Big reforms without a big price tag

CEO of the ALC Kirk Coningham outlines how governments could make significant reforms to unlock freight and logistics networks.

The COVID-19 pandemic has been an expensive experience for governments around the nation. Budgets that were in surplus or close to balance have been pushed firmly back into the red, and this will undoubtedly affect the policy choices governments make in the months and years to come.

Yet, significant reforms don’t have to be accompanied by a big spend. As governments turn their minds to policy actions needed to hasten the pace of Australia’s economic recovery, there is significant opportunity to achieve regulatory reforms that will be of lasting benefit to the freight and logistics sector.

Developing a set of National Planning Principles was a key action to emerge from the National Freight and Supply Chain Strategy released last year. Establishing these presents us with an opportunity to achieve a better balance and ensure that freight movement is properly integrated as part of a more nationally consistent approach to planning.

A key outcome flowing from the establishment of National Planning Principles must be to enshrine distinct planning recognition for freight and logistics lands within all state and territory planning schemes.

Of course, these new National Planning Principles would be significantly strengthened by the development of a National Corridor Protection Strategy.

A consistent national approach to corridor protection is essential to achieving the planning reforms that the freight logistics industry needs. Effective corridor protection not only serves to prevent future community discord over land use; it can also deliver significant savings for taxpayers when it comes to the cost of building infrastructure.

Infrastructure Australia underscored this fact in 2017, when it found that close to $11 billion could be saved on land purchases and construction costs for seven future infrastructure priorities listed on the Infrastructure Priority List if swift action was taken to preserve relevant corridors.

Now is also an ideal time to pursue harmonisation of regulations that govern freight movement as it transits across to the continent.

To take one example, the 2018 Review of Rail Access Regimes, published by the then Department of Infrastructure, Transport and Regional Development noted there were roughly 150 different environmental regulations that rail operators must comply with when operating rollingstock between Perth and Brisbane.

Clearly, there are cost savings and other efficiencies to be gained by moving towards a single set of laws across jurisdictions governing environmental regulation, workplace health and safety, workers’ compensation, and drug and alcohol testing for the freight and logistics sector. The new-found spirit of cooperation engendered through the National Cabinet process should now be harnessed to secure that outcome.

In a constrained budgetary atmosphere such as that which is likely to endure for several years in the wake of the COVID-19 pandemic, it is even more important that governments drive though low-cost regulatory reforms that will still deliver tangible benefits to the freight and logistics sector, and to the wider community.

Membership of national freight industry reference panel announced

The new Freight Industry Reference Panel will provide Australian federal, state, and territory transport and infrastructure ministers with an industry perspective on the National Freight and Supply Chain Strategy.

Chaired by John Fullerton, who recently stepped down as the managing director and chief executive officer of the Australian Rail Track Corporation, the body will provide input onto decision-making at the highest level.

“The new panel will provide industry a clear line of sight on implementation of the National Freight and Supply Chain Strategy and annually report to Transport and Infrastructure Ministers its independent view on progress made,” said Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack.

McCormack highlighted Fullerton’s 35 years of experience in the transport industry.

Fullerton is a leading figure in Australia’s infrastructure and transport industry and consistently promotes the value of rail and freight supply chains to the national economy.”

Other members of the reference panel include Nicole Lockwood, who is the chair of the Westport Taskforce Steering Committee and is on the board of Infrastructure WA.

“As a member of the Expert Panel which led the Inquiry into National Freight and Supply Chain Priorities in 2017 and 2018, Lockwood is uniquely placed to bring both continuity and fresh perspectives in overseeing the Strategy,” said McCormack.

Sophie Finemore will also be a member of the panel. Finemore was senior manager – government relations at Toll Group before joining KPMG in January 2020.

“Finemore’s practical experience in navigating supply chain issues in her role with the Toll Group and her recent involvement in transport market reform will make her a valued member of the Panel,” said McCormack.

Other members include Peter Garske, chief executive of the Queensland Trucking Association and Brett Charlton, general manager of Tasmanian-based Agility Logistics and chairman of the Tasmanian Logistics Committee.

With membership now announced the panel will work with government to suggest areas for reform and the implementation of the National Freight and Supply Chain strategy.

A resilient freight network is key in times of uncertainty

In her column, CEO of the Australasian Railway Association Caroline Wilkie highlights that Australia’s rail freight network is facing challenges during the COVID-19 pandemic but its importance now is greater than ever.

Australia’s population is forecast to double by 2070, reaching almost 45 million people. This growing population requires an increased allocation of goods, adding pressure on our existing freight networks to deliver. According to the National Freight and Supply Chain Strategy, Australia’s freight task is expected to grow by over 35 per cent between 2018 and 2040, an increase of 270 billion tonnes, bringing the total volume moved to just over 1,000 billion tonne-kilometres.

The role of rail freight is critical in meeting this future demand and maintaining our international competitiveness. The Value of Rail study commissioned by ARA in 2017 highlights that a one per cent improvement in freight productivity could generate $8-20 billion in savings to the national economy over 20 years. Rail freight provides a cost-effective, safe and environmentally sound solution for reducing congestion from heavy vehicles on urban, regional, and interstate roads. Just one freight train alone can take 110 trucks off our already congested roads and rail is up to nine times safer than road freight. In light of these significant benefits, the ARA is working with governments and industry on behalf of our members to get more freight on to rail, and to improve the efficiency and productivity of Australia’s rail freight supply chains. Achieving modal shift to rail is critical to increasing economic growth, improving the liveability of our cities and supporting regional communities.

Delivery of the Inland Rail project is an important step in achieving this. This nation building project will see a 1,700km freight rail line directly connecting Melbourne and Brisbane, via Toowoomba, Parkes, and Albury. The route will utilise approximately 1,100 km of upgraded existing track and 600 km of new track in Queensland, New South Wales, and Victoria. Most importantly though, it will bypass the heavily congested Sydney network and bring rail freight travel times between Melbourne and Brisbane down from 33 hours to less than 24 hours. This is a game changer and will make rail freight much more competitive over long haulage routes.

In a period of economic uncertainty, the Inland Rail project is bringing a much needed boost to the economy. Construction is already underway on the Parkes to Narromine project and planning is well advanced on a number of other sections. Approximately $747m has already been spent, with much of this spend being injected into rural communities.

Inland Rail has been in the public domain for over fifteen years. It is also one of the most heavily studied projects in recent Australian history, having been through an extensive consultation, planning, route analysis, engineering and costing process.

We are aware of issues that have been raised in relation to flooding of the Condamine crossing in Queensland.

Without a doubt, the project is receiving the best possible expert advice and can manage these issues using tested and proven mitigation measures. These issues need to be worked through carefully and collaboratively, but they should not delay the delivery of the project.

The delivery of Inland Rail is a start, but more must be done. Investment in rail freight delivers enormous benefits in the long term. Improved supply chain connectivity and productivity benefits the economy and the environment and helps provide resilience in the face of emergencies like to COVID-19 pandemic.

The current crisis has just reinforced the importance of a highly productive and efficient supply chain. This unprecedented event has challenged our supply chain like never before, but our rail freight members continue to ensure that essential goods such as canned food, toilet paper, and cleaning products are moving across the country and to customers.

When state border crossing restrictions came into force in later March, the ARA wrote to state and the Commonwealth transport minsters to ensure rail freight was considered an essential service and exempt from border restrictions.

However, the stark difference between road and rail freight regulation is never more apparent than it is during times like these. Regulation by the National Heavy Vehicle Regulator (NHVR) has a focus on both safety and productivity, whereas the Office of the National Rail Safety Regulator (ONRSR’s) remit is purely safety-related.

The ARA have long held the view that we must take a national approach with all modes working together to deliver an integrated freight market. However, this approach can only work if all modes operate from a level playing field with equal treatment in terms of access pricing, government policies, and the role of productivity in regulation.

At the beginning of the COVID-19 pandemic, trucks were able to have curfews lifted to extend delivery windows in NSW and Queensland. However, due to the nature of our infrastructure and the shared tracks of passenger and rail networks, our industry does not have the same flexibility. As a result, we must look for other solutions to improve the productivity of rail freight.

Rail freight operators are committed to the highest levels of safety compliance but are routinely challenged by Rail Safety National Law (RSNL) derogations that exist, most notably the differing fatigue management requirements in NSW and Queensland, and the different drug and alcohol management requirements in NSW.

As I outlined in my March 2020 article, these inconsistent, state-based regulatory requirements go against the objective of national regulation and add costs to rail freight without any proven safety benefit. The ARA believes that multiple layers of often conflicting regulation impacts rail freight productivity.

A modern, risk-based approach to rail safety that focuses on productivity will improve our supply chain resilience and unlock significant economic and environmental benefits for the whole country.

Summer events show need for resilience focus

Kirk Coningham, CEO of the Australian Logistics Council, outlines how the effects of this summer will continue to be felt in the freight rail sector.

It is reasonable to say that many Australians have experienced a challenging beginning to 2020, and the flow-on effects are likely to affect our industry in a variety of ways over the months ahead.

The bushfires that burned through vast swathes of the continent had a devastating impact on families, local communities, and businesses. The immediate scale of the tragedy is recorded in lives and homes lost and understandably, that is where the initial focus of recovery efforts has been.

Yet in some respects, that is only the beginning of the story. With the fires now extinguished and the immediate physical threat having passed, it is becoming apparent that recovery efforts – and the cost of those efforts – will be significant.

These costs will include significant repairs that will have to be undertaken to repair damaged transport infrastructure.

Throughout the early weeks of this year, ALC has been participating in regular industry discussions convened by the Deputy Prime Minister and Minister for Transport, Infrastructure and Regional Development, Michael McCormack, which are focused on providing industry advice and assistance to the federal government in shaping its recovery response to the fire crisis.

What was already a difficult beginning to 2020 is now being further compounded by the challenges associated with the coronavirus.

As in the case of the fires, the initial focus is on protecting lives through containment and quarantine efforts. Yet, as with the fires, once the immediate threat is contained, there will be significant economic effects to consider.

Australia’s freight rail sector plays a crucial role in getting imported freight
to customers, as well as transporting Australian products to the point of export. The disruptive effects of an episode like the coronavirus have obvious flow-on effects across the whole supply chain – and these will need to be managed effectively and responsibly.

Over recent weeks, experts have warned that the ongoing restrictions on the movement of goods and people in China – our largest trading partner – are likely to adversely impact Australia’s agricultural exports. The effects are also being felt in other export sectors, including minerals and resources.

On the other side of the coin, restrictions on the departure of vessels from China means those importing goods to Australia – and road transport businesses which supply them – are also likely to feel a slowdown.

Improving the resilience of Australia’s supply chains to withstand the effects of natural disasters and international events was clearly identified in the National Freight and Supply Chain Strategy released last year.

It was a theme echoed in the 2020 Infrastructure Priority List released by Infrastructure Australia in February. The updated list placed a renewed emphasis on enhancing the capacity of national infrastructure to cope with disruptive events – whether they be as a result of natural disasters or through other unexpected events such, as global epidemics or terrorism.

The early part of 2020 was a powerful demonstration of why our governments must join with industry in acting more urgently to address that challenge.

Rethinking recruitment in rail freight

Australian Logistics Council CEO Kirk Coningham highlights that government and industry have to work together to attract a diverse, young workforce.

It will not come as news to those involved in freight rail that we need to attract a younger, more diverse talent pool to protect the sustainability of the industry’s workforce. At the same time, we must recognise that this won’t simply happen of its own accord.

There is ample research available that indicates the millennial generation of workers is more mobile and more likely to change jobs and industries than any of their forebears. A 2016 survey undertaken by Gallup noted that 21 per cent of millennials had left their job to do something else within the preceding 12 months – a figure three times higher than that for non-millennials.

More strikingly, the same research reported that six in ten millennials say they are open to new job opportunities outside their current organisation – again, far higher than figures reported for other cohorts.

On the face of it, this should be positive news for the rail transport. However, the fact that younger workers are willing to take a look at other industries will only be of benefit if they like what they see.

Regrettably, the freight transport sector suffers from a continuing perception problem around its ability to welcome female participants to its workforce, as well as those from diverse cultural backgrounds.

This is a considerable barrier to the attraction and retention of younger workers, who make their career choices (at least in part) on an organisation’s commitment to gender equity and diversity.

As well as dealing with diversity issues, the sector’s workforce must also address the fact that the increasing influence of technology across the industry will demand a broader range of skills than may have previously been required.

Although these efforts must be industry-led, there is certainly scope for governments to play a greater role in making certain the transport sector’s workforce is prepared for a changing world.

Many industry participants continue to note that the transport sector has not received appropriate levels of attention when it comes to skills and training support, especially in comparison to the hospitality, retail, and human services sectors.

As part of the National Freight and Supply Chain Strategy, the Commonwealth government has undertaken to develop a new Transport Sector Skills Strategy, in partnership with industry.

In its pre-Budget submission to the federal government, ALC has emphasised that the development of this Strategy must take particular account of workforce shortages being experienced by freight transport operators, and that the Federal Government must prioritise an increase in training opportunities available to those wishing to enter its workforce.

This includes supporting education and awareness campaigns that combat stereotypes about the nature of the industry, and which prioritise the recruitment of new workforce participants from diverse backgrounds.

Attracting a younger more diverse workforce for this industry clearly demands a different approach to engaging potential recruits.

ALC is committed to playing its part by combatting stereotypes about the industry and highlighting the impact technology and innovation are having and aligning these with the skills and ambitions of new workforce participants.