Logistics & Transport NZ by CILTNZ

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THE OFFICIAL PUBLICATION OF CILT NEW ZEALAND

Supply chain congestion: a bird’s eye view Transition of Freight in New Zealand InTIME New research reveals true value of rail

Volume 19 Issue 4 June 2021

ON THE COVER Aerial shot of Lyttelton Port Photo: Lyttelton Port Company LOGISTICS & TRANSPORT NZ IS THE OFFICIAL JOURNAL OF THE CHARTERED INSTITUTE OF LOGISTICS & TRANSPORT NZ

Contents COVID-19 and the impact of the Suez Canal obstruction................................... 3 Supply chain congestion: a bird’s eye view..............................................................5 Transition of Freight in New Zealand InTIME.........................................................6 Biofuels: The immediate option to decarbonise transport ...............................8 Government commitment to investment in rail...................................................11

Decarbonising the freight supply chain.................................................................. 12 Work site traffic management.................................................................................. 15 New research reveals true value of rail.................................................................. 16 Lyttelton Port Company – future-thinking and community-orientated...... 18

Call for nominations for the 2021 Awards............................................................ 20

In the next edition

The editorial team welcomes expressions of interest for submitting an article for the September 2021 edition of this journal, especially from young professionals (those under the age of 35). Contributors should in the first instance contact the editorial convenor, Murray King (email murray.king@xtra.co.nz) to discuss their article. Deadline for the September 2021 edition: August 3.

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June 2021

MSC Ship at Port of Rotterdam. Photos : Port of Rotterdam

COVID-19 and the impact of the Suez Canal obstruction

BY EMILE HOOGSTEDEN

THE PORT OF ROTTERDAM ALONG WITH OTHER PORTS AROUND THE WORLD HAS BEEN IMPACTED BY COVID-19 AND THE SUEZ CANAL BLOCKAGE RESULTING IN DELAYS IN ARRIVAL TIMES OF VESSELS WHICH HAVE LED TO AN INCREASE IN DWELL TIME FOR EXPORT AND TRANSHIPMENT FLOWS.

This combination of events has disturbed supply chain equilibrium and led to an imbalance in empty equipment, and also congestion caused by full and empty containers left in the container yard results in lower productivity in ports and terminals and longer dwell times for containers.

The Port of Rotterdam and the port community have taken various actions to limit the effect including additional anchorages for container vessels. Ships were also allowed to anchor closer to the pilot boarding area, allowing swift exchanges with departing vessels.

Ports and terminals have acted by limiting acceptance of containers (empty, export and, transhipment) to avoid yard congestion, and Port of Rotterdam has worked with other port infrastructure operators (such as depots, hinterland, and regional trade hubs) in order to act as a buffer.

Agents and terminals received a heads-up regarding container vessels with a vertical tidal window as this effects the berth planning.

Current Suez situation and action plan Currently, all vessels (63 excluding the Ever Given) have made their call in Rotterdam. Nevertheless, it will remain very busy for the weeks to come with relief expected around June. This is dependent on efficiency of other modes and improving reliability of deep-sea vessels.

The Coast Guard also allowed bunkering at sea provided the vessel could demonstrate immediate need and weather was suitable. Proactive dredging was instigated during the slow period in anticipation of the ‘Suez Armada’ so that dredging activities during the busy weeks can be limited. Infrastructural works during daytime were, when possible, postponed and we found additional empty depot capacity on request to deal with overflow of boxes on the terminal.

Together with terminals and Portbase, Port of Rotterdam launched a website www.portbase.com/suez in order to share information throughout the shipping and port community. In addition, regular sessions with the Logistics Alliance were set up to keep all parties informed on current situation. Other measures that have helped include increased use of night distribution, strategic hinterland hubs, and bundling concepts. Port of Rotterdam also received calls from hinterland operators who actively approached the market to offer support as overflow locations for export cargo and for bundling import cargo. Cont. on page 4

4 Logistics & Transport NZ

Longer term plans for optimising the supply chain Optimising infrastructure in the port area include the on-port road system called the Container Exchange Route. There has also been work undertaken to deepen basins, and new quay walls have been built at Prinses Amaliahaven and Theemswegtracé. Optimising port calls has been managed through the digital platforms such as PortXchange, while hinterland calls have been managed via Nextlogic and data sharing via Portbase datahub, Navigate and Scope.

In the meantime, we have the year-to-date figures for January-April 2021 and we see an ongoing increase. We are at 6.3 per cent in twenty-foot equivalent (TEU) compared with 2020 (which equals the 2019 Jan-Apr figures). Asia – Europe volumes are at +11 per cent compared with 2020 (2.443 mio TEU).

Collaboration between sector players has resulted in the bundling of container volumes in the hinterland and in the port. New agreements with deep-sea terminals regarding call times (fixed windows) and call sizes can further improve the reliability of the container shipping product. Terminals are offering fixed windows, on certain conditions, to support bundling initiatives by means of guaranteed handling times. Small and medium-sized shippers and forwarders are seeking fast, efficient, and sustainable solutions for their supply chain. We believe that transparency of container routeing possibilities will facilitate and optimise the decision-making process of shippers and forwarders and meeting their needs.

Two major trends in recent years There has been a consolidation of carriers and alliances and we are handling larger vessel- and call sizes. Causing major impact on port and terminal operations globally and the Asia – Europe trade specifically are: • Fewer port calls and greater peaks; • More pressure on port infrastructure; • Hinterland modes need to match deep-sea scale to avoid congestion and longer lead-times; • First lockdown led to capacity adjustments carriers by cancelling port calls (‘blank sailings’); • Reopening of economies led to unexpected increase in demand; • Mismatch between surge in volume versus fixed terminal capacity led to delays; • Labour shortage in several ports due to COVID-19 health measures; • Ripple effect of congestion between ports; and • Schedule reliability has dropped drastically.

Emile Hoogsteden

In this role as Vice President Commercial at the Port of Rotterdam, he is responsible for acquisition of shipping line calls and leases concerning containers and other general cargo, logistics, customer relations management and networking.

June 2021

BY HARRIET SHELTON

Supply chain congestion: a bird’s eye view This time last year New Zealand emerged from a nationwide lockdown. The general consensus was that while there might be a few hiccups ahead, the worst was behind us. Little did we know that the scene had already been set for some of the most significant and widespread supply chain disruption the sector will ever see. Months later, the challenges continue. It is only due to the hard work of people across the supply chain that the wheels have not fallen off completely. Containerised supply chain congestion appears likely to continue for at least a while yet. The passage of freight around the world and throughout New Zealand is beset with delays and uncertainty. Ships queue outside congested ports, container yards are full, and transport and storage costs are increasing. The reasons for this unprecedented worldwide congestion are complex, and so are the solutions. As the Government’s lead transport advisor and steward of the transport system, the Ministry of Transport is one of the few organisations that is able to take a bird’s-eye view of the supply chain system. While we are well-placed to draw the pieces together and make connections across what is a highly complex and dynamic network, we rely on operators and cargo owners to tell us what’s going on the ground. We recently brought together a range of industry representatives from all parts of the supply chain to share their views on the core issues and to generate ideas for solutions. The atmosphere was positive and constructive, and many issues and possible mitigations were identified. Three key themes emerged: resilience and capacity, information visibility, and optimisation through better coordination.

Resilience and capacity New Zealand’s supply chains are optimised for efficiency, as they are the world over. Networks and infrastructure have been designed to minimise costs, with ‘just-intime’ having become the dominant logistics model. This works well under stable market conditions, but a lean system is not designed for volatility and is poorly placed to cope with shocks and disruptions. The lack of resilience in our supply chains became painfully apparent as COVID-19 lockdowns drove up global consumer demand just as port productivity fell due to social distancing measures and COVID-19 infections. In New Zealand, reduced productivity at Ports of Auckland resulted in shipping lines diverting some Auckland-destined cargo to other ports. Returning this cargo to Auckland required extra rail and roading capacity – fixed infrastructure that cannot be scaled up quickly

to meet demand surges, particularly in the case of rail. An obvious solution to this problem would be to simply build extra capacity into the system, whether infrastructure or labour, or both. But it is much less straightforward to agree on where additional capacity is best provided, given that every shock will be different and may place demands on different parts of the system. Extra capacity also comes with a high price tag, which may be difficult to justify if the need for it only exists during sporadic disruptions. The workshop participants agreed that it was not cost effective to build in lots of idle capacity to guard against shocks, but suggested other ways to improve resilience such as better information visibility and mechanisms to enable more effective coordination.

Data and information visibility International supply chain commentators frequently point to a lack of information visibility as a key barrier to better resilience and risk management. Our supply chain workshop participants reinforced this view. As supply chain networks have become more complex over the last few decades, they have become harder for operators to control and predict. The ability to see from one end of the pipeline to the other is crucial, especially when conditions are volatile and uncertain as they are right now and will likely be in the future. Access to real-time data enables operators to react to changes and adapt more quickly, and information sharing provides a powerful platform on which to build collaborative working relationships across the supply chain. Achieving these things will require a culture shift towards more openness and data sharing, a commitment to more continuous monitoring (as opposed to ‘predict

and provide’), more willingness to use technological solutions even if they appear costly, and more investment in innovation.

Optimisation and coordination Supply chains operate as a delicately balanced ecosystem. With so many inter-connections and inter-dependencies between all the moving parts, there is an ever-present threat of contagion risk; the possibility for a failure in one part of a network having a knock-on effect across the whole network. This has occurred on a massive scale over the last 10 months, with multiple factors causing reverberations across the entire global system. The recent Suez Canal blockage is a classic example; in less than three days more than 500 ships started backing up, disrupting already-constrained shipping schedules all over the world and creating flow-on impacts for landside operations. A complex problem like this can only be solved through all components of the system playing their part. For example, reducing container congestion at ports needs to be managed while shipping lines’ schedules remain unreliable. This relies on the combined efforts of rail and road freight to carry imports away in a timely fashion while also avoiding too-early delivery of exports to ports. This in turn requires off-site container yards, distribution centres and depots to be open to receive and dispatch cargo whenever needed. Extending depot opening hours was suggested as a short-term mitigation at our workshop, but achieving this will require alignment among shipping lines, rail and road freight operators and cargo owners.

The challenge for New Zealand Whatever New Zealand does to address its own domestic congestion issues, there will continue to be delays and disruptions as long as the global congestion and disruption Cont. on page 6

6 Logistics & Transport NZ

continues. Our small, remote country is the final stop at the end of the world’s supply chains, and as an island economy we are heavily reliant on sea freight for our imports and exports. A blockage in one part of a supply chain on the other side of the world can quickly cascade through to the South Pacific, where the impacts may be felt more strongly because of our small size and geographic isolation. New Zealand has limited influence over the international drivers of supply chain disruption, but we can try to alleviate the pressures domestically. What we can also do is organise ourselves to ensure that we are better positioned for future shocks and disruptions. This longer-term planning task is a better fit for Government in an environment where supply chains are primarily market-driven and the appetite (and likely success) for centralised coordination is low. It does not make sense for Government to intervene in the day-to-day operations of the supply chain. Voices from across the freight sector are supportive of the Ministry of Transport’s plans for an inaugural national freight and supply chain strategy. Last year we began scoping a comprehensive work programme that will take us to all the corners of the supply chain system over the next two years and beyond. Our strategy will consider issues as diverse as climate change, resilience, and efficiency. The Government intends for this strategy to provide a context for longer-term multi-modal planning and infrastructure investment, as well as a framework for collaboration and coordination between industry players. We need a system-wide and inter-generational approach to help make better decisions about where to focus our efforts within the freight system and to provide more certainty for the sector. Because it has not been done on this scale before, it will take time to get it right.

whenever they need or want them. Most people only interact directly with freight when they momentarily get stuck behind a slow truck on the open road. Last year’s lockdown and subsequent disruption brought freight closer to the forefront of people’s minds. They discovered that they might have to wait longer for their stuff to arrive. This is a good thing; it is important that people don’t take freight for granted. The need for better freight literacy was a common aspiration amongst participants at the supply chain workshop. When freight only operates below the radar, customers assume there will always be capacity to meet demand whenever or wherever they require it, whether that is on a truck, ship or train, at a port or on the shop floor. But customers and consumers are also part of the supply chain system, and their decisions and requirements influence the way the system operates. This can create unreasonable pressures, particularly when times are tough. Greater awareness of the important role that freight plays in the economy has many benefits; for supporting public decisionmaking on tricky trade-offs, for investment in essential infrastructure, and even for boosting the attractiveness of freight as a career option – particularly important for some parts of the sector currently facing skills shortages and an ageing workforce. New Zealand’s supply chains are not broken; they can be very adaptable, and operators have coped admirably with the multiple challenges that the last year has thrown at them. We have an opportunity to use the learnings from these experiences to create a better system that benefits everyone. Let’s not waste it.

In the meantime, most of the short-term mitigations to the current supply chain congestion rest with industry. Our workshop participants came up with great ideas, but these will require market players to collaborate with each other – a challenge for a sector that is fragmented and naturally competitive. Depot and yard opening hours, for example, need to work for the market and are not something the Ministry can lead. But our door is open to facilitate and support the sector to respond. There are opportunities to leverage too. The experience of the past year has highlighted the importance of freight to people’s everyday lives. In times of stability, freight operations are almost invisible to the general public. Supply chains operate smoothly and seamlessly, providing producers and consumers with all the things they need,

HARRIET SHELTON has worked in transport planning and policy for over 20 years, mostly within local government, and recently made the move to central Government. In her current role at the Ministry of Transport, Harriet leads a policy team focussing on strategic freight and supply chain issues including rail, ports and shipping.

Transition of Freight in New Zealand InTIME BY DR SUSAN KRUMDIECK IMAGINE THAT A BILLIONAIRE HAS ISSUED A $100 MILLION PRIZE FOR FINDING THE NEXT STEPS ON THE PATHWAY TO 80 PER CENT LOWER EMISSIONS IN NATIONAL HEAVY FREIGHT, WHILE CONTRIBUTING 50 PER CENT MORE TO THE NZ WELLBEING ECONOMY. The University of Canterbury InTIME Team are going for the prize, identifying next big steps that turn the corner to low carbon, and we only have three days. The draft Climate Change Commission (CCC) report spends a lot of time setting out how bad New Zealand’s transport system is compared to other countries. We certainly don’t find the next steps to transition in the CCC report. The CCC advisory groups were largely purged of technical people who challenged the assumption that hydrogen was the miracle solution to emissions reduction. Therefore, it isn’t surprising that the “solutions” mentioned in the report revisit the biofuel policy from the 2000’s and the current favourite, hydrogen longhaul trucks, delivered by one particular company with no technical track record. Our InTIME Team will use the Interdisciplinary Transition Innovation, Management and Engineering (InTIME) Methodology.1 The first job is to discuss the operations, costs, and technologies of the current system with the industry stakeholders. The InTIME Team has training from University of Canterbury2 in how to engineer the realistic, reliable, regenerative, and renewable projects.

June 2021

New Zealand heavy freight is a wicked problem (a situation with no plausible solution) because things now work great! The central and regional governments build and maintain roads, fuel companies provide fuel depots around the country, and super-sized linehaul trucks can be imported since 2010. None of the stakeholders have propositions for next steps, but they do point out even more problems not even relating to carbon emissions: • Supersized trucks are causing road damage at accelerating rates and road risks, • There is a serious driver shortage and it is getting worse, • Congestion is killing productivity, • The rail network is not sufficient, and is in managed decline on many lines, • There are only a few coastal ships left with almost no windows at the ports, • Empty runs and empty containers add to costs, and • The capacity can’t handle any future growth. The InTIME Method first step is to take a step back, literally. We dig into New Zealand history and look at how the freight duty was handled in 1911.3 We observe that a century ago, all of the cities were established on port locations with frequent coastal shipping. Importing and exporting was from major ports. Regional freight moved mainly by rail and drayage using horse and wagon. The rail and steamer ships were the modern freight technology of the time – burning coal. The freight infrastructure was financed by private companies and local governments. Big changes came after World War II. Roadbuilding, trucks, and even airplanes extended oil-based freight delivery to all corners of the country. The wicked problems of today have their roots in political actions, mainly selling the rail network to overseas corporations, the council ownership model of the ports, and massive investment into roads of national significance. A major carbon problem is the low importance of much of the millions of tonnes of stuff – 65 per cent higher than in 2000 – most of it packaging on its way to the landfill. The next step in the InTIME method is to get the current data regarding where the emissions are coming from. We find that the New Zealand freight task has been growing

for decades. Currently 93 per cent of freight is carried by trucks on the road, with rail carrying about 5 per cent, mostly bulk, and coastal shipping around 2 per cent which is mostly containers.4 One tonne-kilometre of freight consumes 50 per cent less fuel on diesel rail compared to road. Shipping is about 80 per cent lower emissions per tkm than trucks. The next InTIME step is to “crash test” the current policies and scenarios for emission reduction to see if they are the best way forward. The hydrogen trucks5, the blue hydrogen with carbon capture and storage6 and the biofuels7 fail the crash test and need to be set off to the side. The issues of impracticality, insufficient supply, high cost, energy inefficiency8 and low technology readiness put these “solutions” suggested by the CCC report out of the running. In addition, ecological economists are starting to realise that the very low Energy Return on Investment means that using less fossil fuel is much better for the economy than trying to substitute very low or negative energy technologies like hydrogen.9 Improving efficiencies of existing ships, trains and trucks can deliver near term emissions reductions as well as cost savings. Given the scale of fuel used, even small efficiency gains can represent the first run on the board. But what next? Our first day is done already! The next InTIME step is great fun. We “assume” that the targets are met. Somehow, the world turns business as usual around, and global warming stays below 1.5oC to the end of the century. Then we take a trip forward in time to see what it is like in New Zealand beyond coal, oil, and natural gas. The InTIME Team finds that in 2121, all of the urban areas we are familiar with are still in the same places, but over the past 100 years there has been a lot of change. As we walk around (yes walking, cycling, and hopping on the trams to get across town) we notice that there are micromanufacturing facilities and retail hubs in each of the suburbs. The old uninsulated and leaky homes have been replaced and roadways take up much less space. We hop onto the electric train and ride out into the countryside, stopping at towns along the way. The InTIME Team pays special attention to what the freight is, where it has come from, and how it is moving around. There are small re-useable container pods that are used to consolidate produce, materials, and manufactured goods from around regions and move them to markets. Curtainside trucks run on the tram network in the night to all of the manufacturing and retail centres, again carrying these small container pods. The pods have tracking electronics on them which provide security, as only the authorised receiver can open them. They have wheels that pop up so

one stevedore can move them around, and they have very clever structure and internal bladders that keep damage to a minimum. It is clear that the freight task is much lower, perhaps 80 per cent less than in 2021. The port is a lively place with warehouses and wholesale distribution hubs. Numerous small freight ships sail in and exchange cargo. It makes us smile to see a lot of the America’s Cup technology being put to good use as these ships seem to fly in and out of the harbour. The Transition Team build simulations of the system to understand how it works. This takes most of day two! The next InTIME step is to back cast what we learned in the future – what does New Zealand have in 2121 that we don’t have? • An extensive electric rail network, intermodal connections at the ports, manufacturing and agriculture hubs as well as with the urban trams. • Amazing fast sail ships and a lot of people working as sailors, stevedores, and warehouse goods handlers. •

M anufacturing and processing in different parts of the cities, and in every small town which supply goods and custom-made finished products from micro-manufacturers directly to local or national customers via electric rail and fast sail ship.

• Many more families living in the regions producing foods and fibres, wood and stone, and smelting and recycling glass and metals. • They have very energy efficient buildings, and electric transport. • And, of course, they have those cool cargo consolidation pods that allow tracking and efficient, secure delivery of goods. What would trigger changes from the business as usual and into this future direction, but would also provide near term growth and benefits? That exploration took a whole day. We really need to get cracking as we only have one day left. We start out fresh in the morning on the InTIME innovation step, developing project concepts. The InTIME Team review the numbers and models across the whole sweep of the InTIME journey and look for insights. What could entrepreneurs, corporations, local and central governments do? What are the first steps to decarbonisation? Cont. on page 8

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The very obvious first step is a research and development project to develop a National Information Artificial Intelligence (NIAI) for freight demand. The concept is that the data for all receipt of goods is collected and mapped over the country. This information is mapped out to show the demands for goods and products. It is used to firstly set up the national freight grid where producers bid to meet demand and the artificial intelligence optimises the logistics, consolidates the freight, selects the closest source and the most efficient modes, sets up the intermodal connections and dispatches, tracks and records the receipt of the freight. Incentives are available for development of small businesses to meet demand locally, which can be driven by the NIAI demand map. Government puts maximum investment into building an extensive national electric rail network with total connectivity to ports. An entrepreneur develops tracking and packing pods. Corporations increase investment in coastal shipping as it becomes the preferred mode for centre-to-centre trade. De-Value taxes are added to imported products according to their packaging intensity and product life. We only have two hours left in day three – can we get our projects over the line? The InTIME Team race to complete the final step. Now we must critically consider where all of this innovation in the national freight grid, the NIAI, and investment in networked rail and coastal shipping would lead us. Would it create enterprise and good work? Would it provide for needs? Would it grow the wellbeing economy while driving down the oil use? Would it reduce reliance on imported trucks and oil and grow local capability and productivity? We say yes. The InTIME Team has identified next steps that are practical and immediately do-able. Importing outrageously costly, and unproven hydrogen trucks and electrolysers, or committing to biofuel targets would lock in the business as usual for another political cycle. That would not be the preferred option. Note: InTIME Team with Professor Susan is a proposed BBC TV show, following the formula of the famous British television programme, Time Team with Tony Robinson (1994-2014).10 S. Krumdieck (2019) Transition Engineering, Building a Sustainable Future, CRC Press, 254p. 2 www.canterbury.ac.nz/epecentre/research-and-innovation/professionaldevelopment/ 3 www.kiwirail.co.nz/our-story/history/ 4 R. Paling, M. King (2019) National Freight Demand Study, Ministry of Transport 5 S. Page, S. Krumdieck (2009) System-Level energy efficiency is the greatest barrier to development of the hydrogen economy, Energy Policy, 37(9): 33253335 6 S.C. Page, A.G. Williamson, I.G Mason (2009) Carbon capture and storage: Fundamental thermodynamics and current technology, Energy Policy, 37(9): 3314-3324 7 S. Krumdieck, S. Page (2013) Retro-analysis of liquid bioethanol and bio-diesel in New Zealand, Energy Policy, 62: 363-371 8 www.csrf.ac.uk/2018/06/should-lorries-be-powered-by-hydrogen/ 9 A. Jackson, T. Jackson (2021) Modelling energy transition risk: The impact of declining energy return on investment (EROI), Ecological Economics, 185: 107023 1

www.youtube.com/channel/UCvmEISc6e4tLwn8TyS14ncw

Dr. Susan Krumdieck

is a Professor of Mechanical Engineering and Chair in Energy Transition Engineering at the Heriot-Watt University, in Edinburgh, Scotland.

BY SHEENA THOMAS

Biofuels: The immediate option to decarbonise transport YOU HAVE PROBABLY HEARD THE WORD “BIOFUELS” MORE IN THE LAST FOUR MONTHS THAN YOU HAVE IN THE PRECEDING FOUR YEARS. Ever since the Government agreed “in principle” to a biofuels mandate (https://bit.ly/3fllGV4) and the Climate Change Commission released its draft advice (https://bit.ly/3vopBpJ), biofuels are finally having a moment in the spotlight and being recognised as a meaningful part of the decarbonisation puzzle, alongside electrification, and hydrogen in the medium to longer term. This is not the first time a biofuels mandate has been floated in New Zealand. In 2008, the Clark Government introduced a biofuels sales obligation – basically a mandate that would require 3.4 per cent of total fuel sold to be biofuel by 2012. As it was pointed out during the announcement, had the 2008 sales obligation remained in place, New Zealand would have reduced emissions from transport by over six million tonnes by now. But what exactly are biofuels, is it safe for my engine and is it actually better for the environment are all questions that we often get asked. There are all sorts of different terms used to describe different types of biofuels, but here are the key things you need to know.

Types of biofuels, feedstocks and technology Biofuels are made from bio-based materials and generally fall into two broad categories: “Conventional” and “Advanced”. Even these terms are used slightly differently internationally, but for the purposes of clarity, Conventional biofuels usually refer to established processes that produce biofuels that are subject to a “blend wall” because they still contain some oxygen molecules. This means that they must be blended with fossil fuel or its equivalent “renewable fuel” counterpart. Over the years, safe limits have been established and approved by original engine manufacturers (OEM). Typical examples of conventional biofuels include fatty acid methyl-esters, biodiesel, and ethanol. Which brings us to Advanced biofuels. Advanced biofuels are made using more recent, more complex processing that typically requires hydrogenation. These biofuels are often called “renewable”, so usually referred to as “renewable diesel”, “renewable petrol”, and “sustainable aviation fuel (SAF)”. These fuels are hydrocarbons, effectively molecularly identical to their fossil-based counterparts, which is why they can be safely blended with conventional biofuels. While there are some

June 2021

Technology Pathway

Transesterification Fermentation (Conventional) (Conventional)

Hydro-processed Esters & Fatty Acids / Vegetable Oils (HEFA/HVO)

Gasification + Fischer-Tropsch

Gasification + LanzaTech process

Pyrolysis

Alcohol to Jet

Catalytical hydro-processing

• • • •

• Ethanol

• • • •

Renewable diesel SAF Renewable petrol Bio-LPG

• SAF • Renewable diesel • Bio-LPG

• • • •

• Petrol vehicles

• Any diesel-based applications. • Jet aviation fuel • Petrol vehicles • LPG applications

• Blending with jet aviation fuel. • Any diesel-based applications • LPG applications

• Any diesel-based applications. • Jet aviation fuel • Petrol vehicles • LPG application

Ethanol, iso-butanol Woody biomass, other lignocellulosic biomass, municipal solid waste

Woody biomass, other lignocellulosic biomass, municipal solid waste

Can produce • FAME Biodiesel • Glycerol

• Ethanol • Sugar

• • • •

Application

• Any diesel-based applications including vehicles, shipping, generators and equipment. • Animal feed, pharmaceuticals etc

• Petrol vehicles

• Any diesel-based applications. • Jet aviation fuel • Petrol vehicles • LPG applications

Feedstocks

Tallow, used cooking oil, vegetable oils, tall oil

Corn, sugarcane, wheat, beets and other similar crop

Tallow, used cooking oil, vegetable oils, tall oil

Woody biomass, Woody biomass, other lignocellulosic other lignocellulosic biomass biomass, municipal solid waste

Blend ratio/ blend wall

• 7% (20-30% for some equipment)

• 10%

• 10% • 80% • 80% (renewable diesel) (renewable diesel • 50% (SAF) • 50% (SAF) • Over 20% • Over 20% (renewable petrol) (renewable petrol)

Lifecycle emissions reduction (per litre of pure B100 biofuel)

~80% (if using sustainable feedstock)

0-85% (depending on feedstock)

~80% ~70-80% ~80% ~80% (if using sustainable (if using sustainable (if using sustainable feedstock) feedstock) feedstock)

~70-80%

~80%

Maturity

Full scale commercial

Small scale commercial

Small scale commercial pilots

Renewable diesel SAF Renewable petrol Bio-LPG

Small scale commercial pilots

Small scale commercial

• 80% (renewable diesel • 30-50% SAF • Over 20% (renewable petrol

Small scale commercial pilots

SAF Renewable diesel Renewable petrol Bio-LPG

• 50% SAF • 50% SAF • 80% • 80% (renewable diesel (renewable diesel • Over 20% • Over 20% (renewable petrol) (renewable petrol)

Z biodiesel plant

blending limits, particularly for SAF, these are quite high – in the range of 80 per cent for renewable diesel, and 30 to 50 per cent for SAF. Above is a summary of the main, proven biofuels manufacturing pathways that are either at commercial scale or close to commercial scale. Note that this is not a complete list of all possible technologies.

Not all biofuels are created equal As illustrated above, there is a range of technologies with the ability to use a range of feedstocks to produce biofuels. So, it is important to note that not all biofuels are created equal. While the lifecycle emissions of biofuels can be impacted by things such as the type of energy used in its manufacture, the main indicator of the sustainability of a particular biofuel is the feedstock used to make it. Unsurprisingly, biofuels associated with land-use change (such as palm oil) or that compete with food production, have lower environmental benefits than biofuels made from woody biomass waste like slash, by-products such as inedible tallow, or feedstocks that are carefully farmed as rotation crops that improve the quality of the soil. Given this, New Zealand needs to be careful about ensuring the sustainability of the

biofuels we manufacture or import. For example, biofuels made from crops or plantations that have caused deforestation would be arguably worse from a sustainability perspective than the use of fossil fuels. The good news is that many of our major trading partners have mandated biofuels for over a decade and there is a lot we can learn from their experience and how they have since tightened up their policies to maximise the emissions reduction they can achieve through biofuels. With the right policy settings, biofuels can start displacing even more than the amount modelled by the Climate Change Commission (140 million litres by 2035), sooner and sustainably.

Local production For local production, it is particularly important to take into account what is best suited to New Zealand – what will be the hardest to decarbonise sectors without biofuels, which feedstocks are abundant, and how can we also ensure that the co-benefits of local production are realised here in New Zealand. Z Energy decided to invest early in biodiesel production, despite a lack of enabling policy at the time because of our commitment to providing lower carbon options for our customers. It was a deliberate choice

to produce biodiesel instead of ethanol, because heavy transport vehicles that rely on diesel are harder to decarbonise than light vehicles that can be electrified. It was also a deliberate choice to use inedible tallow as a feedstock as it is a by-product of the agricultural industry, does not compete with food production, and already has meaningful volumes – enough to supply around seven more biodiesel plants similar in size to our plant in South Auckland. We began production in November of 2018, and have been supplying customers with B5 biodiesel (5 per cent biodiesel blended with 95 per cent mineral diesel) since that time. In 2020, we hibernated production at the plant because of the sustained, steep increase in the price of tallow – driven by demand by overseas biofuel producers selling into subsidised markets – and an understandable lack of appetite from many customers, grappling with the implications of COVID-19, to pay slightly more for a cleaner fuel. Some customers have continued to use biodiesel to reduce their transport emissions, and we currently import biodiesel from Australia to supplement our own biodiesel stock and meet this customer demand.

Cont. on page 11

10 Logistics & Transport NZ

Z Energy Chief Executive Officer Mike Bennetts speaks at the company’s south Auckland biodiesel plant, surrounded by Climate Change Minister Hon James Shaw, and Prime Minister Rt Hon Jacinda Ardern. Photo: Getty Images

While an import supply chain for biofuels will continue to be used, we would like to see more local production come about as a result of this mandate. As Crown research institute Scion has previously summarised in the New Zealand Biofuels Roadmap (https://bit.ly/3yGpTKX), local production of biofuels would: • Reduce our greenhouse gas (GHG) emissions; • Help us meet our international GHG reduction commitments; • Rejuvenate regional economic and employment growth; • Make New Zealand less dependent on oil imports; and • Maintain access to international markets for our goods and services. The report estimates that even establishing a biofuels industry in one region alone could create over 1,000 new direct, indirect and induced jobs.

Engine compatibility As for whether biofuels are compatible with your engine, the short answer is yes, within the guidelines of the above table. Europe has

mandated biofuels for over a decade. It is not a new fuel, and it is used safely around the world, even for aircraft. The Motor Industry Association has provided guidance on vehicle compatibility here in New Zealand, so it is easy to check OEM guidance on conventional biofuel blend limits.

will become increasingly available in New Zealand, giving transport and logistics operators lower carbon options for their existing fleets.

Z also has real world experience of supplying biodiesel to customers. Since 2018, we have supplied customers’ bulk tanks, private truck stops, as well as Z Highbrook in Auckland, which is a truck stop accessible to anyone with a Z card. There have been no issues with our product, it simply lowers your emissions. While some vehicles and equipment are compatible with higher biodiesel or ethanol blends, there are risks associated with higher blends when used in vehicles that are not compatible, such as reactions with fuel system elastomers and corrosion of fuel components respectively. This is not an issue with advanced biofuels.

The low-hanging fruit Biofuels are the low-hanging fruit to lower transport emissions because they are a realistic option right here, right now for our existing fleet, at the same time as we accelerate the uptake of electric vehicles. Between the Commission’s draft advice and the Government’s recently announced package of measures to tackle decarbonisation, it seems like biofuels

Sheena Thomas Strategy Lead – Z Energy

Sheena leads the development and delivery of low carbon fuel options for Z Energy. Her interest and expertise are in accelerating the low-carbon transition in a way that delivers value for New Zealand. She has worked in the transport energy industry for over 10 years, and has a background in strategy, communications, and government relations.

June 2021

Government commitment to investment in rail IN MAY 2021 THE NEW ZEALAND RAIL PLAN WAS RELEASED. IT OUTLINES THE GOVERNMENT’S VISION FOR THE NEW ZEALAND RAIL NETWORK AND THE IMPORTANT ROLE THAT IT WANTS RAIL TO PLAY IN A MULTI-MODAL TRANSPORT SYSTEM.

BY JOANNA HEARD

The Government is committed to two key investment priorities. Firstly, supporting investment in the national rail network to restore rail freight and provide a platform for further investments in growth. Secondly, investing in the Auckland and Wellington metropolitan rail networks to support growth and productivity in our largest regions. The Rail Plan also reinforces other existing investment priorities for rail, including those found in the Auckland Transport Alignment Project, and the New Zealand Upgrade Programme. It also reflects regional rail investments and supports our inter-regional rail passenger services in New Zealand, like the recently launched Te Huia. The Rail Plan will guide future investment decisions taken by the Government under the Government Policy Statement on Land Transport 2021 (GPS), and through future Budgets for Crown investment.

New planning and funding framework for rail The Rail Plan is an output of the Future of Rail review, which recognised that significant parts of the rail system were in a state of ‘managed decline’. The Government recognised the benefits that rail could deliver to New Zealand, including emissions reductions, congestion reduction, safety benefits, and supporting productivity and jobs in our regions. However, in order to deliver these benefits, the Government needed to plan and fund rail differently. Remedial investment was needed, but this alone was not sufficient. A long-term planning and funding approach was required to guide investment in the system, and integrate it into the overall approach to the land transport system under the Land Transport Management Act 2003 (LTMA). The Government made changes to the LTMA last year to bring rail into the land transport management system and allow the network to be funded through the National Land Transport Programme (NLTP), with the support of Crown funding and track user charges. KiwiRail’s freight, logistics and tourism businesses will continue to be expected to run commercially and will be funded as they are now through the Crown if required.

The Government acknowledges the significant ambition for rail in New Zealand and sees the Rail Plan’s investments as an important first step for the rail network. Photo: KiwiRail

As part of the changes to the LTMA, KiwiRail is required to prepare a Rail Network Investment Programme (RNIP) that will be considered by the Minister of Transport, in consultation with KiwiRail Shareholding Ministers, by 1 July 2021. The RNIP will then form part of the upcoming NLTP. KiwiRail has also joined the Regional Land Transport Committees in Auckland and Wellington to support rail and transport network planning in those regions, which currently have commuter networks. This is important to support regional planning processes and more integrated land transport planning.

connections, and in existing and new metropolitan rail networks. The Government acknowledges the significant ambition for rail in New Zealand and sees the Rail Plan’s investments as an important first step for the rail network. The investment proposed in the core network creates a platform from which to consider further investments for New Zealand. There were also a range of other comments on the amendments to the LTMA, and changes to the overall structure of the rail system. We expect further work on the rail system to continue in the coming years.

Public feedback on the draft Plan Public feedback on the draft Rail Plan was sought from March to May 2020, alongside the draft GPS. Due to the COVID-19 alert level measures in place at that time, face-toface engagement was not possible, and the Ministry of Transport made content available on its website. Despite this there was significant feedback and the draft Rail Plan received over 1,100 submissions from a range of stakeholder groups. The feedback was a key consideration in finalising the Rail Plan. The majority of submitters supported the intent of the Rail Plan and the Government’s proposed investment. However, submitters also sought a greater level of ambition from the Government for the rail network, including freight rail, inter-regional

JOANNA HEARD is a Principal Policy Advisor, Rail and Freight at the Ministry of Transport.

12 Logistics & Transport NZ

Marinus La Rooij (left) poses with Minister of Transport, Hon Michael Wood, at the Pathway launch of a fully-electric Fuso eCanter. Photos: Sustainability Business Council

Decarbonising the freight supply chain TO MITIGATE THE EFFECTS OF CLIMATE CHANGE AND MEET OUR INTERNATIONAL COMMITMENTS FOR CLIMATE ACTION, NEW ZEALAND MUST ACHIEVE NET ZERO EMISSIONS BY 2050. BY MARINUS LA ROOIJ While this is challenging enough for most parts of the transport system, decarbonising the freight system has its own specific and significant challenges. As we embark on this work, we must be mindful that decarbonisation solutions for other parts of the transport system do not translate well into the freight system.

Freight volumes are growing and the system that supports it is complex Our freight system is complex and expanding as the flow of goods increases to meet the needs of our growing population and economy. These are all the goods we buy and sell every day, their movement critical for our economic and social wellbeing.

To give a sense of the scale, each year we move an estimated 280 million tonnes of freight or 30.6 billion tonne-kilometres of travel. Around 70 per cent of this freight is moved by road transport using around 800,000 vehicles that travel over 3 billion kilometres a year. That equates to around 50 tonnes of freight, and 600 kilometres of truck travel, for every New Zealander, every year. Our freight volumes are also forecast to increase 30 per cent by 2042. The whole system is underpinned by the internal combustion engine (ICE) using fossil fuels (predominantly diesel). The current system is cost effective (ignoring externalities), reliable and proven to deliver

on the customer requirements at the heart of the system – having their freight delivered in full, on time and at low cost. But the use of ICE vehicles cannot continue as freight transport is a key contributor to New Zealand’s greenhouse gas emissions.

Freight is a major source of greenhouse gas emissions and growing Current emissions from freight movements are around one third of the emissions generated by the wider transport system, which makes up around 47 per cent of New Zealand’s total carbon dioxide (CO2) emissions. The Climate Change Commission estimates that this equates to 4 million tonnes of emitted CO2 each year, which is forecast to grow to 5.5 million tonnes

annually by 2050 as freight-related travel grows. A massive migration to low carbon freight transport is possible – if carefully planned, staged, co-ordinated, and implemented over a 30-year period. The Sustainable Business Council (SBC) has developed such an initiative, looking at how we can develop a common industry pathway for decarbonising the national freight supply chain. The work was initiated by the SBC Freight Group, which is made up of thought-leaders from some of New Zealand’s largest freight companies – from cargo owners, logistics operators, ports, and haulers. Along with their expertise, what is valuable about this collaboration is that their experience and thinking extends across the supply chain – being comfortable in the multi-modal space. Freight Group members were working to decarbonise their own logistics, which prompted them to examine how the whole sector could move to low-carbon operations. With assistance from Sapere Research and DETA Consulting, the Freight Group developed an outline as to how this shift could take place – the Low Carbon Freight Pathway report.

We need a shared pathway for moving the sector to a low carbon supply chain Released in April, the Pathway report sets out ambitious targets of halving emissions by 2030 and achieving net zero by 2050. The Pathway establishes three horizons of work seeking to Reduce, Replace and Eliminate the use of fossil fuels. Importantly these horizons operate concurrently, but with different levels of intensity over the 30-year period.

Initial focus is on optimising existing fleet operations to reduce diesel use, with work started on developing viable bio-fuel alternatives to replace fossil fuels – requiring the ramping up of production and importing environmentally sustainable biofuels. E-fuels (synthetic fuels) may also be an option for parts of the system (notably aviation and shipping), however the economic viability and practicality of this will need to be explored and tested. While this all happens the third horizon begins, with the progressive development of infrastructure, vehicle specifications, and supply lines required to discontinue the use of internal combustion engines altogether. Trials and testing will be an important part of this eliminate horizon.

Managing down the cost of transition A focus of the report is how to manage down the high transition costs. We still have the benefit of time (if we act now), with costs being able to be minimised by managing out the existing fleet over time, allowing vehicles to reach the end of their useful economic life. As vehicles age, work can start progressively replacing retired vehicles with lower emitting alternatives (likely battery electric for light trucks and hydrogen for heavy).

Providing industry with confidence and a high degree of certainty Migrating the fleet to new vehicles will require testing and financial analysis to ensure the needs of the sector are met – notably capital and operational costs and reliability. Learning the lessons from these trials will be essential for the sector as it

looks to make this big (and expensive) leap into what for them will be largely unknown technologies and new fleet practices. The uptake of high productivity motor vehicles (HPMVs, including 50MAX) provides valuable lessons here. For that transition, industry confidence needed to be cultivated, with government officials providing a highlevel of certainty that the considerable investment made in new vehicles would not leave vehicle owners with stranded white elephants. A highly engaged process between industry and Government was used to successfully develop specifications for new vehicles approved for operation. Something similar, but on a much larger scale, is needed now.

Lead infrastructure requirements National and local power generation and distribution systems also need to be considered. Upfront support from Government will likely be required to provide confidence and create private sector demand. But there are many “chicken and egg” challenges. One of the main criticisms of hydrogen, for example, is the high loss of energy from when the fuel is created, through to use in a vehicle. However, hydrogen seems better suited to the range, refuelling and torque needed to haul heavy loads. This could be resolved through green hydrogen generation occurring off-peak and/ or from variable generation sources (such as wind), effectively making use of electricity that would otherwise neither be used or stored. All new technologies should be examined critically, noting that the continued status quo of fossil fuels is no longer a viable long-term option. Cont. on page 14

14 Logistics & Transport NZ

A new report by the Sustainable Business Council Freight Group, comprising nine members, states that decarbonising New Zealand’s freight system by 2050 is “ambitious but achievable”.

Importance of short-term actions While longer-term planning and implementation for new vehicles is underway, we should look at what we can do now to shave off our fuel use and CO2 emissions. The single biggest, and in some ways easiest, solution is to lift the fuel efficiency of heavy vehicle drivers through training. Many firms have already had their people go through training with up to 20 per cent of diesel (and emissions) saved. Safe and efficient driver training also demonstrably reduces minor road crashes. More could be done to see this training become standard across the heavy vehicle fleet, noting that it is an upfront investment by trucking companies in time and money – often with the fuel savings passed on to their customers. We should look at financially rewarding drivers who undergo such training. After all, those drivers that are heavy on the gas will reduce the range of electric and hydrogen fuelled vehicles also.

Value and limitations of mode shift There is also the opportunity for encouraging mode shift to rail and coastal shipping. This features heavily in the Government’s thinking and is accepted in the Pathway as an important part of the reduce horizon. However, the opportunities for mode shift are discrete and limited to certain commodities in some locations where the freight task is contestable. An overreliance on mode shift, in a way that slows the necessary transition work required on road transport, will make net zero by 2050 unachievable.

A detailed implementation programme is needed Importantly, the SBC Pathway sees all the options to reduce CO2 emissions as complementary. All must also proceed, to make their contribution to the overall task – effectively “slicing up the mountain”. There will also likely be other opportunities not yet in the Pathway that could be added

to the programme of work – such as the development of next generation HPMVs on some routes. The Pathway should therefore be used as the basis for developing an adaptive work programme – driven through collaboration between the freight sector and Government. With many decisionmakers across the freight sector, driven by commercial considerations and customer requirements, the approach to decarbonising freight will need to be quite different from other parts of the transport system. An industry accord, as part of an action-focused freight strategy, would be a great start. An accord would recognise the need for industry actions and the need for bespoke Government interventions that shape the transition, including incentives and disincentives. Without genuine Governmentindustry partnership and meaningful dialogue, there is the real risk that efforts will be uncoordinated and less successful. Government may also bring in measures that, despite good intentions, end up hampering industry or disrupting supply chains (with economic impacts). We also must address the risk that some in the private sector feel no compelling reason for change. But thanks to the SBC’s Pathway, we have a detailed plan to begin the implementation phase – a plan that goes further than anything currently available in New Zealand for the work that is required.

the launch emphasised, it is incumbent on all of us to move now from talk to action. Decarbonisation will not happen by itself, nor will we be rescued by some wonderous and easy technology that comes along at the right moment. With the limited and shrinking carbon budget available to us between today and 2050, now is the time to start the process to Reduce, Replace and Eliminate fossil fuels from our freight system. More information on the Pathway can be can be found on the SBC’s website: www.sbc. org.nz/insights/2021/low-carbon-freightpathway. Disclaimer: TSA Advisory is providing advisory services to support the advancement of the SBC’s Low Carbon Freight Pathway. However, the views in this article are the views of the author.

Let’s start now The SBC Freight Group is committed to continuing the decarbonisation of their own businesses and has some exciting work underway and in delivery. However, they also appreciate that the whole sector must progressively reduce emissions to be ultimately successful. As more businesses join the Pathway, so will the costs come down as economy of scale are achieved – such as having the critical mass to attract sufficient vehicle imports into the country as demand for low carbon vehicles spike in the future. As many of the speakers at

Executive Consultant – TSA Advisory

Marinus La Rooij has over 20 years’ experience on transport and infrastructure matters, with a focus on freight (across road transport, rail, ports, coastal, international shipping, and aviation).

June 2021

Work site traffic management In February 2021, WorkSafe NZ released its “Guidance for keeping healthy and safe around vehicles and mobile plant at work sites” document. This was created in consultation with industry and was in response to the growing number of injuries and deaths in relation to work site traffic management. BY KEITH ROBINSON This 62-page document can be found on the WorkSafe NZ website and this article is intended to be a brief summary of the full document. Despite this summary only being one page, readers should not under-estimate the scope required of an effective and compliant traffic management plan.

Person Conducting a Business or Undertaking (PCBUs) and Risk Management: a) PCBUs have an obligation to provide safe workplaces for workers and members of the public. b) Appropriate processes and mobile plant must be provided, and only competent people should be permitted to operate them. c) Where more than one business shares a work site, (including a driveway), they must work together to manage the risks related to work site traffic. In a tenanted environment, both the landlord and tenant have a responsibility. d) A risk management approach is required to identify appropriate risks and mitigations using the “hierarchy of controls”. Control measures must be reviewed.

Site Design A well planned and designed work site can reduce the risks to people working near work site traffic. a) Site managers in a dynamic work site (e.g., a construction site) should engage with regular drivers on site to ensure effective systems and processes. b) In principle, keep pedestrians, the public and vehicles apart. Clearly marked pedestrian crossing areas should be maintained.

• Coupling and uncoupling; • Loading and unloading; • Driver waiting areas; • Loading and unloading shipping containers; • Tipping; • Tarping / load securing; and • Queuing vehicles.

Safe Vehicles Using the right vehicle for the job, with up-to-date safety features, can help reduce the risk to driver and other people nearby. There is a need to consider:

and others safe when working in and around vehicles. Areas to think about: • Only use competent drivers. • Training and certifications to be provided by the PCBU. • Evidence of training and refresher training is required. • Appropriate PPE must be provided, users need to be trained on its use and replacement criteria. • Keep visitors and members of the public safe.

• Ensure that the vehicle is designed to perform the task (e.g., weight, load, and environment). • Vehicle to have suitable certification. • Evidence is required that operators are currently competent to use the machines. • Unless specific exception is allowed, if a vehicle has a seat belt, it is to be used. • Visibility – drivers should have good visibility when using the vehicles. • Pedestrians should have good visibility of the moving vehicles. • Consider modern technological safety controls. • Keep vehicles well maintained. Daily checklists should be used. Issues identified are dealt with quickly.

Safe People Everyone at a work site should have the knowledge and skill to do their job safely, including knowing how to keep themselves

c) Maintain road surfaces, lighting and effective signage. Keep markings consistent.

Site Activity Safe work site practices can help reduce the risks to people working in or near work site traffic. There is a need to consider: • Speed of vehicles; • Reversing; • Parking;

KEITH ROBINSON is the President of CILT NZ. Keith is a consultant / Trainer Auditor in traffic management providing advice and creating Traffic Management Plans.

Inductions and Traffic Management Plans Creating work site inductions and traffic management plans in conjunction with other PCBUs and your workers is a useful way to manage shared risks. Inductions – Work site inductions are one way to make sure new workers and visitors entering a work site know and understand the requirements and expectations for that work site. Traffic Management Plans – Work sites that have a lot of traffic activity or pedestrian interaction should have a traffic management plan. Traffic management plans help communicate how traffic risks will be managed in greater detail. Joint PCBU Traffic Plans – Where more than one PCBU operate on the same site, a Traffic Management Plan should be created using a committee with representatives from each PCBU. This Committee can also carry out the monitoring and review of the traffic management plan.

16 Logistics & Transport NZ

New research reveals true value of rail BY GREG MILLER THE LATEST “Value of Rail” report has been released, providing useful and interesting analysis of the benefits of rail, aside from the obvious ones of getting people and freight to their destinations. Rail is a critical enabler for the New Zealand economy, providing broad ranging benefits economically, socially, and environmentally. Rail networks have long been part of the infrastructure of New Zealand and are a significant investment for the nation. While we know the costs, there is an economic value of rail in New Zealand which is often overlooked. This value accrues to the community and in the latest report “The Value of Rail in New Zealand” by independent consultants Ernst & Young, some of these social, environmental, and economic values of rail transport are identified and quantified. The value of rail to New Zealand was first modelled by EY in 2016 when the Ministry of Transport, in partnership with KiwiRail and Waka Kotahi NZ Transport Agency, asked what the effect on the roading network would be if rail was removed. This model1 has now been updated and shows the benefits of rail to New Zealand range in value between

$1.7 billion to $2.14 billion per annum. This value is made up of costs which are often hidden: • Reduced congestion ($997m) • Reduced air pollution ($332m) • Reduced fuel use ($216m) • Reduced greenhouse gas emissions ($180m) • Reduced road maintenance ($105m) • Improved safety outcomes ($96m) Viewed through this lens, the importance of rail is even more significant than is already recognised and reaches beyond the economic benefit to the customers KiwiRail services directly. The general approach taken in assessing this value has been to model the potential economic cost to New Zealand from not having a rail network. The value is indicative because, for example, it doesn’t consider any second-order or behavioural effects that might result if there were more vehicles on the road. Without rail freight, it is estimated that there would need to be an additional 24,000 trucks

on New Zealand’s roads. Heavy commercial vehicles cause 90 per cent of damage to our roads2, so moving freight by rail greatly assists in reducing road damage. Each year commuter rail in Auckland and Wellington avoids more than 26 million car trips. Rail also contributes a wider range of benefits to the economy, and these can be measured when we consider what might occur if we didn’t have rail. When we do this, we see that rail generates fewer costs in terms of accidents, congestion, and emissions than road. The benefits include: • Air quality benefits from rail are equivalent to saving 70 lives each year; • Rail freight avoids the need for over 150 million litres of diesel each year, or approximately 1m barrels. As a result, rail helps the environment by reducing CO2 emissions by 2.5m tonnes per year; and • Rail helps to make our roads safer through 288 fewer injuries and fatalities per year. The value of rail calculated by EY excludes further qualitative benefits from rail, such as connectivity, land use and resilience benefits. Nor does it consider the direct contribution

June 2021

Moving passengers and freight by rail contributes significantly to the New Zealand economy.

$1.70B$2.14B

The total economic value of rail is:

EVERY YEAR

Total value is derived from:

$997M reduced congestion

$322M reduced air pollution

$216M reduced fuel use

$180M

reduced greenhouse gas emissions

$105M reduced road maintenance

$96M

improved safety outcomes

This value far exceeds the government’s annual investment in rail The latest “Value of Rail” report has been released, providing useful and interesting analysis of the benefits of rail to New Zealand range in value between $1.7 billion to $2.14 billion per annum. Rail also has a significant part to play in assisting with the climate change emergency as every tonne of freight moved onto rail from road delivers a 70 per cent reduction in carbon emissions for the environment. Photos: KiwiRail

rail delivers to support New Zealand’s economic growth and Gross Domestic Product through its commercial operations. KiwiRail provides resilience to the national transport system supporting the country’s export growth carrying approximately 25 per cent of all export goods, and around 12 per cent of New Zealand’s total freight task – the equivalent of 4 billion tonne kms and anticipated to grow over the next 10 years to 5.4 billion tonne kms3. Through inter-island operations, KiwiRail also creates a critical freight and passenger linkage for State Highway 1 connecting the North and South Islands across the Cook Strait.

passengers and freight by rail contributes significantly to the New Zealand economy as well as providing a significant intangible public benefit. We are excited about the transformational journey we are on and providing a renewed rail foundation for the benefit of all New Zealanders. The updated report is available online here: www.kiwirail.co.nz/assets/Uploads/ documents/2021-Value-of-Rail-report.pdf (kiwirail.co.nz) – or https://bit.ly/2R04fjO.

Notes: 1 Value of Rail modelling takes account of rail freight across New Zealand and passenger rail in Auckland and Wellington. Inter-island ferries and long-distance passenger rail within the KiwiRail network are out of scope. This study includes direct, indirect and externality benefits, consistent with the Waka Kotahi Monetised Benefits and Cost Manual. The majority of benefits are calculated in net terms, with air pollution, fuel use, greenhouse gas emissions, maintenance and safety values reflecting the difference between road and rail impacts. Time savings are the one exception, with impacts on the road network being calculated in gross terms. Such an approach is required to maintain consistency with previous (2016) modelling.

The Government has signalled rail has the potential to contribute further through the significant investment in rail infrastructure, locomotives, and ships. This will help drive further economic growth both regionally and nationally, all the while providing employment and career opportunities for New Zealanders and flow on partnership opportunities for New Zealand businesses. Rail has a significant part to play in assisting with the climate change emergency as every tonne of freight moved onto rail from road delivers a 70 per cent reduction in carbon emissions for the customer, the country and the environment, contributing to a cleaner, greener New Zealand.

2 Modelling carried out through a 2020 study by EY which uses the fourth power rule to model Heavy Commercial Vehicle versus Light Vehicle contribution to road damage.

The benefits of KiwiRail are for our country, our company, and our customers. Moving

3 Growth projections from the National Freight Demand Study (2014).

Greg Miller KiwiRail Group Chief Executive Greg Miller was appointed Chair of the KiwiRail Board and Chair of The New Zealand Railways Corporation Board in November 2018, after a 32-year career in supply chain logistics domestically and abroad. In May 2019, he was appointed Group Chief Executive Officer.

18 Logistics & Transport NZ

NEW ZEALAND’S PORTS

Lyttelton Port Company – futurethinking and community-orientated

BY DANIEL DUNT

LYTTELTON PORT IN CHRISTCHURCH IS THE SOUTH ISLAND’S LARGEST INTERNATIONAL TRADE GATEWAY, FACILITATING THE MOVEMENT OF $6.3 BILLION OF EXPORTS AND $3.9 BILLION OF IMPORTS LAST FINANCIAL YEAR. IT IS HOME TO THE LARGEST CONTAINER TERMINAL OPERATION IN THE SOUTH ISLAND.

The Port holds a crucial role in the economic sustainability of Christchurch and the wider South Island and is therefore committed to developing a profitable Port to ensure that it is able to handle the projected growth in volumes and is sustainable in the long term. Lyttelton Port has a rich and diverse history. Lyttelton Harbour, called Te Whakaraupo(the harbour of bullrush reeds) by Ma-ori and Port Cooper by one of the earliest Pa-keha-

visitors, runs westwards for 13 kilometres between two headlands – about twokilometres apart. Ma-ori have lived in and around the area since 800AD.

regional and territorial authorities including Ashburton, Banks Peninsula, Hurunui, Selwyn and Waimakariri District Councils, and the Christchurch City Council.

In 1988, the introduction of the Port Companies Act created the Lyttelton Port Company (LPC) which took over the Port’s commercial role including the land, assets and facilities. Shares in the new Port Company were allocated to

In 1997, other regional and territorial authorities decide to sell their shares in LPC, effectively raising the level of public shareholding to 30 per cent. The Christchurch City Council became the single largest shareholder with a 65 per cent shareholding.

June 2021

Today, the Lyttelton Port Company is wholly owned by Christchurch City Holdings Limited.

Principal commodities and trade Lyttelton Port is somewhat unique in terms of New Zealand ports. Simon Munt, General Manager container operations, explains: “While the majority of other ports in New Zealand are primarily based on export commodities, at Lyttelton we are lucky in that we have a balance of import and export. We have sustainable imports for population-based goods, such as retail, as well as goods for manufacturing. On the export side of things, our trade is driven by dairy, meat, logs, fuels, fertiliser and other local goods delivered by Canterbury’s many thriving businesses.” Lyttelton Port is home to the largest coal export facility in New Zealand. A variety of coals are received by train from the West Coast and aggregated in the coal stockyard. Sampling is carried out by an internationally accredited inspection agency and the coal is then loaded onto vessels for export and is used offshore in steel making. Lyttelton’s stockpile can hold up to 335,000 tonnes of coal. By rail, the Port can receive up to seven trains per day. When we hear of coal we think of sustainability, however Lyttelton Port’s Mr Munt emphasises that their trade is driven by coking coal for steel production, for which there is currently no alternative. This considerable part of the Port's operations is therefore likely to continue, despite the move away from fossil fuels for household use.

Container trade and technology Lyttelton Port has a throughput of more than 440,000 TEUs a year, making it the largest Container Terminal operation in the South Island. “Containers have grown 5-6 per cent per annum, which is a combination of immediate land of what we service as a port; we also seeing increases in consolidation – volume that’s moving through smaller ports starting to move between bigger hub ports,” Mr Munt explains. Containers are stacked four high in the twelve-and-a-half-hectare secure terminal and managed via SPARCS N4, the latest computerised container management system from Navis. The Container Terminal offers storage for 20ft containers, 40/45ft containers, including over height containers. Storage is available for approximately 8,000 containers with specialised areas for refrigerated, imports, exports, general and empty containers.

Containers are received by road and rail and the automated gate system minimises the average turn-round time for trucks. For trucks transferring containers, the terminal has an off-road 10 truck bay for parking allowing documentation to be completed and checked. Two 24-wagon sidings for rail transfers are available and significant technological advances through EDI allow container documentation to be electronically exchanged prior to arrival.

Overcoming adversity On 4 September 2010 at 4:35am, a 7.1 earthquake shook the Canterbury region. The earthquakes over the 2010/11 period damaged over 75 per cent of the Port’s wharves. This includes the 22 February 2011 earthquake – named the Lyttelton earthquake as it was centred at the Port. The result of this disaster would last for years to come. In 2014, the rebuild of Cashin Quay 2 at Lyttelton Port begun. In June that same year, the Canterbury Earthquake Recovery Minister, Hon Gerry Brownlee, directed Environment Canterbury and LPC to prepare a Lyttelton Port Recovery Plan. The Port Lyttelton Plan – the Port’s 30-year vision for recovery and enhancement – set out to ensure the rebuilt Lyttelton Port is “resilient and efficient, and contributes positively to the social, economic, cultural and environmental wellbeing of Lyttelton township, harbour-side communities and greater Christchurch”. It included the reclamation of up to 24 hectares of land for a new container terminal within Te Awaparahi Bay adjacent to the existing consented 10-hectare reclamation for port operational land.

Bringing the community together Over the last two decades the Port increasingly became separated from the community due to increased security and health and safety. With this, Mr Munt explains, the Port wanted the community to re-engage, which is why it developed a walk-on, walk-off community marina. Te Ana Marina opened in 2018 as part of the Port’s commitment to bring the community back to the inner harbour. Since it was opened, Te Ana Marina has breathed life back into Lyttelton’s west side waterfront. Set between two traditional sites, Ohinehou and Te Ana o Huikai, Te Ana is Canterbury’s only walk-on floating marina. Of the 170 berths, more than 90 per cent have been leased and house various vessels, from powerboats, to mono-hull yachts, catamarans and launches.

The Port’s vision for Te Ana has been to create an engaging and vibrant waterfront with public access and connectivity between Lyttelton, the Inner Harbour and the recreational areas of Naval Point. Te Ana has once again opened up Lyttelton’s Harbourside and made it a place where people can connect and enjoy the waterfront.

Future growth One of the most unique things about Lyttelton Port is its ability to grow over the next half a century. “Through a recovery plan we have been given the consensus we need to grow the port for the next 30-40 years, which is possible only due to our unique geography. This enables us to put plans in place to facilitate larger vessels, which is going to be crucial to sustained growth,” Mr Munt explains. A key example of the Port’s growth potential is the Te Awaparahi Bay reclamation. The South Island’s growing economy means Lyttelton Port needed more land to handle increasing volumes of export and import trade. The key to greater freight capacity is new land at Te Awaparahi Bay. The first 10ha of the reclamation of the Te Awaparahi Bay reclamation project was completed in 2019, and the second stage, totalling 6 hectares, was completed in December 2020. Some of this new land is already being used for imported vehicle storage, and this year there will be a further 16 hectares of new land at Te Awaparahi Bay for operational use. Another recent project is the construction of New Zealand’s first ever purpose-built cruise ship facility at Lytellton Port. The cruise berth is now open and operational and is used for a number of bulk cargo operations, and LPC look forward to welcoming some of the world’s largest cruise ships back to Lyttelton in the near future.

Commitment to the environment LPC has just delivered its first sustainability strategy, which defines clear goals for improving performance in three key focus areas: Prosperity, People and the Planet. “LPC is the gateway for the goods that keep our region moving. We support thousands of jobs and the creation of billions of dollars of wealth for the Canterbury economy.

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Our commitment is to continue to do this while growing our strong focus on health and safety, the wellbeing of our workforce, mutual benefits for our communities and importantly, doing our part in addressing the significant global challenges of climate change and biodiversity loss.” LPC are also currently developing an environmental management system in accordance with AS/NZ ISO 14001:2015. It has also joined the Toituenviromark certification programme, indicating its commitment to continuous environmental improvement. The wildlife surrounding the Port is a key driver in LPC’s sustainability efforts. Seawalls and rock revetments at LPC provide habitat for white flippered penguins (WFP) who use these areas for nesting and moulting. WFP are protected under the Wildlife Act 1953 and are listed as an At Risk, Declining species. To ensure that port operations and construction activities do not impact on their habitat, LPC engages the Kaikoura Ocean Research Institute (KORI) to undertake bi-annual surveys to locate and identify penguin hotspots. The Cawthron Institute also regularly undertakes dive surveys and sediment sampling of the intertidal, subtidal and benthic zones. This work helps LPC to better understand the local marine environment and to ensure our resource consent requirements are complied with, and that port operations are managed, and a healthy harbour retained.

At a glance:

CALL FOR NOMINATIONS

FOR THE 2021 AWARDS • H AS YOUR COMPANY made any outstanding achievements in the last 12 months?

– Excellence and innovation?

– Safety? • D O YOU KNOW SOME-ONE in the transport and logistics sectors who should be acknowledged for their work or studies?

• $6.3 worth of exports shipped to the world each year

– Made an excellent presentation?

• $3.9 billion worth of imports arrive each year

– Published an article in NZ?

• 446,000 TEU loaded and unloaded each year

• D ID YOU KNOW there is a scholarship to undertake further training through MITO?

• Over 600 staff

• H AVE YOU CONSIDERED nominating your younger staff for the Rising Star or Young Achiever awards? Dry dock facts:

• 137.15m Floor length • 14m Floor width • 146.75m Top length • 18.80m Entrance width • 6m Maximum draught (subject to vessel type)

• A NY-ONE CAN BE NOMINATED for all but one award (the Norman Spencer Memorial Medal). You can nominate yourself, your own company, another person or company whose work you admire. NOMINATIONS OPEN 1 JULY 2021 for the period 1 July 2020 – 30 June 2021, and close: • for the award for Outstanding Research Achievement for Masters’ Dissertation or Thesis (A3) on 15 August 2021

Lyttelton Port leadership team:

• for all other awards on 31 August 2021

• Roger Gray – Chief Executive Officer • Andrew Clark – Chief Financial Officer • Simon Munt – General Manager, container operations • P aul Monk – General Manager, bulk cargo and marine services • M ike Simmers – General Manager, infrastructure and property • Kirstie Gardener – General Manager, people and safety • P hil de Joux – General Manager, engagement and sustainability

DANIEL DUNT is freelance writer, brand and marketing consultant, art director, production designer, and producer based in the United Kingdom.

NEED SOME INSPIRATION? Check out our website for previous winners. We showcase the winners for the last nine years! Or read pages four and five of the March issue for the winners of the Rising Star Young Employee of the Year award. And check out the awards criteria on our website: https://cilt.co.nz/awards/categories-and-criteria/ This year’s annual awards dinner is going to be a little different, with our venue the iconic and new facility – Eighteen Sixty-Seven at Wellington College. The evening will start with a champagne reception and canapes – providing for a range of tastes. More details to follow. The 2021 CILT NZ Annual AGM and Awards Dinner will be held on Thursday, 14 October 2021 in Wellington.

Logistics & Transport NZ

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