freight study terms of reference

Freight Demands on the New Zealand Transport System – Empirical Study

Purpose

This sets out the terms of reference for work on improving understanding of the New Zealand freight sector. This includes examining the likely future demands that freight will place on the New Zealand transport system and what will shape the transport aspects of our supply chains. The study is not a gap analysis of current and future transport infrastructure, and the study will not recommend particular infrastructure investments for the future.

Background

An efficient and effective freight transport system is important for the healthy functioning of any economy. New Zealand’s economy is reliant on the trade of goods and services, and freight demand will grow as their volume increases over time. An inefficient, high-cost freight system impacts on the cost of transporting goods from origin to destination. Higher transportation costs could reduce the competitiveness of New Zealand exports. This is significant as the New Zealand economy is heavily reliant on the export of its goods. The way that goods are transported internationally, and both intra- and inter-regionally, has environmental and social impacts and implications for communities, land use and how the transport network performs.

The Ministry of Transport, the Ministry of Economic Development (MED) and Land Transport New Zealand believe there is merit in undertaking a freight study to help fill data gaps on the current and future movement of freight flows into and around New Zealand. There is not, for example, a clear understanding of the forecast movement of goods and services from major shippers of export goods, domestic goods and importers. Likewise, the plans of major infrastructure providers are not understood from a wider national transport perspective. These participants in the movement of goods and services may have appropriate supply chains to meet their organisational objectives. Collectively, however, these plans are not well understood by officials in central government, including the extent to which they contribute to a national objective of an efficient and reliable freight system to support New Zealand’s economic development.

It is proposed that an empirical study be undertaken to help address these gaps in knowledge and understanding. Once it is complete, its output could be used to form the basis of robust, focused and objective discussions with a wider group representing the country’s logistics and infrastructure providers. The output of such interaction would help inform economic, environmental and social policy issues related to freight. The study would also be used as an input to the development of future transport policy, and the development of world-class transport infrastructure to better support New Zealand’s globally competitive firms.

Objectives

The key task for the study is to provide robust data on:

the current modal distribution of import, export and domestic freight movements in New Zealand;
the likely future modal distribution of import, export and domestic freight movements in New Zealand; and
any significant modal, national, regional and industry trends, and any imbalance of directional freight flows.

The study will also gather information to:

provide a better understanding of the likely future transport network and the optimal use of that and the current network, given current and projected domestic, export and import flows;
identify any barriers to achieving improved efficiency in the transport components of our supply chains;
identify the drivers of current freight movement and how these might change over time (e.g. business requirements and logistics methods); and
identify domestic and international trends, issues and opportunities related to the freight transport and logistics sectors.

Proposed Approach

The study is primarily a data gathering consultation exercise with qualitative assessment of the available information without any requirement to create a predictive freight forecasting model.

It is proposed that the project be completed in six months with significant stakeholder engagement. This process will include the following:

gather data from a range of sources (e.g. Ministry of Agriculture and Forestry, Statistics New Zealand, industry associations, export groups, ports, airports, key shippers and importers) in order to develop an understanding of:

current and projected domestic freight movements by high-level commodity, volume, regional origin and destination, and distribution network;
current and projected export growth projections by high-level commodity, volume, regional origin, distribution network, point of exit from New Zealand and overseas destination; and
current and projected import growth projections by high-level commodity, volume, regional destination, distribution network, point of entry to New Zealand and overseas origin;

(Future projections are to be, nominally, five, ten and twenty-thirty years, be on a modal and high-level commodity basis, and provide for assumptions of high and low growth.)

gather data defining current transport infrastructure (at the national and regional level) capacities and constraints, and planned enhancements or new infrastructure, including projected capacities;
gather data on the drivers of current and future freight movements. Information is to be supplied in data table format compatible with GIS software (MapInfo/Arcview);
identify domestic and international trends, issues and opportunities related to the freight transport and logistics sectors;
significant consultation will be required across the transport sector (including Transit New Zealand, ONTRACK, ports and airports, local government and transport service providers), major import and export organisations, major users of transport infrastructure and services, and international providers (e.g. overseas airports, ports and shipping companies); and
as necessary, resulting from the feedback from the consulted stakeholders, highlight the uncertainties and the key influencing factors.

Deliverables

The project deliverables will comprise:

a draft report that:

focuses on:

the current and likely future modal distributions of import, export and domestic freight movements in New Zealand (including analysis by high-level commodity, volume, regional origin and destination);
critical current and future demands for infrastructure and services, and any associated constraints, including where plans of shippers are not matched by plans of infrastructure providers; and
any significant modal, national, regional and industry trends, and any imbalance of directional freight flows;

includes information on:

international trends that may have an impact on New Zealand’s Freight transport system;
barriers to achieving improvements in the transport aspects of supply chain efficiency; and
the quality of the data collected, any uncertainties associated with the study and the implications they have for the results;

a detailed data report, supported by relevant data (MS Excel format preferred) is also required;
circulating relevant portions of the draft study report to freight infrastructure providers and freight transport suppliers and users, with the intent of verifying and confirming the robustness of the study output and any assessment of the effects of uncertainties and key influencing factors;
based on the draft study report and feedback from the above, giving a presentation to the Ministry of Transport, the Ministry of Economic Development and Land Transport New Zealand; and
finalising the study report taking cognisance of comments on the draft report.

Links with other studies

Transport Engineering Research New Zealand Ltd (TERNZ) is commencing work on identifying the national and regional determinants of freight demand in New Zealand. This work involves updating and improving its national freight model and requires data to be collected from transport companies. The consultant chosen to complete the Ministry’s freight study will be required to work with TERNZ to consult and collect data in an efficient and mutually beneficial manner.

Limitations

The freight study analysis will be subject to the following limitations:

the study is static and will become outdated over time, but may nonetheless provide a useful stocktake of the freight demands. It may provide a useful methodology and a point of reference for future studies;
the study will provide useful observations for policy considerations, but will not make recommendations. For example, it is not a gap analysis of infrastructure requirements and will not recommend investment in particular modes or corridors; and
passenger and freight transport are often supplied jointly and use common inputs. This study does not include passenger transport.

Ownership of data and confidentiality

The project will involve the collection of commercially sensitive information from importers and freight forwarders etc. It is essential for the integrity of the project and its outcomes that this confidential information is (and is accepted by participants as being) protected at all times.

The Ministry’s model consultancy agreement contains obligations of confidentiality that will apply to the chosen consultant and to its personnel. Personnel may be required to enter into separate confidentiality undertakings with the Ministry and/or participating importers, exporters, freight forwarders, infrastructure providers etc.