Critical Aspects and Future Challenges Within the NZ

Forestry Supply Chain

Forests + Wood Processing

• 3% NZ GDP• Export earnings $4.7 billion• 70% of production is exported (47% as logs)• Very capital intensive: $20.9 billion invested• Strategic Action Plan to get to $12 billion export earnings

by 2022

Forecasts are based on assumptions. This scenario assumes total wood availability is non-declining until 2034. Large scaleOwners availability is at the owners stated intention until 2015 and then non declining.

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15,000,000

20,000,000

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Forest Harvest - Radiata pine

Historic Harvest (Actual) Forecast Harvest (All Owners) Forecast Harvest (Large-scale Owners)

Historic Harvest (Actual) Forecast Harvest

HS&E

12REGIONAL

AUTHORITIES

41LOCAL

AUTHORITIES

Compliance Critical to Productive Profitable Business

•Diversity across RA’s and LA’s•National Environmental Standard (NES)

Activities and Tasks Within the Supply Chain

• Harvest Planning & Engineering (Critical)• Harvesting (meat ind)• Transport & Logistics• SOP (Sales and Operational Planning)

Harvest Planning & Engineering

• Paper plan• Field visit to assess attributes and hazards• Generate a prescription• HS&E• Road line crew to strip trees• Construct roads and landings

Current Situation • Summary of existing engineering principles• Barriers to implementation of best practice

Opportunities • Risk management processes• LiDAR and engineering design processes• Sub-grade compaction and improvement

Issues & Opportunities

Existing Body of Knowledge

• The science of building roads is well established

• Geotechnical engineering• Soil mechanics• Pavement design• Hydrology / Hydraulic’s• Strength of materials• Geometric design

Barriers to Implementing Best Engineering Practice

• Expertise and skills to use new technology is limited.• The sheer scale of the national forest roading programme• A poor forward roading position • A poor understanding of engineering principles

Why Invest in Better Technology/Engineering

• Based on a harvest of 26.12 million m3 (2011 year end)

• With a 47% cable and 53% ground based

• With respective average roading costs of $10 and $5/m3

• The collective national forest roading prgramme is in the order of

$200 million (plus)pa• 14,000kms.

• New forests will require an investment of $1.5 billion over next 10 years, in roading

The Risk• Infrastructure projects are notorious for running over

budget and time

• One 2003 study carried out by Flyvberg et al looking at the success of infrastructure projects concluded: Cost escalation/over-runs on infrastructure projects are the norm

Cost estimates used in decision making are often misleading and are characterised by large standard deviations

Roading projects typically exceed estimates by 20%

• The implication if applied to the collective NZ forest roading programme over the next ten years is a

$400 million cost escalation risk

Risk Management and Decision Making

• How reliable are your estimates?

• How certain are you that the estimates can be delivered?

No estimate should be given without a probability statement

LiDAR (Light Detection & Ranging)

• Provides high quality digital terrain information • Improved risk identification

Practical Application of LiDAR Standard 1:5,000 harvest plan DTM (with roads & landings)

The Low Hanging Fruit

• Greater attention to sub-grade compaction

• Improved pavement construction practice

• Potential cost savings to the industry over the next ten years if pavement depths can be reduced by 50-100mm

$125 - $250 million

(Based on 14,000 km x 4m wide and assuming an average delivered metal cost of $45/m3)

Removing Barriers to Improving Sub-grade

• Establish and maintain a forward position

• Project management (operational planning)

• Manage the road-line salvage / construction interface

• Realise the value of these:

Harvesting

• Ground based; 350 to 1200t/day

• Cable hauler;180 to 350t/day

Critical Aspects and Challenges• HS&E

Mechanised log makingQuality and valueACoP Safety in Health in Forestry Operations i.e. grapple hauler

extractionEnvironmental compliance

• Productivity gains Improved planningMechanised felling and bunching for haulersMechanised log makingMaintain and improve quality/value out-turn

Transport & Logistics

• On Highway

• Off Highway

• Rail

Critical Aspects and Challenges

• Ageing workforceReplenishment programRecruitment campaignAccelerated Driver Licensing

• HS&E Improved TrainingLTSC Bronze, Silver, GoldHPMV’s (reduced fuel consumption and carbon

emissions)

Critical Aspects and Challenges

• Efficiency and Productivity gainsWork with Port companies to better utilise time and

equipment, as opposed to grizzling about storage capacity - COLLABORATION!!

24 x 7, 4 on 4 off x 7Technology (GPS, data transfer etc.) Improve Port throughput ($5m plus per annum)High Productivity Motor Vehicle’s (HPMV’s)

Critical Aspects and Challenges

• HPMV’sLong time in the makingNZTA working with usSecond to general freight31m tonnes pa20% > productivity, 9% < fuel use8,000 less transactions through

Rotorua paHuge Potential yet to be realised

HPMV

NOT HPMV!

HPMV’s cont’d

• ChallengesLocal authorities struggling with this initiativeEnforcement, increased axle loading tolerancesPavement and bridge upgrades

Summary

• Critical AspectsGreenfields roading task ahead is ENORMOUSProductivity and efficiency gains extended hours etcHPMV’s up and running

• ChallengesUp skill and improve planning & engineering personal and

processesManage the increasing volume effectivelyCOLLABORATION across all stakeholders, including central and

local government

Investigating Alternative Options in Log Transport….