Transporting New Zealand

The Road and rail – delivering for New Zealand report estimates only 12 percent of New Zealand’s freight movements are contestable by rail.

by Nick Leggett Chief Executive

Ia Ara Aotearoa Transporting New Zealand

Transporting New Zealand released a report on behalf of the road transport industry that effectively buried the myth that rail can be a serious competitor to road transport across New Zealand’s freight network.

The report, Road and rail – delivering for New Zealand, which includes contributions from economists David Greig and Dave Heatley, is not intended to be a self-serving anti-rail hit-job, rather it is a rational evidence-based look at the true value of rail freight to New Zealand.

Transporting New Zealand fully supports investment in rail where it makes sense and it must be acknowledged that the road freight transport industry is one of the largest users of rail. Rail has its advantages – it is extremely good at carrying the likes of coal, chemicals and other bulk non timesensitive goods over long distances. What it lacks though is the flexibility and dexterity to compete with road transport for the vast majority of more time-sensitive, lower volume freight.

Our report sets this out and counters the prevailing rhetoric that freight can simply be forced onto rail at the stroke of a Government Minister’s pen with little to no impact on the country. Our aim was to bring far more balance to the debate and use informed views of how the freight system works to scrutinise Government decision-making about rail investment where it is clearly detrimental to New Zealand’s interests and comes at the expense of vital investment in roads.

Transporting New Zealand remains firmly of the view that Government should not endeavour to artificially manipulate the freight market. Whether it comes down to economic efficiency, timeliness, environmental factors, safety, international comparisons or intermodal compatibility, the report illustrates there is no justification other than pure ideology for the view that trains are ‘better’ than trucks.

The fact is we have a rail freight network that costs New Zealand billions of dollars to maintain yet there is little-tono scrutiny over much of that spending. Just last year the Government committed $5 billion to be invested as part of the New Zealand Rail Plan 2021. We are concerned that this money, primarily taken from road users, which should be used to maintain, repair and build roads, is simply being siphoned off to satisfy misguided ideology and nostalgia for a transport mode that can only ever have a minor role in transporting New Zealand’s freight.

When we consider modal contestability, as of today 93 percent of New Zealand’s goods are moved by road.

The expressed desire by the Government to shift freight off roads and onto rail implies that the modal share at the moment is incorrect. It also implies that there is an ideal share of the

The majority of freight in New Zealand is carried over relatively short distances - which road can achieve faster, more reliably and more efficiently than rail.

freight task for each transport mode that we should be striving to achieve. But this does not make sense.

Modal share is market-driven and organically determined by the requirements of producers, consumers and exporters. Because trucking is faster, more efficient and more reliable than rail, as well as delivering door-to-door when the customer wants it, it is the preferred mode for most types of freight.

So, how much of New Zealand’s freight movement is actually contestable by rail? Our report estimates it might be around 12 percent at best. What people involved in the freight industry understand that politicians and bureaucrats obviously do not, is that rail can only ever be helpful for part of the freight task.

Studies show that rail starts to compete with road at an inter-regional level and once the distance is greater than 400 kilometres. The problem is, the vast majority of freight in New Zealand is moved over much shorter distances than that. You aren’t seriously going to put freight on a train at the Auckland Port, shift it to a yet-to-be-built rail hub, to then be put onto a truck to take it to a warehouse. Logically you are going to put it straight on a truck at the port and take it directly to its end destination because that’s the most efficient way of completing the freight task.

Finally, let me address the environmental argument against trucks, because again, this is based largely on emotion rather than fact.

“Trucks are gross emitters,” is the kind of language we constantly hear from Government, however, when we look at the evidence the picture is not so straightforward. For a start, constant vehicle turnover and advancements in emission-reduction technology means that the truck fleet is far more advanced than our ageing diesel train fleet, which in many cases is decades old. There is also little-tono acknowledgement that a fully-laden truck is actually extremely fuel-efficient when delivering its load, far more so than a typical light vehicle.

I understand that this report, coming as it does from the trucking lobby, will be criticised by some and that is a shame because there is much at stake in this debate. The movement of freight is critical not only to New Zealand’s economic success but also our social cohesion and the interconnectivity of our communities. By meddling, all the Government can achieve is a further increase in freight costs, the escalation of consumer prices, and an extra cost burden for our exporters. T&D

Ia Ara Aotearoa – Transporting New Zealand PO Box 1778, Wellington 04 472 3877 info@transporting.nz Nick Leggett, Chief Executive 04 472 3877 021 248 2175 nick@transporting.nz