Transition of Freight in New Zealand InTIME

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. 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.

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.

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.

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. 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.

• Manufacturing 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?