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The national freight challenge By Dan Stojanovich
The national freight challenge
By Dan Stojanovich
If only the world would stand still, one could design the perfect transport system – for a few seconds at least. But our national freight network is complex and ever evolving. It is a highly interactive system that refl ects a multiplicity of stakeholder interests as well as global considerations, all laid over a legacy of what has gone before – the infrastructure as well as administrative and regulatory systems. No wonder it may sometimes feel like juggling endless bottlenecks.
According to Brendan Lyon, executive director of Infrastructure Partnerships Australia, Australia’s freight market is signifi cantly fragmented, with a range of bodies at a Commonwealth level - and dozens more at a state level - responsible for regulating and planning different parts of the freight task. What is needed is a single body charged with looking at the entirety of the national task.
The national signifi cance of the transport and logistics industry is clearly identifi ed in Meeting the 2050 Freight Challenge, a report prepared by Infrastructure Partnerships Australia and PricewaterhouseCoopers, where the industry is described as “a critical part of the Australian economy, responsible for generating 14.5 per cent of national GDP, with Australia’s supply chain worth an estimated $150 billion every year”, providing “more than one million jobs across some 165,000 companies”.
Industry growth projections emphasise the need for effective strategies and policies to best serve the national interest. These projections are partly driven by forecasts for Australian population growth to more than 35 million people by 2050, according to a recent Treasury Intergenerational Report.
Forecasts by IBISWorld in the “Meeting the 2050 Freight Challenge” report have shown that Australia is looking at an unprecedented growth in freight volumes; doubling to 2020 and tripling to 2050, increasing from 503 billion tonne kilometres in 2008 to 1,540 billion tonne kilometres in 2050. Quantifying the economic consequences, the report asserts that “Every one per cent increase in effi ciency will save the economy around $1.5 billion in costs associated with transport and logistics (based on current values)”.
Without a fi t-for-purpose supply chain, productivity will suffer and congestion will cost us all plenty, as well as making us less competitive and our living environments less pleasant and sustainable. The distances of freight travel and the volumes of freight, as well as the complexity of the freight task, will change markedly, pushed by consumer demand in major urban and regional centres, as well as the global demand for resources. The pressure is certainly on to dramatically improve infrastructure as well as regulatory regimes and operating systems in order to keep pace with both technological developments and growth in demand.
No wonder the report announces that “The reform agenda must be bold,” pointing to the need for “radical reform of the current framework of governance, planning and regulation.”
Its key recommendation is the establishment by the Commonwealth Government of a national freight coordination body with responsibility for developing a national freight plan which: • Provides clear, national leadership to develop a new long-term vision for the freight sector; • Develops and delivers a national freight policy, identifying key policy reforms; and • Identifi es key priority projects for investment and has strategic control of ongoing funding.
The national freight challenge can be divided into two basic areas: 1) Getting goods into and out of the country. 2) Distributing goods throughout the country.
We have challenges in both areas.
The national freight challenge
The 280 metre long vessel, Xin Yan Tai, is the largest container ship to ever call at the Port of Melbourne. Its visit in March at the declared draught depth would not have been possible without completion of the Channel Deepening Project. (Image: Peter Harry, Port of Melbourne Corporation.)
Imports and Exports
An island nation, Australia plugs into the world through its air and sea ports – vital gateways to the globe. But even despite our distance, and although our ports are largely determined by local issues of geography, economy, culture and history, the ports we build are also infl uenced by what the rest of the world is doing – port systems and equipment need a degree of compatibility with what is going on in the rest of the world. Containerisation is but one manifestation of this.
Several of our international airports recently spent considerable sums to upgrade both runways and terminals in order to prepare for the arrival of the Airbus A380. Our 22 federal airports are grappling with competing land uses, air and ground traffi c control systems and surrounding development. The federal government’s Flight Path To The Future white paper report is an attempt to address the diversity of airport related infrastructure issues at all levels of planning – national to local.
New ships and cargo management systems are also continually being developed. Millions of dollars have been spent dredging harbours like Port Phillip Bay in Melbourne and Port Botany in Sydney to increase channel depths to 14m and 16.5m respectively, to accommodate some of the world’s biggest ships. Our international competitiveness is partly defi ned by the capabilities of our ports. Now that we seem to be emerging from the worst of the GFC, the pressure is back on our export industries. So how many ships were anchored offshore from our nine main resource industry ports around the nation in early April 2010, waiting to get a turn to load?
There were around 200 and these were hardly your little 5m “tinnies” – this is serious money being incinerated at an impressive rate. And someone is paying for it. The world is literally queuing for our mineral exports, and the challenge of improving our resource industry ports is substantial to say the least.
The same applies to container and general cargo ports around the nation. Our biggest container ports (Port of Melbourne followed by Port Botany in Sydney) not only have maritime access issues, but are located in the middle of intensive and complex urban environments and face challenges across many fronts. Not least of these is integration into the greater multi modal freight network and this is where the going gets very complicated indeed. Competition for scarce land is intense, there are economic considerations, environmental and safety concerns, issues of social amenity, political acceptability and the list goes on. This is a challenging policy environment.
At a national level, the new National Ports Strategy will attempt to somehow address all the issues and suggest ways forward. There are also initiatives at a state level. In NSW for example, a new policy was announced in 2009 in an endeavour to integrate zonings at Port Botany, Newcastle and Port Kembla. In Victoria, the Port Futures strategy was also released in 2009, which endeavoured to better integrate the state’s four major and 14 local ports. The Port Phillip Bay channel deepening (also completed in 2009) to 14m has extended the life of Melbourne as the nation’s leading container port. Just how serious limited channel depth was before dredging is indicated by the fact that over 50 per cent of ships using the Port of Melbourne in the September 2009 quarter had not been able to load to full capacity. This constraint has been “completely removed” according to Port of Melbourne Corporation CEO Stephen Bradford.
Both air and sea ports need to look well beyond being only access points for air and sea craft, to being part of an integrated multi modal system, part of a logistics chain that stretches endlessly around the globe as well as across the nation.
The Port of Darwin is strategically a very important asset, and traffi c through the port is booming. Darwin Port Corporation’s export volumes should increase by some 50 per cent in 20092010 over previous tonnages, due largely to resource projects coming on-stream. And that in an area where the tidal range can be 8m.
New sea port developments are underway or being assessed along the coasts of WA, Queensland and South Australia as well. All these need to be effectively integrated with the national freight network.
The National Transport Network
A truly integrated, freight focused, fast national freight rail system has been talked about for decades. Progress on this appears to be proceeding at a similar pace to the long-awaited national high-speed passenger rail system. It is one thing for yet another breathless government media release to announce a regional “fast” train initiative, but it’s a long way from the 300kph now achieved in countries like China.
Nation building requires vision – but not much happens without lots of realworld follow-through. Infrastructure is at last starting to grab headlines, but it needs more attention still. It is absolutely fundamental to how well this nation survives and prospers in a volatile world.
Across the nation, intermodal issues are critical as we address the challenges of getting items from one end of the nation to the other, as well as getting them from one suburb into the next. These complex and ever changing supply chain issues are not challenges that are at all easy to optimise, and they have to be addressed in a holistic, system-wide way. Access, integrated planning and regulation are all essential parts of the solution.
Grand national highways as well as narrow service laneways in the middle of intensely populated CBDs are all part of a roads network that is required to make sure that all manner of freight gets to where it is needed.
Our national freight system is only as good as its weakest link – which is why developing a system with inbuilt redundancies is important. There are potential bottlenecks lurking everywhere, and they keep changing.
Good freight systems are vital, as emphasised in the report: “The operation of the national freight sector is integral to the wellbeing of all Australians – and its effi ciency has a direct impact on national and individual prosperity. However, the importance of an effi cient freight system is not always appreciated.”
Infrastructure 101 is not an “easy pass” subject – far from it in fact. We need a national perspective and the dedicated attention of some of the best and brightest in the land, now and for a good time to come.
Delivering a Better Network.
www.artc.com.au
At the end of 2008 the Australian Government announced that over the next two years, it will inject $1.2 billion into Australian Rail Track Corporation (ARTC) in a range of projects to upgrade the nation’s rail freight network.
ARTC will supplement the $580 million of equity through debt raising to expand capacity along the rail corridors connecting Hunter Valley coal mines to the Port of Newcastle.
This $1 billion project will more than double the amount of coal being transported to export markets from 97 to 200 million tonnes per year.
The announcement by the Australian Government continues ARTC’s work in upgrading Australia’s freight rail system.
ARTC has embarked on a $2.6 billion improvement programme to upgrade the North South and Hunter Valley rail corridors.
Key projects have already been completed and many others are now under way.
The investment in rail infrastructure will deliver reduced transit times, increased track capacity and greatly improved reliability over the networks.
DOWNER EDI – PROVIDING INTEGRATED INNOVATIVE INFRASTRUCTURE SOLUTIONS
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As Australia’s leading provider of innovative and efficient rolling stock asset management solutions, we are the partner of choice for freight and passenger rail operators as we provide design, construction and maintenance of railway infrastructure (including signalling and electrification), freight and passenger rolling stock, communications and ticketing systems.
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Managing waste INTO THE FUTURE
WASTE DISPOSAL IS RAPIDLY transforming into waste processing as local governments, their communities and business demand solutions that divert waste from landfi ll and recover valuable resources. In Australia, as landfi ll space diminishes, and is not viewed as a sustainable option, essential waste infrastructure is being built and many challenges met by government and private enterprise. It is interesting to see how other countries, such as the United Kingdom, is integrating waste infrastructure into the big picture.
Gone are the days when waste was simply a one-bin garbage collection service where all materials were buried in a hole in the ground. Waste is increasingly being treated as a valuable resource and councils are demanding more sustainable solutions for their residents’ domestic waste. Demand is also coming from the commercial and industrial (C&I) sector, with business becoming more responsible for its ecological footprint.
The fi rst step toward sustainable waste infrastructure was building Materials Recycling Facilities (MRFs), which process recyclable materials that are collected through kerbside collection services. MRF’s separate materials like plastic, paper, metal and glass so manufacturers can use them to produce new products.
More recently, alternative waste processing technologies (AWT’s) for mixed, or household, waste have been contracted and built in some capital cities. An example is the $60 million Macarthur Resource Recovery Park, owned and operated by leading Sydney recycling company WSN Environmental Solutions. This facility sorts household waste and recovers resources which generate green energy, used to power the facility’s operations or exported to the NSW Energy Grid.
Australia is likely to need around 70 AWT’s in various forms, new MRF’s and processing plants for additional diversion of organics from landfi ll — this could represent an investment of up to $7 to $11 billion. NSW has led the way in waste infrastructure investment with around 20% of Sydney’s waste being processed through AWT’s and MRF’s. There are also exciting waste infrastructure initiatives happening in other countries.
The United Kingdom has recently developed a co-ordinated approach to the development of waste infrastructure. For example, it has established the Waste Infrastructure Development Program to accelerate the construction of infrastructure needed to treat waste and comply with European Union (EU) Landfi ll Directive targets. It is also designed to stimulate investment in the supply side of the industry, building capacity in product off-take markets, such as Refuse Derived Fuel (RDF) markets.
This Division maintains a national overview of existing and planned waste infrastructure and allocates funding in waves rather than by piecemeal funding of projects. The UK has projected that a substantial investment program, in the order of £11 billion, will be necessary to meet landfi ll targets.
Government fi nancial support for this program is through PFI (private fi nance initiative) credits, grants and consultancy. Approximately 2.48 billion pounds of PFI credits relating to 37 projects have been committed with a further 800 million in PFI credits expected to be allocated during the 2009–2010 fi nancial year.
In order for councils to gain the PFI credits, they need to follow a predetermined procurement procedure and use an industry standard contract that has been road tested and approved by bankers and contractors. Such a process reduces both cost and risk for the bidders and helps limit the potential for failed projects.
Councils can remain responsible for contracting industry to deliver projects, but they do so with a centralised, well developed model, along with funding and professional support from central government.
The program also engages with other government departments to resolve particular policy issues that impede progress and threaten the delivery of infrastructure projects. The UK model is considered a good model for public private partnerships — it supports a new industry to grow and deliver the necessary projects.
In Australia there is an innovative and emerging industry focused on developing world best practice waste facilities. Waste infrastructure is increasingly on the agenda to support the states’ waste diversion targets. Great in-roads have already been made; we continue to learn from our own experience, as well as that from other regions, on how we can effectively meet the infrastructure needs to manage our waste.
