017 provided industry with an opportunity to explore these issues in greater
depth.
ALC Forum is the largest annual gathering of leaders and decision-makers in the Australian
logistics industry. Once again, this year’s event proved to be an invaluable opportunity for
the industry’s most senior representatives to discuss the challenges and opportunities now
confronting the freight and logistics sector.
ALC Forum 2017 was especially significant in that it was the first industry-wide gathering
since the confirmation last year that the Federal Government has agreed to develop a
National Freight and Supply Chain Strategy.
Accordingly, the entire focus of the Forum was on what needs to be included in the Strategy,
and what needs to be done to make sure that what emerges is right for our industry, and
right for our economy.
As ALC Chairman Ian Murray AM said in welcoming delegates to the Forum, there will never
be a better time or place to get the supply chain right.
Through the work of Infrastructure Australia, the nation now has the most comprehensive
infrastructure plan in its history. Adhering to the roadmap it sets out will be critical to boosting
Australia’s productivity in the decades to come.
Mr Murray pointed out that the Federal Government has put enormous resources into
securing free trade agreements with some of Australia’s most significant trading partners,
including South Korea, Japan and China. However, if the nation wants to fully realise the
benefit of those agreements, we must ensure our supply chain is operating efficiently.
This is why the Prime Minister’s announcement in the Annual Infrastructure Statement to
Parliament last November that the Government would develop a National Freight and Supply
Chain Strategy was so important. It puts our industry right at the heart of government policymaking, and will help ensure that the enormous contribution the logistics sector makes to
economic activity is better reflected in government decisions.
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8
ALC Getting The Supply Chain Right (2016) Page 26
ibid. Page 26
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He said the National Freight and Supply Chain Strategy would succeed provided it meets the
needs of the industry, its priorities are commercially sound and, most critically, it is
sufficiently funded.
Mr Murray concluded by emphasising that ALC represents the supply chain from end-to-end,
and our members are the most significant voices in the industry. We are not biased towards
any one mode of freight delivery.
The high standard of the presentations and the quality of the discussions which flowed from
them have helped to establish a clear industry view of what needs to be incorporated within
the Strategy as it is developed over the next year.
A summary of outcomes are set out in Attachment 1.
The material that follows represents a selection of views and issues aired by participants at
the Forum.
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Views from government
The Victorian government
ALC Forum 2017 commenced with a keynote presentation from Victoria’s Minister for Roads
and Road Safety and Minister for Ports, The Hon Luke Donnellan MLA.
The Minister began his remarks by noting that the Port of Melbourne is the nation’s largest
container and general port, and thus the nation’s freight and logistics capital. He noted that it
will require considerable policy development, careful planning and significant investment in
the years ahead to keep it that way.
He reflected on the ongoing political impediments to securing public investment in the
logistics sector. He related some of his own experience in taking investment proposals to
Cabinet, only to find reaction is often lukewarm, because while the supply chain delivers
freight, it does not necessarily deliver votes. Certainly, the level of pubic investment in the
logistics sector is in no way commensurate with its significant economic contribution.
The Minister also noted the pressure that competing interests place on government in this
area, especially with regard to speed limits for trucks, curfews and permit systems for direct
routes. The four year electoral cycle inhibits long-term planning, and political point-scoring
means opportunities can sometimes be lost.
In closing, Minister Donnellan said the Victorian Government welcomes the Federal
Government’s commitment to develop a National Freight and Supply Chain Strategy.
However, he noted that the bulk of impediments to greater supply chain efficiency fall within
the bailiwick of state and local governments.
The Minister’s final observation was that Victorian taxpayers are doing the heavy lifting when
it comes to infrastructure development in the state. While the Victorian Government is happy
to advise and assist in the development of the national strategy, that fact needs to be
acknowledged by the Commonwealth.
Infrastructure Australia
Phil Davies, CEO of Infrastructure Australia, spoke to Forum about the important role a
National Freight and Supply Chain Strategy will play in boosting Australia’s economic
capacity in the decades to come.
He began by noting that Infrastructure Australia has released its updated Infrastructure
Priority List, which sets out 100 major infrastructure projects nation-wide that have
substantial strategic merit and are of national importance.
Mr Davies said that national economic performance relies on an efficient supply chain.
Australia’s continuing population growth and the boost to trade activity resulting from recent
free trade agreements will mean that our domestic freight task will increase by 80% between
2011 and 2031.
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There is an urgent need for a new approach and a new plan. With Australia’s population
expected to reach 30 million people by 20319, we cannot rely on a ‘business as usual’
approach – especially considering half of that growth will occur in Australia’s four largest
cities.
He said that if we fail to get the planning right now, our cities will be faced with everworsening congestion and bottlenecks, which will contribute to a decline in the quality of life
enjoyed by Australians. If we don’t take appropriate action now, the cost of worsening
congestion could amount to $53 billion per annum by 2051.
We will continue to experience growth in demand for Australian goods from overseas,
particularly our agricultural goods. The phenomenal growth of the Asian middle class will be
a major factor in this.
Between 1996 and 2014, our food exports into Asia and Africa grew by 14% per annum. If
we want to maintain that sort of growth and remain competitive, we need a more efficient
supply chain.
Mr Davies also noted the significant impact of growth in mobile and online trading is having
on the nation’s freight task. Between 2006 and 2014, the number of light commercial
vehicles on the nation’s roads grew by 35% - twice the rate of growth in other vehicle
categories. This obviously impacts on road congestion.
As the Infrastructure Priority List notes, both the Inland Rail project and the development of
Western Sydney Airport are critical, transformational projects that will help meet the needs of
our long-term freight task.
However, Mr. Davies pointed to the absence of a cohesive national strategy to deal with the
coming challenges. Infrastructure Australia often sees good projects, but their proponents
fail to outline how they fit into the national economic picture. The development of the
National Freight and Supply Chain Strategy should assist in this regard.
Mr Davies expressed his hope that the recommendations contained within the National
Strategy will be clear, will engage state, territory and local governments and will take a longterm (ie. 40 to 50 year) view of what needs to occur.
The Department of Infrastructure and Regional Development
Mike Mrdak AO, Secretary of the Department of Infrastructure and Regional Development,
said that Australia has been through several decades of economic reform. Although the pace
has slowed recently, we are nonetheless a more efficient economy than we used to be.
However, he noted there is still a very significant gap between long-term planning and
investment, and until very recently the process for project selection has also been poor.
Thus, even though the past decade has witnessed the biggest lift in transport infrastructure
spending over the last century, people are asking whether we got value for money.
9
Australian Infrastructure Audit – Executive Summary, Infrastructure Australia (2015) Page 5
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He said the National Strategy needs to consider those issues, as well as how to ensure
regulations facilitate the uptake of technology to improve efficiency. We also have to ask
ourselves if we have the right pricing signals in our land transport network.
The Department of Foreign Affairs and Trade
Hamish McCormick, First Assistant Secretary in the Office of Trade Negotiations at the
Department of Foreign Affairs & Trade, set out the contribution of recent trade agreements to
economic growth – the $390 billion worth of exports recorded during 2016 were the highest
in Australian history.
However, tariffs are not the only barrier to obtaining improved trade outcomes. If we wish to
maintain growth, improvements in the efficiency of our supply chain will be critical, which
underscores the importance the National Freight and Supply Chain Strategy.
The Australian Government
In his address to the ALC Annual Dinner, Minister Chester congratulated ALC on hosting the
Forum, noting that its theme of getting the supply chain right dovetails neatly with the
Federal Government’s determination to develop and implement a National Freight and
Supply Chain Strategy.
The Minister noted the enormity of the challenge confronting Australia when it comes to
developing a transport system that safely accommodates passenger vehicles, cyclists and
pedestrians without impeding the flow of heavy vehicles and delivery vans.
This challenge is only becoming more significant as our population grows. Between 2010
and 2030, our domestic freight task is expected to grow by 80 per cent and air passenger
movements will increase to 280 million passengers per year.
By 2050, Australia's population is forecast to reach about 38 million, with Sydney and
Melbourne both having populations of around eight million people apiece.
The Minister said Inland Rail is a critical aspect of designing a transport system that will be
capable of meeting our future freight needs. He emphasised that his key challenge during
this term of government is to advance the Inland Rail project to such a point that it could
never be halted by any future government.
The other signature project that will help boost national freight capacity is the Western
Sydney Airport, a facility for which future generations will be grateful. By the early 2060s, this
facility is anticipated to generate more than 60,000 direct jobs, and contribute $1.5 billion per
year in value-add for the Western Sydney region.
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Industry views
It was pleasing to note the extent to which views expressed at Forum by government
representatives accorded with those expressed by industry and other participants at the
Forum when considering particular issues.
Industry perspectives on some of the most pressing matters covered during Forum are now
discussed.
Planning and encroachment issues
An entire session of Forum 2017 was dedicated to the issue of urban encroachment. This is
because poor planning decisions and their impact on efficiency in the supply chain was
universally identified as one of the most urgent challenges facing industry.
Unless we can better highlight the important economic contribution our industry makes, it’s
going to be hard to win battles on things like corridor preservation. Yet, these battles must be
won, otherwise the cost of future infrastructure development will be prohibitive.
Panellist Chris Noble, Group Director Property with Toll, expressed broad agreement with
this sentiment, noting that increasing land values are already having a huge impact, and the
prevalence of siloing in planning processes will only exacerbate the problem. A National
Freight and Supply Chain Strategy may be our best hope to finally get planning right.
Roy Cummins, Chief Executive Officer of the Port of Brisbane, made the very good point that
there is a symbiotic relationship between good outcomes for freight efficiency and good
outcomes for the community.
The problem lies in the fact that this is vastly underappreciated. The Port of Brisbane
undertakes significant work in the area of environmental protection, so that the community
sees the Port as part of the solution, not a problem.
As things stand, the Inland Rail route stops at Arcadia Ridge. We must preserve the corridor
from that point through to the Port if we want to derive the full benefit of the project.
The industry needs to ‘sell’ the fact that corridor preservation equates to improved safety,
liveability and efficiency outcomes.
This is made clear in the following case study presented to Forum:
Marika Calfas, Chief Executive Officer of NSW Ports, said that urban encroachment is
one of the top five concerns her organisation has about the future. The most
concerning aspect is that encroachment is preventing the industry from using
existing infrastructure to capacity before we have to start planning and building new
facilities.
She highlighted Port Botany as a textbook illustration of the problem. The facility was
originally constructed in the 1960s as a means of getting the ‘dirty stuff’ out of
Sydney’s residential areas. Yet, over the last 50 years, the zoning for the adjacent land
has been altered, first from industrial to commercial, and now increasingly from
commercial to residential.
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The end result is a situation where there is now a residence just 200 metres from the
port – and many formerly single dwelling properties in the vicinity have become high
density properties. The value of land is skyrocketing, and it is much more lucrative to
sell it as residential land. Accordingly, even old factories in the area are now also
being converted into residential properties.
This is engendering more and more noise complaints from new residents, and the
political response invariably results in decisions that favour residents over freight
operators - despite the fact that the port was there long before the residents were.
Ms Calfas pointed to the flow-on effect of this phenomenon – increasing scarcity of
industrial land available to unload and redistribute freight. In the case of Sydney, this
means trucks must travel further west to redistribute, further hampering efficiency in
the supply chain.
The subsequent discussion among delegates revealed a high degree of support for
addressing urban encroachment issues as a core aspect of the National Freight and
Supply Chain Strategy.
Intermodal Solutions
Another Forum session examined the desirability of intermodal solutions for freight
movement, some of the barriers to establishing such a network, and how those might be
overcome.
The session was chaired by Geoff Farnsworth of Holding Redlich, who noted the centrality of
safety to efficiency in the supply chain; you can’t have one without the other. Likewise, in
considering what a National Freight and Supply Chain Strategy might look like, it is helpful to
think of ‘infrastructure’ as being not only the physical structures within our freight systems,
but also the regulatory regimes which govern their use.
Panellist Hans Anneveldt of Aurizon said the attitude of the state government in a particular
jurisdiction was crucial when it comes to the more efficient use of freight infrastructure.
He highlighted the example of the Port of Melbourne, where a rail solution has been talked
about by three successive governments, and contrasted it with NSW, where the state
government intervened to promote better coordination of road and rail freight at Port Botany.
This reduced the turnaround time for trucks at the facility from over an hour to around 20
minutes.
Brendan Bourke, Chief Executive Officer of the Port of Melbourne, responded by saying it’s
not only about what happens inside the port facility itself – the whole supply chain needs to
be examined over the longer term. As part of that, rail will need to take on a greater share of
the workload when it comes to taking the containers out of the port.
The President of the National Farmer’s Federation, Fiona Simpson, observed that there was
an 8% increase in Australia’s agricultural production in 2016 to $64 billion. Of this, around
$50 billion was exported.
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She noted that freight represents a substantial cost for agricultural producers, and more
work is needed to protect and develop strategic freight routes from paddock to port.
Antiquated road and rail networks are a particular problem, and the NFF hopes that the
National Strategy will not only look at the major infrastructure requirements, but also
examine deeper ‘last kilometre’ issues for agricultural freight.
Technology
Panellist Paul Graham, Chief Supply Chain Officer, Woolworths Group, noted that the
longest supply chain in Australia is the equivalent of a route from Dundee to Athens every
day. Obtaining information about movement and quality though the supply chain will require
significant investment on the part of suppliers and partners.
Increasing urban density resulting from our growing population will pose a significant
challenge to the efficiency of the supply chain, so this is something the National Strategy
must address.
The panel also noted the importance of a regulatory framework that does not impede the
uptake of new technologies. Five years ago, few would have predicted Uber’s rise as a
major player. Now, the conversation is turning towards the use of automated vehicles. We
need to make sure our regulatory structure doesn’t impede potential efficiency improvements
through new technologies.
The top priority must be safety in the supply chain. Australia’s approach to safety in the
trucking industry is lagging significantly behind that of other comparable nations. In
particular, Australia’s trucking industry is making insufficient use of telematics when it comes
to making business decisions.
Mr Byrne advocated a national telematics law permitting the use of data about vehicle
performance, equipment and driver behaviour that can be used to enhance road safety,
improve efficiency within the logistics industry and identify problems with driver behaviour.
The first panel session of the Forum’s second day also examined technological solutions for
delivering goods to inner-city residents in the face of ever-more restrictive planning and
vehicular access policies.
Professor Russell Thompson of the Department of Infrastructure Engineering at the
University of Melbourne discussed the particular challenge of ‘last mile’ issues when
delivering goods to new residential apartment towers.
In his view, the solution will come from greater use of technology, and in particular using
urban consolidation/distribution stations. These can provide for multi-modal routing systems
using bicycles, walkers and electronic vans to facilitate freight delivery. It is far more efficient
than using large vehicles to deliver small loads.
This was confirmed by the following presentation to Forum made by Dr Jeff Potter, from the
National Transport Commission:
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Dr Jeff Potter, Project Director – Productivity and Safety with the National Transport
Commission underlined the fact that access to up-to-date data is essential in allowing
organisations to ascertain their current position, to monitor the success of any
changes undertaken, and to identify priority areas for improvement.
He drew attention to the National Transport Commission’s recent publication, Who
Moves What Where, which brings 150 data sources together to provide an overall
picture of the nation’s transport road transport network.
Although this is of great assistance, there are still some barriers to information that
need to be overcome. For instance, it is hard to capture the activities of smaller
operators, or those who move their own freight within their normal business
activities. Another difficulty is that a significant proportion of drivers identify
themselves as part of an industry other than logistics – such as agriculture or mining.
Dr Potter advocated the use of open data policies in the sector, to permit more
effective policy responses. There is much data gathered for primary purposes other
than infrastructure planning, but there’s no reason we can’t make use of it. In that
connection, the NTC is working towards a transport satellite being included as part of
the National Accounts, in much the same way as the tourism sector already has one.
Unfortunately, information about road freight is lacking - and the large number of
operators in the market makes collection difficult. We will only get better decisions if
we can obtain better information, particularly regarding last-kilometre issues,
congestion and optimal locations for truck stops. The current collection methodology
- by paper from truck drivers – is both costly and fragmentary.
He outlined the experience with a pilot survey the ABS did using GPS date from ten
companies over a month. The results were broadly in line with the traditional the
paper survey - but the GPS data had far greater detail. Particularly revealing was the
comparison between truck speed and the speed limit, which demonstrated where and
when there was road congestion.
The GPS data also highlighted truck-stop use; the use of alternative routes; journey
time taken by a truck with multiple drivers and so on.
The discussion that concluded the session produced general consensus that we
should be using these powerful tools to inform investment decisions.
If what occurred with the ABS trial could be expanded to incorporate data from 20 to
30 major operators, it would provide a very accurate picture of road freight issues.
This could well be the basis for the publication of a quarterly indicator, led by the
industry itself.
Rail
A session chaired by ARTC’s Simon Ormsby discussed what needs to change so that rail
carries a greater share of the national freight task.
The first contribution to the discussion came from Catherine Baxter, Vice President
Operations for south-east Queensland, NSW, Victoria and Intermodal with Aurizon.
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In her view, the advent of the National Freight and Supply Chain Strategy will have a major
impact in encouraging greater use of rail and promoting the associated safety benefits. In
that respect, it would be good to get the Inland Rail project moving more swiftly, so that
these benefits would become more obvious.
However, she also noted the continuing challenge around shorter hauls that are lower in
volume. There must be a review of the pricing of road and rail, and it should be overseen by
an independent pricing regulator. We need to make sure that revenue generated as a result
of such reform actually goes back into infrastructure.
Ms. Baxter expressed some hope that the move to a national rail regulator would also prove
helpful in increasing rail’s share of the freight task. Further harmonisation would also assist –
not merely rail gauges, but also of rules across different rail networks.
Her fellow panellist David Irwin, CEO of Pacific National, neatly summarised some of the
frustrations within industry about the seemingly glacial pace of reform.
He pointed out that it has taken 12 years to get a national regulator for rail – and despite
progress, we are still not all the way there. There are also enormous barriers to entry; the
result being that we have only two national operators in the whole of Australia.
Mr Irwin also said that in his view, there is far too much of a ‘what’s in it for me’ attitude
between the various states, which impedes progress on reform initiatives. Establishing a
National Strategy will help to alleviate that, and foster bipartisan and industry support for the
initiatives contained within the Strategy. In its absence, businesses and consumers are the
ones ultimately paying the cost.
The panel also lamented the fact that in some respects, rail has proved late to the party
when it comes to embracing new technology that can drive better outcomes.
However, this session nevertheless emphasised the importance of rail as an essential
component of any Freight and Supply Chain Strategy.
The importance of this can be gleaned from the following summary of a subsequent Forum
session, dealing with intermodal ports:
Chaired by Mick Cronin, General Manager Strategy & Commercial with NSW Ports,
this panel discussion explored how NSW is developing its intermodal network
capacity.
To begin, panellists Andrew Adam, National General Manager – Intermodal at
Pacific National and James Wright, Director of Commercial Development with
Maritime Container Services provided delegates with an overview of the capacity
and growth trajectories of their respective organisations.
Mr. Adam particularly emphasised the importance of developing infrastructure
such as the Parkes intermodal facility in building the freight capacity of the rail
network. We lose opportunities if we can double-stack trains from Perth to Parkes,
but are forced to shuttle single-stacked trains from Parkes through to Chullora.
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Ian Hunt, Chief Executive Officer, Moorebank Intermodal Company noted that NSW
presently moves around 2.5 million containers per year. In his view, we need to lift
the number of containers moving by rail from 100,000 to 1 million per year. There
is capacity to do this with existing infrastructure, and Moorebank will be able to
take an additional 1 million per year – but growth of the freight task means we will
need capacity for another one million on top of that. This is something that must
be addressed in the National Freight and Supply Chain Strategy.
He said the most significant problems stem from the fact that existing facilities are
located near residences and roads that have limited expansion capacity.
Maurice James, Managing Director, Qube Holdings, explained how Sydney’s
congested road network is making road freight in and out of Port Botany more
expensive and unworkable, expressing confidence that the advent of new
technologies will witness changes in the supply chain. Moorebank sees no reason
why freight cannot be conveyed from Port Botany to the intermodal facility via
driverless trains. The crippling traffic congestion on Sydney’s M5 could be
substantially alleviated if more containers shifted to rail from road freight.
During the discussion which followed, it was observed that the preservation of
freight corridors now will actually avoid community objections and hostility down
the line. It’s important to get engagement with the general community right, and
not take short-cuts. In the current environment, the industry is likely to obtain
more support for its objectives if it can explain what those objectives would mean
for job creation – now, and for future generations.
Road pricing
Mr Rod Simms, Chairman of the Australian Competition and Consumer Commission, noted
that the development of a National Freight and Supply Chain Strategy should receive far
more attention than it does, given its economic importance.
Mr Simms highlighted road pricing reform as especially important, but noted that there is a
considerable lack of awareness about it, both in the general community and among some
decision-makers. The mere mention of “congestion pricing” immediately kills any sensible
discussion, because it is portrayed as a new tax.
He suggested the best way to improve road funding would be to hypothecate the money
raised from road taxes and charges, thus ensuring that revenue raised from them is actually
invested in the road network.
The 26 years of continuous economic growth Australia has now experienced has not been
an accident. A lot of it was as a result of a smart approach to regulation and policy design in
the 1980s. Then, impediments to economic growth were methodically stripped out of the
system. We need to do the same again.
Mr Simms observed that although none of us like regulation, the fact is there needs to be
some in place in order to make sure markets work. But it will work best if it is a national
approach, and that is why the development of a National Freight and Supply Chain Strategy
is a critical economic priority.
15
Key Messages from ALC Forum 2017
The discussions during ALC Forum 2017 clearly established industry expectations as to the
content of a National Freight and Supply Chain Strategy.
In summary, these are:
1.
The need for infrastructure to operate as efficiently as possible. This means
developing planning instruments that not only identify and preserve the industrial
lands to provide the jobs and logistics facilities of the future, but also ensure
residential developments do not encroach on infrastructure and prevent its effective
utilisation.
2.
The development of some form of mandatory system for the electronic collection of
information required for safety, planning and productivity purposes.
3.
Levies, fees, charges and taxes raised for the purposes of developing an identified
piece of infrastructure (either through road funding, ‘value capture’ or any other
device) should be ‘hypothecated’ for the express purpose of developing that
infrastructure; our industry cannot be used as an ATM to raise funds for the general
purposes of government.
4.
The development of Inland Rail as an important component in ensuring rail as a
modality has a clear place in moving freight within the Australian freight supply chain.
5.
Commonwealth leadership is required to promote greater supply chain safety and
efficiency. This means:
(a)
helping industry in making the case to the public at large that Australia’s
economic future requires not only investment in freight and logistics
infrastructure, but also the capacity to operate such infrastructure with
maximum efficiency.
(b)
promoting greater efficiency in the use of freight infrastructure by pursuing
agreements with States and Territories that require, (as a condition of
funding) the development of planning instruments that:
i) clearly preserve transport corridors and employment lands; and
ii) prevent urban encroachment in areas that surround freight
infrastructure.
(c)
establishing a specific Federal Department of Planning and Infrastructure, so
as to concentrate all Commonwealth expertise in these issues (including the
development of funding mechanisms) in one area.
Relevant recommendations made by ALC in Getting the Supply Chain Right are contained in
Attachment 2.
16
ATTACHMENT 1
ALC Forum 2017 - Major Outcomes & Points of Agreement
 There was general agreement that the National Freight and Supply Chain Strategy
should build upon positive progress in recent years to improve logistics planning and
reforms, which included the development of state freight and port strategies and the
National Land Freight and Port strategies. The National Strategy stands its best
chance of success if its development is supported by all political parties and at all
levels of government.
 The Forum emphasised the pressing need to overcome fragmented decision-making
on critical infrastructure projects between local, state and federal governments.
Delegates expressed particular concern at the parochial attitude that still pervades
some aspects of decision-making.
 Although logistics is a highly competitive industry both within and across the modes,
there was nonetheless general agreement that the National Freight and Supply
Chain Strategy should be ‘mode neutral’’. However, there was broad agreement that
the strategy should particularly examine initiatives to increase rail’s share of the
national freight task, especially with regard to long-haul, bulk freight.
 The proposed Inland Rail link from Melbourne to Brisbane enjoyed significant support
from delegates. With freight movements on the east coast of Australia projected to
double over the next decade, there was a broad consensus that Inland Rail should
be ‘port to port’ and form the backbone of the National Freight and Supply Chain
Strategy.
 There was agreement that achieving a better road-rail mix in the delivery of the
national freight task will help to reduce costs, deliver improved safety outcomes on
our roads and produce clear environmental benefits. Communicating these benefits,
both to government and to the wider community, will be absolutely crucial in building
political and public support for Inland Rail.
 Many speakers observed that the National Freight and Supply Chain Strategy must
be more than just a priority list of infrastructure projects. The Strategy must take a
long-term view, to ensure the best freight links are not lost to the supply chain
through encroaching residential and commercial development.
 Attendees called for more effective action from government at all levels when it
comes to preserving transport and logistics corridors. Unless state and local
governments commit to a National Strategy that protects freight corridors from
expanding residential and commercial development, the most efficient transport and
logistics solutions will become prohibitively expensive. This will in turn limit the
nation’s capacity to achieve better economic outcomes.
 There was firm recognition that the National Strategy must be backed by investment.
The financial resources required to make it work will be significant over time, and will
likely depend on investment from a mix of government, private and institutional
sources, and possibly proceeds from asset recycling.
17
 The National Freight and Supply Chain Strategy must also focus on the lost
opportunities and continuing costs that arise from overlapping and outdated
regulation within the logistics sector, especially at the state level. There is a need for
greater harmonisation between state jurisdictions when it comes to regulation in this
area if efficiency and economic gains are to be achieved.
 There was strong support for reform of road pricing. With technological
enhancements (such as GPS tracking) now making it easier than ever to monitor
vehicle use, it is imperative that we move to a model where road users pay according
to where and when they travel. It is clear that fuel excise is no longer raising sufficient
revenue to support the road network of a 21st century economy.
 It was recognised that we must achieve a better balance between the planning needs
of efficient freight transport and residential development requirements. Curfews,
detours and prohibitive speed limits all impose added costs on businesses, which are
ultimately borne by consumers.
 In particular, local government must be incentivised to consider national freight needs
in the context of their own decision-making. Equally, state and federal governments
must recognize that local government cannot be expected to pick up the cost burden
of building and maintaining roads which form part of a national or export freight
network.
18
ATTACHMENT 2
Selected recommendations from the ALC election priorities document, Getting The
Supply Chain Right.
4.
An incoming government, in partnership with the States and Territories, should
establish effective corridor protection mechanisms from urban encroachment or
incompatible land uses to ensure the timely preservation of surface, subterranean
and air corridors and strategic sites for future infrastructure priorities
5.
An incoming government, in partnership with the States and Territories, should
establish effective protection mechanisms for existing freight facilities such as ports,
intermodal terminals and freight corridors from urban encroachment to ensure freight
infrastructure is able to accommodate current and future freight volumes.
6.
An incoming government should recognise that efficient and economically
sustainable freight chains are required to operate on a 24 hour/7 day basis and so
caps, curfews and other arbitrary restrictions on operations should be avoided.
This principle should be applied when making decisions relating to the protection and
development of freight corridors and employment lands.
8.
An incoming government should establish infrastructure reform incentives to link
additional infrastructure funding to the delivery of reform outcomes.
9.
An incoming government should ensure state and territory governments’ planning
instruments require sensitive use developments (such as residential) in close
proximity to infrastructure to implement appropriate mitigation measures for factors
such as noise as part of delivering high quality development design outcomes. This is
to allow freight activities to meet demand. Most importantly, metropolitan land use
and transport planning processes should be integrated.
15.
An incoming government should actively fund and manage the inland rail project in a
holistic and genuinely national manner.
16.
An incoming government should continue identifying, supporting and promoting
opportunities where short haul rail services may offer supply chain efficiencies and
broader community and environmental benefits.
19.
The road pricing process currently being developed by the COAG Transport and
Infrastructure Council (TIC) to replace the current PAYGO formula must:
a) have the principles guiding its development finally determined and
published within 12 months of an incoming government’s first COAG TIC
meeting;
b) have industry involved in all aspects in the development of the road funding
model to ensure its workability and thus early implementation, and not just be
involved in commenting on developed models contained in regulatory impact
statements; and
c) determine that any community service obligations placed on road owners
by Government must be funded from the government’s general revenue and
not from any new road user charge.
19
26.
So as to give the community assurance the road transport operators have in place
systems to ensure that vehicles are operated safely, an incoming government
should request the next available TIC meeting for an amendment to the
Heavy Vehicle National Law to require heavy vehicles to carry data recording
equipment that captures:
a) the longitude, latitude, speed, date and time of circumstances of speeding
events;
b) engine on/off data; and
c) for such data to be retained by operators.
27.
Legislation requiring the capture of data for statutory reporting and monitoring
purposes should rely on open standards and a systems platform approach rather
than prescribing particular pieces of hardware and without the overriding concern to
ensure the collection of data to ‘evidentiary standards’ to support (in particular)
prosecutions.
28.
An incoming government should encourage the development of collaborations
that permit the transfer of non-proprietary information across the supply chain.
The economic regulator with responsibility for land transport pricing and access
decisions should be permitted to authorise such a practice if it is regarded as being
prima facie anticompetitive.
29.
An incoming government should continue to provide ongoing support for
technological improvements in the rail freight sector to drive improved efficiency
outcomes.
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ALC MEMBERS
Corporate members
Associates
PORT OF NEWCASTLE PRIMARY LOGO – 2 COLOUR
Strategic partnerships
National sponsors
office of Economic Development
Honorary fellows
•
•
•
•
Andrew Ethell, March 2017
Don Telford, March 2016
Ingilby Dickson, March 2015
Ian Murray AM, March 2012
•
•
•
•
Paul Little AO, February 2011
Peter Gunn AM, February 2011
Ivan Backman AM, May 2010
David Williams OAM, May 2010
Current at May 2017