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Strengthening Queensland’s Supply Chains

Strategic and operational priorities to improve the development and sustainability of efficient and productive supply chains in Queensland

A QTLC initiative Dr Rebecca Michael, CEO, QTLC

QLD Freight Network

• 180,500km public roads

– 150,000 locally controlled (100,000 unsealed)

• 9,550 km rail line (inc. narrow, standard and dual gauge)

• 15 import/export ports

• 3 international airports and various domestic

• 2 key intermodal freight terminals (various smaller terminals and rail sidings)

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The Freight System

• Geography exponentially increases challenges as well as value of efficiency and productivity gains within the system

• The freight system = freight network + transport services + regulation

• Whole of supply chain approach versus modal….integrate not insulate!

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Supply Chain Security

• Freight is a profit seeking activity

• Goal is most productive and efficient flow of goods to market

• Australia logistics up to 50% market price. Canada ½ of that!

• Infrastructure upgrades wont deliver benefits unless the comparative advantages of each mode are optimised through broader freight system across supply chains

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Commission of Audit Report

• Recommendation to reduce debt by $25-30 billion

• Cannot reduce debt by adjustments to state operating statement

• Productivity declining (Source: Qld Treasury & Trade , 2013)

• Right infrastructure, used the right way, enables more efficient production which benefits productivity

2007-08 to 2011-12 QLD AUST

Average Annual Growth (%)

Output 1.4 2.7

Multifactor Productivity -2.0 0.00

Labour productivity -0.1 1.4

Less capital deepening 1.9 1.4

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Connectivity & Innovation

• Paradigm shift that:

– Recognises the connectivity of the freight system

– Understands key drivers and flows

– Underpinned by innovation and network optimisation

– Recognises that infrastructure upgrades alone are not a silver bullet for improved productivity and economic growth

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QLD Challenges

• Major constraints to supply chain security:

– First / last mile (not just LG, access to “significant place for freight”)

– Network capacity & reliability

– Congestion

– Regulation

– Role uncertainty

• Fiscal constraints…..unlocking latent efficiency

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Scope

• Acknowledges fiscal constraints

• Does not advocate major infrastructure projects

• Low cost, innovative, system recommendations aimed at unlocking latent efficiency and capacity in freight system

• Prioritises QLD supply chains, focusing on landside operations

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Drivers of Freight

3.96.7 7.2 6.8 7.9 9.6 7.5 7.4 6.42.4 2.9 2.7 2.7

3.12.7 3.3 3.2

2.8

4.0 4.4 4.95.4

6.96.0 5.2

7.0

3.8

5.37.0 7.5

8.1

7.49.4 8.6 6.1

2.9

9.6 6.1 5.76.4

7.14.5 5.4

37.0

2.2 2.72.4 3.2 3.3

2.3

4.0 2.7 2.4

2.6 2.7

2.3

4.1

3.5 7.211.1

9.78.5

14.6 16.1

4.7

2.2

3.3 3.12.6

4.14.8

2.6

5.0

4.4

6.9

5.7 5.56.7

5.75.6

2.9

3.4

3.8

6.0

5.1 5.76.4

6.34.7

3.4

3.6

6.15.1 5.0

3.5

5.5 5.4

13.4

14.2

10.28.7 7.6

7.7

6.8 6.2

11.5

2.3

2.6 2.7 3.04.8

2.4 3.0

2.5

5.8

7.7

8.8 8.6 10.69.0

9.9 9.2

39.2

21.9

11.6 11.2 5.5

2.4 3.83.1 3.1 2.7

6.5 8.13.0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

236.32.37

18.10.24

280.64.66

1451.122.85

91.21.66

24.30.51

322.85.68

446.27.38

31.50.36

GSP ($ billion)1

Population (F2012) (M. persons)

Agriculture (B$)

Mining (B$)

Manufacturing (B$)

Utilities (B$)

Construction (B$)

Wholesale Trade (B$)

Retail Trade (B$)

Transport & Postal (B$)

Media & Telecom (B$)

Finance & Insurance (B$)

Rental & Real Est (B$)

Admin & Support (B$)

Public Admin & Safety ($B)

Ind. Taxes less subsidies (B$)

Education (B$)

Accom, Cafe & Rest (B$)

Health & Community (B$)

Cult & Rec (B$)

Other Services (B$)

WA NT QLD AUST SA TAS VIC NSW ACT

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Aust. Freight Task - Tonnes

0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600

Air

Sea

Pipeline

Rail

Road

Tonnes (million)

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QLD Freight Task – Tkm

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Past & Forecast QLD Road Task

0

20,000

40,000

60,000

80,000

100,000

120,000

1985 1990 1995 2000 2005 2010 2015 2020

Tonne K

ilom

etr

es

(Million)

Actual

Projected

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Past & Forecast QLD Rail Task

0

20

40

60

80

100

120

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Tonne-K

ilom

etres (Billion)

Ancillary

Hire and Reward

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Freight Flow & Demand

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Freight Flow Data

• There are a number of gaps in the freight data available. – Much of the rail freight mapping data is time-dated or

not available due to a commercial-in confidence rationale.

– The road freight mapping data has been kept up-to-date, but uses GVM as a surrogate for freight.

– Does not present sufficient information on commodity flows.

– Does not contain 20-year regional, commodity and corridor forecasts to analyse the freight growth challenges

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Freight Pricing & Investment

• Freight system and modal choice impacted by: – Economic distortions and interventions

– Charging and investment policies

– Disconnect between revenue and investment

• Note the developments by COAG and the Productivity Commission to address modal pricing issues

• Other factors influencing contestability & investment

• Slow nature of pricing reform requires interim approach

• Interim investment regime

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Supply Chain Coordination

• The key findings of the Supply Chain Pilots Draft Position Paper, for the coal, meat and livestock, grain and intermodal supply chains were: – insufficient sharing of information

– lack of accountability

– lack of cooperation

– lack of certainty around government requirements for cooperation along supply chains.

• MITEZ Report: SCC value – confidentiality, info sharing, planning, removing bottlenecks, prioritise investment, data management

• Port Botany Landside Improvement Strategy (PBLIS)

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Rail Freight

• TIA prioritises passenger services over freight services regardless of type of passenger service or freight function

• Rail Network Operational (Efficiency) Policy to provide greater rail network and operational efficiency:

– Hierarchy of freight and passenger rail lines using transparent criteria and data.

– Freight train priority hierarchy using business criteria and a passenger train priority hierarchy using social criteria.

– Use these two sources to develop a new Rail Network Operational (Efficiency) Policy

– Basis for reviewing TIA S265 & S266

– Operational guideline to support priority processes

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Intermodal Facilities

• Currently, no north side Brisbane intermodal facility is being planned**

• Current or past proposals include Bromelton, Ebenezer, Charlton Wellcamp

• Planning needs to consider urban capacity constraints and be part of a long term strategic freight plan based on robust freight flow data & train length aspirations

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Road Freight

• Productivity versus preservation

• Infrastructure funding backlog

• Complex, burdensome and non-transparent decision making processes for RAVs

• Private-public sector Advisory Board

• Performance indicators for assessments

• Efficient permit processing & delivery systems

• NHVR – Full cost recovery only when efficient systems in place

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Aligning Freight & Land Use Planning

• Varying approach to Priority Freight Routes over the years

• Toowoomba Sub-regional Transport Study & NSW draft Freight Strategy both nominate 3-level freight route hierarchy

• Incorporating PFR into planning schemes critical

• Corridor preservation critical

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Challenges for Local Government

• First/last mile

• Infrastructure backlog and asset condition

• Planning responsibilities

• Funding models

• Capacity and capability

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Regional Supply Chains

• 6 regions: – South East Queensland

– Connecting North Queensland

– Surat, Mt Isa & South West Queensland

– Mt Isa to Townsville

– Central Queensland

– Queensland through to Southern States

• For each – description of freight drivers, network, challenges and priorities

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Network Optimisation

• Preventing efficiency leaks across supply chains

• Most vulnerable at mode interfaces

• Unlocking latent capacity through inter and intra modal innovation

• Utilise comparative advantage of each mode to achieve maximum supply chain efficiency

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Innovative Supply Chains

• Increasing load limits through innovative vehicle and rolling stock design

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Innovative Supply Chains

• Automated train management systems – More trains, more safely….unlocking latent

efficiency and productivity

• Rio Tinto Autohaul

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Innovative Supply Chains

• OSOM Routes between Perth and Pilbara put power lines underground to improve efficiency (2012)

• Save operators $15,000 per trip

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Supply Chains in Focus

• North Coast Line Rail Forum

• Import Export Logistics Study

• SEQ Capacity Improvement Project

• Heavy Vehicle Action Plan

• Rail Freight Terminals Study

• Heavy Vehicle Congestion Management App

• Draft Moving Freight

• Draft Ports Strategy

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Thank you