Much has been said by government and industry organisations on the National Freight and Supply Chain Strategy. Here, law firm Holding Redlich looks to distil the many thousands of words it entails into a digestible few to see what it attempts to achieve
In August 2019, the Australian Transport and Infrastructure Council released Australia’s first National Freight and Supply Chain Strategy, with goals and targets out to 2024.
While we may be right to be a little sceptical about ‘grand infrastructure plans’ (as reflected in the comedy TV program ‘Utopia’), projects such as Inland Rail and the Western Sydney Airport are on track to realisation.
So, what is the Freight Strategy, why does it matter and will it work? Let’s take a close look at the four critical action areas identified by the Freight Strategy and examine how the supporting National Action Plan intends to deliver on each of those areas.
To begin, here is an overview of the Freight Strategy and discussion of the first critical action area: smarter and targeted infrastructure investment.
FREIGHT STRATEGY
Freight is a massive contributor to the Australian economy.
As an island nation, heavily reliant on imports as well as exports, our supply chains
are complex.
In a federated system such as Australia, the regulation and management of freight and logistics is challenging as policy, powers and controls are spread around Commonwealth, state and local governments.
How the freight and supply chain strategy got the green light, here
This is exacerbated by the extreme geographical and demographic diversity around Australia’s states and territories. Without some coordination, it is virtually impossible to effectively manage and optimise freight and supply chain activities, particularly where the various actors (whether they be governments, commercial operators or even transport modes) often have competing needs and priorities.
For the first time ever, all levels of government have consulted with industry to set goals (including improved international competitiveness, and innovative solutions to meeting freight demands) as well as strategies to achieve those goals (including smarter and targeted infrastructure investment, and better planning, coordination and regulation).
NATIONAL ACTION PLAN
While strategies are important, actions are required to execute the Freight Strategy and the Council has also published the Action Plan to support the Strategy. The four priority areas are:
• smarter and targeted infrastructure investment
• enable improved supply chain efficiency
• better planning, coordination and regulation
• better freight location and performance data.
It is significant to note that these areas focus not just on built infrastructure, but smarter use of existing resources as well as regulation, data and information technology.
Each of the four critical areas is then broken down in the Action Plan to identify outcomes desired by 2024, with actions required to achieve
those outcomes.
Why does it matter? Efficient freight movements, whether it be Amazon parcel deliveries in urban areas or shipments of grain from regional areas, are critical to the success of the Australian economy – congestion and inefficiency come at huge cost in terms of lifestyle of citizens and the competitiveness of Australian exports.
Because of the scale and complex nature of the growing freight task – expected to increase by over 35 per cent between 2018 and 2040 – bringing all stakeholders into a broad alignment is an important first step.
Just as significant work has gone into preparation of the Freight Strategy and Action Plan, a significant amount of work now needs to be done in execution, creating opportunities across all industry sectors.
Will it work? As with all things, only time will tell. The Freight Strategy and Action Plan are both thorough and ambitious.
The fact that it is largely bi-partisan, across state and federal governments is a good sign. In addition to the Council (which consists of federal, state, territory and New Zealand ministers responsible for transport and infrastructure), an industry advisory body will continue to consult widely with industry and provide advice to the Council and the Transport and Infrastructure Senior Officials Committee.
The Freight Strategy has set out the following guiding principles to progress toward the 2024 goals:
• national coordination
• evidence-based actions
• supporting achievement of long-term vision
• responsive to emerging trends and challenges
• fit-for-purpose regulation.
Critical area 1 is ‘Smarter and targeted infrastructure investment’.
The strategy recognises that investment is needed in physical and digital infrastructure and user charging needs to reflect costs.
In 2016–17, Australian governments spent $26.1 billion on road construction and maintenance. Investments in rail and port infrastructure also continues to be significant.
The Action Plan identifies the following priority actions:
• ensure that domestic and international supply chains are serviced by resilient and efficient key freight corridors, precincts and assets. This will require the development of a comprehensive ‘infrastructure investment framework’, including the $250 million Commonwealth Major Projects Business Case Fund, Moorebank Intermodal Terminal in NSW and the Melbourne Port Rail Shuttle
• provide regional and remote Australia with infrastructure capable of connecting regions and communities to major gateways, through land links, regional airports or coastal shipping. This includes Inland Rail, plus funding regional councils to improve road freight access
• identify and support digital infrastructure and communication services necessary for improved and innovative supply chains. This is listed as a 2024 goal on the need to future-proof new infrastructure and improve mobile coverage along major freight lines plus digital infrastructure deployed to support innovative operations and technology improvements
• advance heavy vehicle road reform to facilitate efficient investment in infrastructure. Australia is more reliant on heavy vehicles than most other first-world nations. As a result, we have the most innovative heavy vehicle fleet. One of the 2024 goals is to achieve stronger links between heavy vehicle road user charges and investments into road infrastructure services.
THE SUPPLY CHAIN
Of the four critical action areas, let’s look at the topic of ‘Enabling improved supply chain efficiency’. The desired outcomes for this action are:
• decreased transaction costs and other barriers to moving freight seamlessly along supply chains
• an appropriately-skilled freight workforce-now and in the future
• technologies to improve freight outcomes
• building community acceptance of freight.
This action puts the focus on supply chains themselves and recognises that the Freight Strategy must focus on the whole of supply chain approach to planning and not just look at separate aspects in isolation. This is perhaps the greatest challenge of the strategy overall given the somewhat intangible nature of supply chains.
Supply chains bring together all aspects of procurement and logistics. They are international and domestic; proprietary and private; involve transport, manufacture and storage; and rely on physical infrastructure, but increasingly rely on data transfer.
Supply chains are made up of multiple actors, often invisible to each other and in different disciplines and jurisdictions operating across different contractual and regulatory environments.
And yet they are critical to the operation of the Australian economy.
The Freight Strategy sets out four goals with respect to supply chains:
• adopt and implement national and global standards, and support common platforms to reduce transaction costs and support interoperability along supply chains. This will include development and utilisation of blockchain and other pre-competitive technologies
• examples include improving agricultural export systems to modernise agricultural trade
• promote training and re-skilling of industry and government workforces appropriate to current and future needs. The Australian freight industry is experiencing shortages of skilled workers across all sectors. This spans heavy vehicle drivers to software engineers
• addressing this issue will include development of the Commonwealth Transport Sector Skills Strategy
• facilitate new and innovative technologies that improve freight outcomes and understand the deployment, skills and workforce requirements for operators and infrastructure. This recognises that Australia needs to be a leader in new transport technologies including automation, drones and hydrogen refuelling
• build community acceptance of freight operations. The freight industry is often misunderstood in the wider community, with many people experiencing noise and congestion as well as sometime intimidating heavy vehicles.
Like many industry sectors, the freight industry needs to engage with the broader community in which it operates to better explain its critical role and negotiate its social licence.
MAKING GOVERNMENTS ‘FREIGHT AWARE’
We now take a step back to see where the Freight Strategy came from and examine the third critical action area that was identified: ‘Better planning, coordination and regulation’.
We also look at the implications in a local context, with a short commentary about NSW’s freight requirements outlined at the end of this article.
Where did the Freight Strategy come from?
In March 2017, the federal government initiated the Inquiry into National Freight and Supply Chain Priorities.
This itself was influenced by a recommendation made by Infrastructure Australia in 2016 that governments and industry work together to develop a ‘whole-of-network’ strategy examining Australia’s freight and supply chains.
The aim of the inquiry was to identify priorities for Australia for the next 20 years to improve freight and supply chain efficiency and capacity.
An expert panel was established to lead the inquiry, whose members had significant freight industry experience.
The Commonwealth Department of Infrastructure, Transport, Cities and Regional Development assisted by preparing supporting papers on areas such as air and maritime freight, and analysis of capital city key freight route performance.
The inquiry conducted extensive government and industry consultation and received 127 submissions.
In early 2018, the expert panel and inquiry made recommendations and the inquiry’s report was released on May 18, 2018.
Following release of the reports, Commonwealth, state and territory governments committed to the development of the Freight Strategy and continued to consult with stakeholders including through 10 focus groups held in late 2018.
This further work identified two main groups of long-term change drivers in freight and supply chains, namely:
• environmental pressures, such as climate change, energy sources and usage, and the consumer driven push for sustainability in supply chains
• automation technologies, such as automated transport and freight facilities, and the impact of advanced manufacturing (such as 3D printing).
The Freight Strategy was ultimately adopted at the August 2, 2018 meeting of the Transport and Infrastructure Council on August 2, 2019.
The Council is part of the Council of Australian Governments (COAG).
Governments will be required to report on progress of the strategy annually, with a major review every five years.
The third critical action area is ‘Better planning, coordination and regulation’.
The desired outcomes for this action are:
• improve planning for moving freight across the nation
• improved heavy vehicle access
• future-focused freight regulation (productivity, safety, security and sustainability)
• planning for a resilient freight system.
Perhaps the critical 2024 goal is that all levels of Australian government become ‘freight aware’. While this may seem like a statement of the obvious, it needs to be borne in mind that many different government departments, at state and federal level, as well as local governments, can have influence over individual freight related projects.
The residential use of land ostensibly reserved for freight corridors is one example. By way of a second example, the Inland Rail project must negotiate with dozens of state and federal government departments, as well as local governments, often with competing and/or inconsistent requirements.
It should not be assumed that these various departments talk to each other, let alone cooperate.
At a local level, the National Action Plan identifies the need to, among other things, ensure freight demand is integrated into both transport and land use planning.
It also recognises that freight needs to be given more consideration in governmental planning and decision-making.
In the NSW context, the government has produced a NSW Freight and Ports Plan 2018–2023.
The Plan also recognises the importance of making freight front of mind for decision makers and integrating the demands of freight in both transport and land-use planning.
The Planning Act in NSW was amended relatively recently to give effect to statutory strategic planning, to establish a long-term strategic vision for an area and then required decision-makers to implement that vision at both the district and the local level.
The Greater Sydney Region Plan, the strategic plan for the whole of metropolitan Sydney, recognises the need to create efficient freight networks and to seek to identify and preserve long-term transport corridors for freight as part of a push to enhance the overall productivity of the region.
As part of the implementation of the Plan, the NSW government is investigating identifying and protecting land around important trade gateways such as Port Botany, Sydney Airport, Western Sydney Airport and Newcastle Port.
Also at the local level the NSW government is also pressing Council’s to ensure that they adequately plan for current and future freight requirements as part of the preparation of local strategic planning statements.
The intent being that these important considerations are ultimately reflected in the council’s local environmental plans, which operate at the local level.
Hopefully these kinds of initiatives, operating under the umbrella of the Action Plan can ensure that by 2024 the east coast of Australia will have in place:
• a series of long-term strategic freight plans linked in to relevant land use and transport planning documents
• statutory provisions that seek to protect key freight corridors and precincts from encroachment
• the assurance that land use planning and development assessment decision-making at the local level adequately considers the impact of development on existing and future freight operations.
BETTER FREIGHT LOCATION AND PERFORMANCE DATA
With Australia’s first National Freight and Supply Chain Strategy released, goals and targets have been set for the transportation industry to 2024.
Looking at the final critical action area ‘Better freight location and performance data’, we ask: why do we need the Freight Strategy?
While we try to be positive, it seems to many that the Australian economy is heading into difficult times, if we’re not already there. The Reserve Bank has reduced interest rates to record lows and there is talk of quantitative easing.
But the message from the Reserve Bank governor Philip Lowe has been consistent.
Interest rates are not the only lever available to boost the economy, and all governments must do more to make structural adjustments to make Australia more productive.
It is as if the Freight Strategy was written precisely to reflect Lowe’s message – through a combination of investment in built infrastructure, plus measures to identify and exploit new and existing infrastructure, all Australians will benefit and the economy will become stronger.
This is specifically addressed in the strategy. Though the strategy’s statement “Australia’s freight systems are the lifeblood of our economy and way of life” may seem florid, it is also demonstrably true.
While the same could probably also be said of other sectors of the economy, if Australia’s freight systems were to stop, the economy would also stop. It stands to reason that any improvement in freight systems will benefit all of us, and not just in dollar terms, but also in terms of social licence, safety and better amenity are critical issues for freight in Australia whether it be the coexistence of heavy vehicles and passenger cars on suburban roads, better utilisation of rail and/or coastal shipping, or noise and emissions from ports.
The Freight Strategy is highly conscious of the overall impact of freight systems to the Australian economy and way of life, acknowledging both the benefits of getting the system right (given the volume of freight carried is expected to grow by over 35 per cent between 2018 and 2040), but also the risks associated with not keeping up, or getting it wrong.
The strategy is significant too because it recognises that significant technological developments and innovations are likely over the next 20 years, and the strategy must try to anticipate what these
are likely to be, or at least be ready to adapt as they come to light.
DESIRED OUTCOMES
Unless we can better measure how our freight systems are performing, we stand little chance of designing better ways to boost that performance.
The desired outcomes for this action are:
• a national approach to data consistency across jurisdictions
• freight performance benchmarks and indicator
• decision makers having relevant information in a
timely manner
• information-based decision making about infrastructure investment needs, areas of reform, freight operations and community amenity.
It is envisaged that these outcomes can be achieved through one priority action – develop an evidence-based view of key freight flows and supply chains and their comparative performance to drive improved government and industry decision-making, investment and operations.
This in turn should produce:
• improved freight data collection, sharing and analysis
• performance benchmarking of Australia’s key import and supply chains against international competitors
• appropriate fit-for-purpose approaches to data collection for use by emergent technologies
• quality data for forecasting of freight movements and demand.
Work is already underway in this area.
For example, the Australian government has committed $8.5 million to settle the design of a National Freight Data Hub. The Hub is intended to enhance collection of and access to freight data, across all modes, to:
• support day to day operations
• improve infrastructure and transport network investment decisions
• enable end-to-end performance evaluation for Australia’s freight system.
Geoff Farnsworth is a partner at law firm Holding Redlich.
The ‘Making all governments freight aware’ section was co-authored with Holding Redilch planning, environment and sustainability partner Breellen Warry and planning, environment and sustainability special counsel Peter Holt