Acknowledging the havoc wrought by Covid-19, the Infrastructure Commission has put freight and supply chains at the heart of a new 30-year draft strategy for Government.
The new Ports of Auckland chair is backing plans for a national freight and supply chain strategy; after all, it is Jan Dawson and her new board who must help steer the export economy out of the rough waters of Covid.
Ahead of her first media interview as chair, Dawson said it was critical that government and the private sector work together, planning and playing to each other’s strengths.
“New Zealand is a tiny trading nation that lies thousands of kilometres from its overseas markets, so we need to make sure our national supply chain and its international connections are as efficient as possible,” she said.
“We’re a small nation with limited resources, so our infrastructure investments need to be well thought out and well used, in order to deliver value.”
But as small as New Zealand may be, the Infrastructure Commission forecasts the population could rise as high as 7.4 million in 2050 – and that will put new pressures on the supply chain, especially to provincial towns and the regions. Coastal shipping must be part of that.
“Our nation will benefit if we can create an infrastructure plan that enjoys cross-party support and lasts beyond the terms of individual governments,” Dawson said. “The Commission’s evidence-driven approach and long-term thinking is very positive in this respect, and bodes well for the future.”
Dawson joined the board in August and was named as chair on September 30, after the resignation of chief executive Tony Gibson and the retirement of chair Bill Osborne. Two other members joined the board this year and today, two more directors were named: Geoff Plunket and Stephen Reindler
The appointments reflect the insistence of Auckland Council, the port’s owner, that the new board quickly address the safety problems that have claimed four lives in little more than four years.
Ports of Auckland and its former chief executive Tony Gibson face charges in relation to the death of worker Pala’amo (Amo) Kalati, who was crushed under a container one year ago. Gibson left with a large payout, and one of the new board’s first tasks is to recruit his replacement.
And the council wants a solution to delays that have contributed to the supply chain woes of New Zealand’s exporters and importers. Last year, fully-laden container ships were anchored for days in the Hauraki Gulf, awaiting a slot at the container terminal to unload.
Plunket, the former chief executive of Port Otago, has an extensive knowledge of port operations and the supply chain. And Reindler, a director of Z Energy and Steel and Tube and a previous director of Port of Napier and Worksafe NZ, has experience in higher-risk industries where “a rigorous approach to safety” is needed.
Auckland mayor Phil Goff told Newsroom the board would provide a new and different approach to improve the port’s performance. He expects directors to move at pace to change the health and safety culture, to meet the challenges posed by Covid-19 and its impact on supply chains, to oversee the completion of a much-delayed automation project, and to improve the port’s financial performance and competitiveness against other ports like Tauranga.
He too welcomed the Infrastructure Commission’s proposed supply chain strategy. He said ports like Auckland and Tauranga were operating as competitors, but needed to have better-aligned strategies for the good of the New Zealand economy.
The Government has increased its investment in infrastructure, as part of a big, debt-funded response to the Covid-19 pandemic that is intended to both act as economic stimulus and to take advantage of the slowdown to embark on construction projects.
The 2021 Crown accounts, published yesterday, show spending has risen further. “Investment in infrastructure continues to grow with the Crown infrastructure investment this year being $9.4 billion, $0.4 billion higher than in the previous year,” said Finance Minister Grant Robertson.
The Infrastructure Commission's draft strategy, published this morning, says Covid-19 has provided a reminder of the importance of reliable, safe and efficient supply chains. "Global supply chain disruptions have been common, with widespread impacts on global airports and air freight," it says.
"This has added to the cost of freight, increasing lead times and lowering inventory levels. Many of these impacts are expected to continue for some time. For many suppliers, traditional models of consumer shopping have been replaced with home delivery."
"Maintaining security of supply within often remote and geographically challenging parts of the country is important to all New Zealanders. Road and rail transport will remain fundamental in connecting our regions. However, digital and mobile connectivity are also becoming essential. Moving data and information will become as important to the regions as moving energy or water."
The draft strategy says New Zealand's supply chains need to be resilient to shocks and stresses, not just the Covid-19 pandemic but also to climate change, earthquakes and cyber-attacks.
They need to keep up with international trends toward much larger volumes of freight and increased efficiency. This includes digitisation and automation of the supply chain and the introduction of bigger ships, it says.
Of course, freight sector carbon emissions must reduce to meet the country's net-zero carbon emissions target, as well as the need to adapt to evolving consumer preferences – such as for locally produced and eco-friendly products.
And the supply chain must be ready for the impact on the freight system of the population growing to as much as 7.4 million in 2050 – equivalent to adding another Auckland, another Wellington and another Christchurch. "This can reduce the availability of land used for storing freight and increase traffic congestion, making it slower to move freight."
The draft strategy calls for a national freight and supply chain strategy, looking at all transport modes. “It would also need to adapt to the challenges facing the freight network and provide competition and choice for freight users. This strategy would feed into regional spatial planning and build on existing transport and freight-related strategies and planning.
"As a geographically isolated country that’s reliant on imports, it is important we have stable and resilient networks for moving goods. Currently, 90 percent of our construction products are either imported, or contain imported products that can’t be easily replaced within New Zealand. Covid-19 has shown that our international supply chains can respond to shocks, but ongoing disruption still has an impact, with prices increasing and some goods becoming hard to obtain.
"We rely on either imports or a small number of local manufacturers for many products we need for building infrastructure such as steel rebar and cement. We need a secure supply of essential materials so we can continue to build, renew, and maintain the infrastructure we need and recover from a significant disaster. This should form an important part of risk management planning."
