BITRE rates and productivity measures static as ‘road trains’ give other combinations a nudge
Any efficiency gains from the growth in truck capacity have stalled over the past decade or more, Bureau of Infrastructure, Transport and Regional Economics (BITRE) interstate freight rate statistics show.
While the BITRE highlights the steady reduction in structural costs “as the smaller, higher cost vehicles are replaced by larger, lower cost types”, it acknowledges that there has be little change in the past decade or more.
And ‘real’ interstate road freight rates have sat around the 8+ cents per net tonne kilometre (c/ntkm) rate – a measure that does not have universal appeal – in 2011-12 terms since 1985, after falling from around 14 cents in the mid-1970s.
In fact, while the nominal freight rate has risen steadily, if slowly, this century – from 5.51 c/ntkm to 9.08 c/ntkm – the real rate in 2016 was 8.38 c/ntkm, a level not seen since 1987’s 8.34 c/ntkm, after rising from 2003’s 50-year low of 7.60 c/ntkm.
The lack of productivity gains are mirrored in the other transport modes with the bureau noting “the major trends are steep declines – from 1975 to 1985 for road, and from 1985 to 1995 for rail – and then a basically flat trend.
“Sea freight rates match rail at a lower level.”
Such commentary as there is otherwise focuses on mostly historic trends, with BITRE saying “the proportion of the freight task at the national level performed by articulated trucks of less than 6 axles fell dramatically during that decade, from 47 per cent in 1975 to 15 per cent in 1985.
“At the same time, the share for 6 axle articulated rose from 13 per cent to 47 per cent – a mirror image change.
“The percentage of the freight task performed by less than 6-axle articulated trucks from 1970 to 1985 is thus used as a proxy for the change in technology leading to the sharp fall in real road freight rates during this period.
“But more generally, over the three and a half decades since 1970, the progressive shift from smaller, higher cost vehicles to larger, lower cost vehicles has generated a continuing productivity gain (lower costs).”
Productivity
The lack of productivity gains are mirrored in the other transport modes with the bureau noting “the major trends are steep declines – from 1975 to 1985 for road, and from 1985 to 1995 for rail – and then a basically flat trend.
“Sea freight rates match rail at a lower level.”
Again, the figures show rail’s nominal rise since the turn of the century from 2.84 The lack of productivity gains are mirrored in the other transport modes with the bureau noting “the major trends are steep declines – from 1975 to 1985 for road, and from 1985 to 1995 for rail – and then a basically flat trend.
“Sea freight rates match rail at a lower level.”
Again, nominal rail rates have risen this century, from 3.84 c/ntkm to 4.32 c/ntkm last year but the real rate have failed to hold the century’s high of 4.28 c/ntkm in 2012 or 2002’s 50-year low of 3.71 c/ntkm, having dipped to 3.99 c/ntkm last year.
Forecast
The BITRE’s forecast to 2030 for road is for a rise in the real rate to the start of the 2020s that will level off before rising again in the second half of the decade.
Depending on oil prices, the rate might be 8.30-9.34 c/ntkm in 2020 rising to 8.40-9.68 in 2030. Rail and national sea freight are seen unchanged for the decade at 3.9 c/ntkm and 2.83 c/ntkm respectively
“The paths of real interstate road, rail and sea freight rates since 1965 has been shown to each have two stages,” the BITRE concludes.
“First, there has been in each mode a sharp drop in real freight rates since the 1960s, first in road, then in rail and sea. In each case the drop was due to significant changes in technologies, infrastructure and logistics.
“Subsequently, there has been, since the early to late 1990s, a period of basically flat underlying trend rates, interrupted by fluctuations caused by input costs (e.g. diesel prices and rebates for road) or demand factors (e.g. changes in capital expenditure in the economy for rail).
“The outlook for freight rates is 1) for road, flat or upward depending on oil prices, and 2) for rail and sea, flat.”
The full BITRE report can be found here.