Decarbonising freight hot topic at supply chain future event

Around 84 per cent of NZ export freight value is carried by sea. Photo / Michael Craig

Failure to lower carbon emissions in New Zealand's exports supply chain could impact negatively on trade agreements, a summit on the country's freight future has heard.

Ministry of Transport acting chief executive Bryn Gandy told the two-day Freight Futures event in Auckland that of the significant challenges facing the freight and supply chain system, climate change and international developments were two major areas for consideration.

Population growth and density and digitisation and technology were the other two.

Gandy said in developing a freight and supply chain strategy, the ministry and the sector faced "real structural challenges" and while he expected Covid-driven supply chain congestion issues to slowly ease, even without them, changes were needed by the industry itself.

"I think people were genuinely surprised in 2020 when we started to have (supply and freight) shortages. Suddenly everyone was a freight expert. I think we would have had a lot of spare biscuits if we had tried to hold a workshop (on the supply chain) before that."

Gandy described the ministry's recently released New Zealand freight and supply chain issues paper as "an initiation document for a few years of work where the government would get to work very closely with the sector."

The issues paper, which received 83 submissions in response and is a forerunner to a formal supply chain strategy, said New Zealand needed to prepare the freight and supply chain system for substantial change, including decarbonisation.

It said over the next 30 years the system would play a crucial role in the transport sector's transformation to a low carbon future. This new future would require the system to produce much lower emissions and adapt to climate change impacts, while managing the pressures of increasing consumer demand, geopolitical uncertainty and increasing vulnerability to disruption.

Gandy told the summit that with New Zealand's population expected to grow by 1.2 million and with freight volumes expected to rise by 55 per cent in that time, there was a clear need for the country's first supply chain strategy.

Issues paper submitters had called for a long-term infrastructure investment planning pipeline to give industry participants certainty to plan their own investments, he said.

They had also been vocal on consenting and spatial planning issues, the need for support for an intermodal freight system, and a more structured approach to the ports side of the supply chain. There had been widespread support for improved freight data collecting and sharing. Submitters reported labour concerns throughout the industry.

Gandy said another area of concern was the cost to small businesses in the sector in transitioning to the necessary changes "given the costs are often borne by those who can least afford them". New Zealand was a country of predominantly small businesses, he noted.

There was an appetite for the government to take a more active role in supply chains, Gandy said. However there were many things only industry could do, and some things only government could, like road projects and signing international treaties.

In response to a summit audience suggestion that the ministry was not supportive of hydrogen as an alternative fuel for heavy vehicles, Gandy said it had "an open mind".

"We are very interested in fuels and fuel-related infrastructure, We have an open mind to hydrogen but it's clear it is not going to be deployed at scale in the short term."

Gandy said there may well be a need for investment in data collection for the sector.