Highlighting the industry’s view

Michael Kilgariff, Managing Director, Australian Logistics Council.

Michael Kilgariff, Managing Director, Australian Logistics Council.

With the Federal Government having announced the composition of the expert panel that will advise on the development of the National Freight and Supply Chain Strategy, the real work of shaping its content is now well and truly under way.

It’s not indulging in hyperbole to say that we have a once-in-a-generation opportunity to get this right. Australia’s rapidly growing population coupled with changing patterns of consumer behaviour – especially with the growth of e-Commerce – will impose significant additional demands on the freight and logistics sector.

Indeed, the National Transport Commission (NTC) estimates that Australia’s freight task will grow by some 26 per cent in the next decade alone. When you think of the capacity constraints that are already evident in some of our major cities, particularly growing traffic congestion, such forecasts can appear daunting.

Although it will require a significant degree of hard work on the part of the freight and logistics industry, I am nonetheless confident that we can come up with solutions that will allow us to meet this burgeoning demand.

We know that industry is willing to play an active role, and we know that the Federal Government’s agreement to develop a National Freight and Supply Chain Strategy shows decision-makers are willing to listen to industry’s advice.

Thus, our immediate challenge is to make certain the advice we provide is the right advice, which will help ensure the Strategy that emerges is the right one for our industry and the right one for the Australian economy.

I think there has been an encouraging start on this front.

At the beginning of March, the ALC held its annual Forum in Melbourne, and the entire focus of the event was discussing the content of the National Freight and Supply Chain Strategy.

Of course, we are not starting with a blank piece of paper. Many of the attendees at the Forum are leading figures within Australia’s freight and logistics industry, and throughout their many years of collective experience they have garnered insights and evidence that will prove invaluable in terms of getting policy settings right.

Although ALC Forum 2017 was the first industry-wide gathering since the Prime Minister’s announcement last November that the Government would develop the Strategy, the discussions revealed there is already a remarkable degree of consensus across the industry about what is required to make it effective. This is a strong basis from which to work.

To help synthesise the industry’s conversations to date, the ALC has produced a Working Paper that summarises the views of industry to date about the contents of the Strategy.

Some of the major themes addressed in that publication are as follows:

Urban encroachment issues

In the lead up to the 2016 Federal Election, the ALC prepared a document called Getting The Supply Chain Right, which highlighted the freight and logistics industry’s most pressing priorities for an incoming government.

One of those was urban encroachment, and the lack of buffer zones, land separation setbacks and design mitigation measures around sensitive use developments, which can significantly hamper the efficient operation of freight-related infrastructure.

At the time, the ALC noted that the national freight supply chain will be unable to support Australia’s growing demand if facilities and infrastructure continue to be prevented from realising their optimal capacity, due to restrictions imposed on their use or operating conditions.

This includes things like night curfews for airfreight and port facilities, restrictive speed limits and the banning of heavy vehicles from key routes that provide access to freight facilities.

These things are often pursued by governments in search of an electoral boost. However, their long-term impact is to simply build inefficiencies into the supply chain, which ultimately results in higher consumer prices.

As industry ‘insiders’, we understand 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 by the public at large, and even at times by decision-makers within government.

This is how we end up with poor planning outcomes, such as the failure to preserve freight corridors, and insufficient consideration of freight operations when pursuing ‘urban infill’ objectives surrounding new residential developments.

The freight and logistics industry needs to better ‘sell’ the fact that corridor preservation equates to improved safety, liveability and efficiency outcomes.

Technology issues

There was a broad consensus among participants at the Forum that not enough is being done to make use of data, both in terms of improving safety and efficiency across the supply chain, and also when it comes to effectively planning the nation’s freight infrastructure.

Of course, the top priority must be safety in the supply chain. Regrettably, Australia’s approach to safety in the trucking industry is lagging significantly behind that of other comparable nations. In particular, several participants at the Forum noted that Australia’s trucking industry is making insufficient use of telematics when it comes to making business decisions.

The ALC will continue to pursue 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.

Technology also offers a potential way to overcome the impact of ever-more restrictive planning and vehicular access policies when it comes to CBD freight delivery. One detailed presentation discussed 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 – especially given that an increasing number of large-scale residential developments do not incorporate delivery zones or provide access facilities for freight vehicles.

Rail issues

There is very strong support within the industry for construction of the Inland Rail, at last providing a port-to-port rail link from Melbourne to Brisbane. This project has had a long gestation, but with the increasing demand for freight resulting from free trade agreements and the growth of e-Commerce, encouraging more freight onto rail is vital.

Constructing the Inland Rail will help to cut freight transport times, reduce road congestion and promote cheaper consumer prices. There are also considerable economic benefits for regional communities along the route.

However, there are also opportunities elsewhere in the sector to make greater use of short-haul rail. This includes pursing projects like the duplication of the rail line at Port Botany, which will help achieve NSW Ports’ target of moving three million Twenty-foot Equivalent Units (TEU) by rail by the year 2045.

Pursuing a rail connection between the Port of Melbourne and three of Victoria’s inland ports will also be important in promoting supply greater supply chain efficiency and addressing road congestion.

This issue is especially important in the context of Asia’s rapidly expanding middle class, whose appetite for the type of high-quality agricultural goods Australia produces will be a source of growing demand on our freight and export infrastructure. We must be mindful not to cede our competitive edge in this area by failing to have a supply chain that operates safely and efficiently from paddock to port.

The next steps

The ALC believes that a dynamic Strategy requires a dynamic consultation process to guide its development, and accordingly the ALC will be continuing to engage closely with industry over the coming weeks and months to make sure we get the right outcomes.

However, from the conversation thus far, it’s already apparent that there are some clear expectations from industry.

Existing freight infrastructure needs to be made to operate efficiently, through making sure planning instruments not only identify and preserve the industrial lands to provide the jobs and logistics facilities of the future, but also ensure new residential developments do not encroach on infrastructure and prevent its effective utilisation.

It will also be necessary to establish some form of mandatory system of data collection that will allow better decision making and improved outcomes in safety, planning and investment decisions, all of which will help boost productivity.

We will need to move towards hypothecation of levies, fees, taxes and charges raised for the purpose of developing an identified piece of infrastructure – so that money raised is invested properly and not put back into consolidated revenue.

The construction of Inland Rail must continue to be treated as a priority, ensuring rail as a modality has a clear place in moving freight in the Australian supply chain.

Great Commonwealth leadership needs to promote supply chain safety and efficiency – this includes helping the public at large understand the importance of supply chain efficiency, as well as incentivising state jurisdictions to consider freight needs in their planning instruments by making Commonwealth funding support subject to conditions such as having corridor preservation strategies in place.

Finally, the establishment of a specific Federal Department of Planning and Infrastructure will allow the Commonwealth’s expertise in these areas (including the development of funding mechanisms) to be concentrated and properly able to be used as resource, by industry and by other jurisdictions.