An integrated freight and logistics system:
supporting New Zealand’s export sector
The freight and logistics industry in New Zealand
The freight and logistics industry in New Zealand is characterised by a system of different transport
modes and organisations involved in delivering infrastructure and services to end users. The industry
comprises four main transportation modes – road, rail, coastal shipping and air. Each of these
components has a role to play in the overall freight sector. Although there is some degree of competition,
freight owners and operators ultimately make decisions and select transport modes that best meet the
needs of their businesses.
Transport users need to be able to access services across all modes to optimise their decision making. In
a similar way, private sector participants in the freight and logistics industry are continually seeking
improvements while ensuring arrangements maximise service delivery.
Figure 3.1
Type of freight typically suited to each mode type
3.1.1
Road
Road is the dominant freight mode in New Zealand – the road network is responsible for moving 70% of
freight tonne-kilometres within New Zealand (Ministry of Transport 2012a). Road transportation is best
suited where freight is time sensitive. By leveraging the network, road transportation can provide door-to-
door and ‘overnight’ delivery to most destinations within each island (or two days when delivery is inter-
island). However, road freight is limited by the size of the vehicle and restrictions on the carrying capacity
of local roads and state highways.
There are a large number of operators in the road sector, many of whom specialise in a particular region
and or type of freight. A number of major companies are dominant in the sector (including Mainfreight,
Toll and Linfox). At the margin there are low barriers to market entry as the cost of purchasing or leasing
a truck and obtaining an operating licence is not significant. The challenge is to build a sustainable
business by generating a critical mass of customers.
3.1.2
Rail and coastal shipping
The remainder of freight is typically moved by rail and coastal shipping. As an overarching principle, rail is
better suited to moving large volumes of bulk and containerised freight over long distances. While
compared with road transportation, more freight can be moved via rail, there are a number of practical
reasons why this is not the case – for example, short distances or inter-regional movements between an
origin and destination not serviced by rail. Rail freight can also be less reliable and less flexible
Road user charges (RUC)
The new Road User Charges (RUC) Act 2012 came into effect on 1 August 2012. The reform in
New Zealand’s road user charges system arose from an independent review in 2009 on the country’s
paper-based system at the time (Ministry of Transport 2009). 3
The independent review made a number of recommendations as to how the system could be improved.
These related to improvements to the Ministry of Transport’s cost allocation model, measures to help
reduce evasion, improvements in customer service delivery, reducing compliance costs and integrating
technology more into the system.
Subsequent to the review a case was made for new governance arrangements to address an estimated
$30 million in RUC evasion each year. It suggested that as a result of evasion, rates are now higher than
would have otherwise been the case to raise the same level of revenue.
Notable reforms in the RUC Act include:
•
•
•
•
the removal of operator-nominated weights to avoid weight-based evasion
more stringent measures around odometer tampering
transport service operators being required to keep certain records accessible by the NZTA
extending the responsibilities and scope for the NZTA and Police to investigate and address more
serious RUC offences, such as search warrants.
The reform is also expected to simplify administration processes, for both government and operators, by
streamlining government agency processes and transferring responsibilities to electronic system providers
for electronic RUC (eRUC). The RUC Act also aims to improve the regulatory framework for eRUC providers.
It also aims to provide more transparency and clarity with respect to licences and charges (ie similar heavy
vehicles will pay similar charges); and will cater to the use of HPMVs by allocating a special licence to allow
HPMVs to operate at the maximum weight limit at all times, or provide the option of purchasing additional
licences for specific journeys.
However, as a result of the reform process which began in 2008, there has been reluctance by industry
participants to invest due in part to uncertainty over new regulations and also due to the general
downturn of the economy.
An integrated freight and logistics system:
supporting New Zealand’s export sector
The freight and logistics industry in New Zealand
The freight and logistics industry in New Zealand is characterised by a system of different transport
modes and organisations involved in delivering infrastructure and services to end users. The industry
comprises four main transportation modes – road, rail, coastal shipping and air. Each of these
components has a role to play in the overall freight sector. Although there is some degree of competition,
freight owners and operators ultimately make decisions and select transport modes that best meet the
needs of their businesses.
Transport users need to be able to access services across all modes to optimise their decision making. In
a similar way, private sector participants in the freight and logistics industry are continually seeking
improvements while ensuring arrangements maximise service delivery.
Figure 3.1
Type of freight typically suited to each mode type
3.1.1
Road
Road is the dominant freight mode in New Zealand – the road network is responsible for moving 70% of
freight tonne-kilometres within New Zealand (Ministry of Transport 2012a). Road transportation is best
suited where freight is time sensitive. By leveraging the network, road transportation can provide door-to-
door and ‘overnight’ delivery to most destinations within each island (or two days when delivery is inter-
island). However, road freight is limited by the size of the vehicle and restrictions on the carrying capacity
of local roads and state highways.
There are a large number of operators in the road sector, many of whom specialise in a particular region
and or type of freight. A number of major companies are dominant in the sector (including Mainfreight,
Toll and Linfox). At the margin there are low barriers to market entry as the cost of purchasing or leasing
a truck and obtaining an operating licence is not significant. The challenge is to build a sustainable
business by generating a critical mass of customers.
3.1.2
Rail and coastal shipping
The remainder of freight is typically moved by rail and coastal shipping. As an overarching principle, rail is
better suited to moving large volumes of bulk and containerised freight over long distances. While
compared with road transportation, more freight can be moved via rail, there are a number of practical
reasons why this is not the case – for example, short distances or inter-regional movements between an
origin and destination not serviced by rail. Rail freight can also be less reliable and less flexible
Road user charges (RUC)
The new Road User Charges (RUC) Act 2012 came into effect on 1 August 2012. The reform in
New Zealand’s road user charges system arose from an independent review in 2009 on the country’s
paper-based system at the time (Ministry of Transport 2009). 3
The independent review made a number of recommendations as to how the system could be improved.
These related to improvements to the Ministry of Transport’s cost allocation model, measures to help
reduce evasion, improvements in customer service delivery, reducing compliance costs and integrating
technology more into the system.
Subsequent to the review a case was made for new governance arrangements to address an estimated
$30 million in RUC evasion each year. It suggested that as a result of evasion, rates are now higher than
would have otherwise been the case to raise the same level of revenue.
Notable reforms in the RUC Act include:
•
•
•
•
the removal of operator-nominated weights to avoid weight-based evasion
more stringent measures around odometer tampering
transport service operators being required to keep certain records accessible by the NZTA
extending the responsibilities and scope for the NZTA and Police to investigate and address more
serious RUC offences, such as search warrants.
The reform is also expected to simplify administration processes, for both government and operators, by
streamlining government agency processes and transferring responsibilities to electronic system providers
for electronic RUC (eRUC). The RUC Act also aims to improve the regulatory framework for eRUC providers.
It also aims to provide more transparency and clarity with respect to licences and charges (ie similar heavy
vehicles will pay similar charges); and will cater to the use of HPMVs by allocating a special licence to allow
HPMVs to operate at the maximum weight limit at all times, or provide the option of purchasing additional
licences for specific journeys.
However, as a result of the reform process which began in 2008, there has been reluctance by industry
participants to invest due in part to uncertainty over new regulations and also due to the general
downturn of the economy.
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