EVENT REVIEW

HEAD ABOVE WATER

National Heavy Vehicle Regulator CEO, Sal Petroccitto.

AN ANNUAL CONFERENCE HELD 20-22 MARCH NEAR PHILLIP ISLAND IN VICTORIA, AUSTRALIA, WAS THEMED AROUND ATTAINING POST PANDEMIC SUPPLY CHAIN CERTAINTY AND SUCCESSFULLY TACKLED A BROAD RANGE OF TOPICAL INDUSTRY ISSUES HEAD-ON.

The Victorian Transport Association (VTA) hosted a record number of 190 delegates at its state conference earlier this year. Speakers included regulators, government and other key stakeholders and they engaged in a series of informative keynote presentations and panel discussions covering everything from infrastructure, industrial relations, taxation, training and education, safety and technology.

For Australian heavy vehicle operators and transport businesses, higher fuel costs and rising inflation and interest rates came under the gun at the VTA State Conference 2022.

VTA CEO, Peter Anderson, welcomed delegates with remarks that acknowledged how operators and the transport industry had been rocked by successive challenges, with conflict in Eastern Europe adding to the pressure.

“Labour shortages, disruptions to fuel and engine additives, difficulties obtaining parts for servicing vehicles, are just a few of the supply chain difficulties that have created such uncertainty in the business and the general community,” Anderson said.

“And when you factor in inflation and the likelihood of interest rates going up, higher costs of doing business just adds to the uncertainty and the stresses it creates on budgets for businesses and consumers.”

Anderson said the sad irony is that the economy was edging towards a post pandemic recovery of sorts when tensions began flaring in Eastern Europe.

“Russia’s war with Ukraine is adding to supply chain uncertainty, with sanctions creating supply issues on commodities the world economy needs,” he said. “Reduced supply is leading to higher prices for most goods and services, prompting businesses to make difficult decisions to remain sustainable.”

The recent conflict in Ukraine also exacerbated issues with the supply chain and concerns about the rising costs of fuel.

“As an industry group, our phones are

A view of Phillip Island, Australia.

ringing off the hook with members and operators desperate for advice on how to respond,” said Anderson.

“On one hand, operators are sensitive to raising their prices to recover higher costs and are loathe to disenfranchise customers facing similar pressures. But on the other hand, absorbing costs is akin to kicking the can down the road, and ultimately will be to the detriment of already stressed operators.

“Our advice is simple – operators must act on rising business costs. They cannot wear higher diesel and other prices forever and must factor it into their cost models, which will lead to higher consumer prices. There are few parts of the economy that will be exempt from higher prices because transport is a factor in every commodity, and when transport becomes more expensive, everything becomes more expensive.”

Anderson said operators need to understand the impact rising costs will have on their business and act.

It was also crucial that they communicate clearly, effectively and regularly with customers.

“In a broader sense, we as a nation need to think seriously and take steps to protect our supply chains and make us less reliant on certain imports for resiliency in our supply chains.” Anderson said.

“At stake, unless governments do more to support the transport industry’s pivot to attaining supply chain sovereignty, is our ability to supply basic community needs,” he continued.

“Only by attaining higher rates of supply chain sovereignty will Australians be able to have greater certainty that our economic security and living standards can be upheld. We need regulatory and legislative settings to identify the risks that inhibit us from standing on our own two feet when it comes to things like labour and fuel security.

“A growing workforce, sufficient reserves of fuel and energy, and the inputs necessary to keep road, rail and sea transport supply chains intact, are the basics we need for supply chain sovereignty and certainty as we recover from the pandemic.”

Technology, training and reform

Assistant Federal Assistant Minister for Road Safety and Freight Transport, Scott Buchholz conceded he was channelling former US Secretary of State Colin Powell in his opening address at the VTA State Conference.

“There are known certainties that we have moving forward, and there are unknown certainties,” Buchholz told his audience.

Addressing post-pandemic supply chain certainty, Buchholz identified a number of issues including the need for reforms.

“The challenge for us moving forward with the National Heavy Vehicle

Assistant Federal Assistant Minister for Road Safety and Freight Transport, Scott Buchholz.

Regulator (NHVR) is to loosen up some of the antiquated and very restrictive parameters which it has to work with,” he said.

“Our fundamentals are very simple. As government we want to get out of your way, we want less administration and we want you to be profitable.”

Buchholz also urged the industry to further take advantage of modern technology.

“Anyone in the room who is not embracing technology at every level is doing themselves and their business an injustice.

“Technology is going to drive our future, whether it be through the prism of safety, through seeing-eye technology, through driving efficiencies and looking for new opportunities with technology.”

On the subject of rising fuel costs Buchholz provided this strong advice: “Unless you understand your business with absolute granular clarity and where your expenditure is, and you have a mechanism to pass that on to your clients, if you’re not going to do it you will not be in this conference room next year.”

He acknowledged that the fuel price hike will place inflationary pressures on the entire supply chain and alluded to some concessions which may be included in next week’s Budget.

“The only lever we have available to us is with fuel excise which is miniscule compared to the increases in fuel that we have seen across the country at the moment.”

Buchholz spoke about other financial mechanisms put in place in response to the pandemic.

“When we created the instant asset write off which encouraged industry to go out and buy more capital equipment which they could write off 100 per cent in the first year, that was done in an environment where inflation was about 1.0 per cent and it’s now 3.5, which is outside of the Reserve Bank’s range of between 2.0 and 3.0 per cent. So we have to create fiscal settings that keep one eye on inflationary pressures and that we don’t continue to add to those burdens, because the cost to our business by not managing that is diabolical.”

Recommendations, according to Buchholz, have come from his own office to the Treasurer’s office to change the timing of the application of the tax concessions so that access to the instant asset write off occurs at the time of the order, rather than upon delivery of the equipment.

“What we have recommended, because of the time delay in getting those pieces of capital equipment into the yard with 12 or 18 months lead time for some equipment, I’ve asked for consideration be given to allow the deductions to happen when you place the order.”

On another issue confronting the transport and logistics industry, Buchholz was supportive but cautious about the potential of driver and worker apprenticeship programs.

“It’s not a silver bullet, it’s not a panacea when we try to attract that next generation of employees into our workforce,” he said. “From a Federal Government perspective we have made commitments to take Certificate III’s out and put them into a fully trade recognised (category) so we are able to get federal funding. That way when parents tell their kids ‘go and get yourself an apprenticeship and get that security behind you’, now they can be a part of a fully recognised trade apprenticeship in the transport and logistics sector and be recognised with the same skill set and be held in the same regard as every other tradie in Australia.”

Prior to his political career Buchholz was involved in the freight and courier industry and was a director of Central Queensland Express Holdings and Toowoomba Express Couriers.

“On the upside I’m very bullish about the sector,” he said.

“I know we have uncertainty at the moment because of the geo-political outlook with Ukraine with reference to fuel, and the pressures that brings to the uncertainty of the supply chain out of China.

“Boardrooms all around Australia at the moment are looking for ways to make investments that will give them security in their supply chain, so they’re looking for alternative suppliers even if it costs them a little bit more to head back into Europe to make those capital acquisitions.

“We just need to have in the back of our mind that the freight task is going to double over the next couple of decades and there is an opportunity for each and every one of you to take advantage of that. If you’re going to be around for the next couple of decades and take advantage of that growth, control your costs and stay profitable.”

Unpacking the challenges of post-Covid recovery

Speaking at the recent Victorian Transport Association (VTA) annual conference, Executive Director, Freight Victoria at Department of Transport, Praveen Reddy, opened his address by saying he wasn’t going to talk about Covid this year.

“The last two-and-a-bit years have been unprecedented in terms of the resolve, flexibility and adaptability of those in the freight and logistics industry in responding to the Covid scenario,” said Reddy.

“I want to acknowledge the tireless efforts of a workforce that has operated at elevated levels and under extreme pressure in order to keep things on track during this extremely difficult time.

“This has taken its toll on the mental health of many, so I want to encourage

everyone to look after each other and to seek help if things are getting too much to deal with.”

With that he moved to the topic of diversity in the industry, saying it was important to open the door to as many people as possible in order to meet the burgeoning demand.

“We know the freight task is increasing, along with e-commerce, and will continue to do so for at least the next 30 years, so we need to continue encouraging people from all walks of life to join the growing workforce,” he said.

He also highlighted the complexity of the supply chain with its multi-facetted modes of transport including ships, trucks and rail.

“One of the biggest challenges we face is the sheer volume of freight that needs to be delivered from our metropolitan to regional areas,” said Reddy.

“With the return of workers to offices and workplaces in Melbourne it will take a while before public transport is fully utilised, with many people using their private cars to commute which adds congestion to the roads and in turn affects freight movements.”

He said the Department of Transport is currently undertaking a study in conjunction with Australia Post to determine how loading zones can be better utilised to help freight movements.

Executive Director, Freight Victoria at Touching on the level of infrastructure Department of Transport, Praveen Reddy. upgrades and the progressive nature of the industry, Reddy said the general public needs to be made aware that this industry is modern and efficient and one of the greatest contributors to economic growth. “Victoria really is the heartland of freight in this country and having an efficient freight system is paramount – it’s really important we continue to focus on the things that allow us to have a sustainable freight sector,” he said. He mentioned the north Melbourne industrial precinct where there’s been a significant challenge over the last few years and where the NorthEast Link is being improved to help alleviate the bottleneck to freight movement in the area.

“As we look to re-establish export markets, we need to look at the whole supply chain from regional economies where goods are produced through to the overseas buyers and make sure all measures are in place to ensure the flow of goods is as efficient as it can be.”

Flagging a new approach to risk management

Meanwhile, the National Heavy Vehicle Regulator (NHVR) shared a glimpse into its future approach to fatigue management and meeting the ongoing challenges around the permit process for access networks.

In a keynote address, the NHVR CEO, Sal Petroccitto, said a new approach to risk management was currently underway in consultation with the industry.

“The latest evidence we’re starting to see really needs to look at those issues around quality not just the quantities,” said Petroccitto.

“A lot of factors impact on the individual that might be driving their truck and also the working environments and conditions play a key role.”

Petroccitto recognised a modern approach would be required to tackle the issues around driver hours as the current system in place had proven flawed for many road transport operators.

“In some cases the current fatigue laws when operators are compliant are unsafe and when you’re non compliant you’re actually safe,” he said.

“We need to shift that focus of counting hours with providing you, as an industry, the flexibility that your drivers need so they can rest when they are tired and not when someone tells them to do so,” said Petroccitto.

“Obviously that needs to be done within those hour limits. None of you are asking for more hours. You’re just asking for that flexibility within those hours.”

Technology would, as it does now, play a vital role in the way the regulator recognised and utilised fatigue detection technology.

Petrocitto was hopeful he had the ear of policymakers when it came to implementing improvements to the current approaches.

A strong commitment, according to Petroccitto, was needed to challenge the current approaches and the reform of what was an onerous and unworkable

system when it came to providing access permits.

“I know that we normally cop the brunt of a lot of complaints. As I’ve said many times before we facilitate access. Our ability to control what a road manager does and doesn’t do is as limited as yours,” he said.

“What we both can agree on is the current system has to be fixed because it is not sustainable,” said Petroccitto.

At present some 150,000 permit applications will be processed through the NHVR office this year alone.

That amounts to around 12,000 a month.

“Analysis tells us that 94 per cent of those applications get approved,” said Petroccitto.

On that front he was dedicated to putting forth an approach involving operators and the NHVR working together on a national reform of which the outcome would assist in overcoming the access and productivity challenges that stakeholders and industry face daily.

Networks would open up, under this model, based on knowing and understanding the infrastructure capacity while identifying clear no-go zones that are supported with an investment approach.

“There’s no point having an HVNL network full of red dots if no one can get through those red dots,” Petroccitto said.

The formal adoption of the NHVR’s strategic local government asset assessment program and its national spacial mapping work, together with additional funding from the federal government, were cited by Petroccitto as a way forward.

“Now in its third year that project is actually assisting local government road managers understand the condition of their bridges,” he said.

“They can make those informed decisions.

Close to 400 assessments had taken place across local government areas with Round 2 set to commence shortly.

San Remo bridge is a gateway to Phillip Island.

It was likely to include another 1000 assessments.

To date, there was 24,000 assets operating on local government networks.

“What we need to do is look at those critical assets on those critical freight routes and really get a genuine understanding of the condition to allow local governments to make those informed decisions to keep you productive,” said Petroccitto.

“We are dedicated to working with those road managers to improve the system that opens up those productive networks.”

The information collated through the management of the local government asset program feeds into the NHVR’s single national spacial access map and enforceable heavy vehicle network map on one central repository.

“The mapping system will have googlebased functionality [and] will really allow industry and road managers to better plan their journeys and manage access conditions en route and will contain critical physical infrastructure information as well,” said Petroccitto.

Dynamic routing on the map will enable industry to enter the vehicle dimensions and systems will automatically snap them

An island sanctuary is the perfect place to talk transport.

to a preferred group and identify if further assessments are required.

The system will be built upon the work that has already been done in Tasmania. At a state level Tasmania will be expanded to a national system to ensure it works across all the jurisdictions the NHVR work with.

Achieving that national consistency was one of the largest hurdles for the NHVR but it was well underway despite the immensity of the challenges inherent in a national reform project.

By the middle of 2022 the NHVR projects it will have transferred the NSW services for heavy vehicle compliance over to it.

That will see the NHVR almost double in size.

It will, according to Petroccitto, bring with it more complexities and also more capabilities. That program has been three years in the making.

The reform agenda, Petrocitto maintained, was right and too important to give up on.

“We have to embrace reform in a faster and more productive manner if we are to remain truly competitive,” he said.

“We know when we do transition one of the greatest benefits for the industry will come in that consistent risk-based regulatory functions that we undertake.”

What Petroccitto called the ‘inform, educate and enforce’ approach was proving effective as the NHVR began to shift away from heavy handed onroad compliance activity to a focus geared around engagement.

He denied, however, that the change in focus would bring about a softer regulator.

“We’re still using the powers that we have when we need to,” said Petroccitto.

“But our view is if we don’t bring you along the journey with a consultative and educative process we’re not really changing the agenda.”

The accumulation of data, for instance, was pointless if the regulator had no way of using it as part of the education process.

“We’re looking at how we can start to share that information and we want to share that information back with you. This way we believe that you can manage your safety in a more timely manner,” Petroccitto said.

In the coming weeks the NHVR will begin a trial with several road freight operators who will be given access to company compliance information through the portal. If that proves successful the intent is for the NHVR to share more information it has captured with industry.

Petroccitto is hopeful it will deliver more functionality for heavy vehicle operators by facilitating a greater responsibility that will in turn lead to a proactive application of how they manage their fleet.

In this way the NHVR will get to use some of the other regulatory provisions it has in its toolkit.

“We’re considered quite unique because we’re both a productivity and safety regulator,” continued Petroccitto.

“I fundamentally believe the two are critical and need to go hand in hand. The more productive a business is the more it can invest in safety,” he said.

“The safer a business is the more productive it can be.”