Addressing the barriers to efficient, reliable and cost-effective cargo movement

The NZ Council of Cargo Owners represents the shipping supply chain interests of many of the country’s largest exporters and importers. Formerly known as the NZ Shippers’ Council, NZCCO was formed in 1983 to be the national body representing large volume cargo owners. The current membership includes companies and organisations with major interest in industries such as horticulture, dairy, meat, steel, forestry, FMCG, and pulp and paper; collectively accounting for in excess of 70% of New Zealand’s containerised exports and a significant amount of bulk export, imports and domestic volume. NZCCO affiliates include ports, freight forwarders, shipping lines and road transport and rail organisations.

Members share a common goal of efficient, reliable, cost-effective movement of cargo; domestically and internationally.

The efficiency, reliability and cost-effectiveness of the shipping supply chain is critical for New Zealand. As an island nation, geographically distant from many of our key trading partners, and with a small domestic population, the economic growth and prosperity of New Zealand – and ultimately, wellbeing of all New Zealanders – depends on the performance of the supply chains that move our goods f rom end to end. Whether inbound or outbound, the efficient, reliable and cost-effective movement of cargo reduces the cost of goods, increasing our competitiveness as a nation and facilitating trade. Facilitation of trade is critical to help New Zealand recover f rom the economic damage wrought by COVID-19.

Our key requirements of government:

  • Integrated, strategic planning and investment in public infrastructure that facilitates efficient movement of cargoes across the entire supply chain.
  • Efficient, well-coordinated border management and assurance processes.
  • A regulatory environment that facilitates fair, transparent commercial practices between supply chain participants.
  • Representation in international maritime processes to protect and champion New Zealand’s interests.

NZCCO calls on the next New Zealand Government to prioritise policies and investment that facilitate efficient, reliable and cost -effective cargo movement.

We ask for robust engagement to support targeted and well-integrated planning for current and future needs. Cargo owners see things from the ground up and from end to end and so are uniquely positioned to advise on New Zealand’s supply chain imperatives.

We seek a cargo-centric approach across government that informs decision making at all levels and ensures supply chain concerns are acted on in a cohesive and timely way.

We urge rapid completion of the FTA negotiations with the EU and UK and an expansion in CPTPP membership. We cannot allow the international rules-based system overseen by the WTO to fail.

INFRASTRUCTURE

New Zealand’s international competitiveness is threatened by inadequate infrastructure planning and poor investment decisions, with resultant cascading costs through the supply chain. Strategically located and well-connected freight and logistics infrastructure is critical: to support ongoing growth in cargoes, to ease congestion to help lift productivity and reduce emissions, and to provide necessary supply chain resilience.

It is important that infrastructure planning and  investment takes a long-term view and is not subject to political whim. We therefore support the creation of the Infrastructure Commission as it signals a longer-term view for infrastructure planning and investment that is not constrained by three-year election cycles.

It is NZCCO’s view that, in general, as long as new infrastructure developments are underpinned by a robust business case they will be a welcome addition to New Zealand’s supply chain infrastructure.

PORTS IN NEW ZEALAND

NZCCO members require ports that are reliable, accessible, competitive and efficient so that we can move our goods to market in a timely fashion. Development and management of the entire freight corridor in and out of ports is of critical importance. These economic considerations need to be front and centre in any discussion about the future of any New Zealand port. Any decision that ignores these considerations would be extremely detrimental for shippers, and ultimately the country. Cargo owners and ports need to actively engage to eliminate waste in the supply chain to ensure NZ Inc. remains competitive and relevant, with a focus on reducing port congest ion and providing the efficient flow of full and empty containers between New Zealand ports. Efficient loading and unloading of vessels that does not create delay is critical.

PROPOSED MOVE OF THE PORTS OF AUCKLAND TO NORTHLAND

The Port of Auckland is critical infrastructure, not only for Auckland but for the entire country. Any decision to close the current port and move its operations elsewhere is a major decision that needs to be considered extremely carefully with appropriate stakeholder input. It is essential that a robust business case underpins any change or development.

The port plays a critical role in terms of both imports and exports. Its location in the centre of Auckland creates great efficiency gains – particularly for imports. In recent years numerous studies have been undertaken – all of which confirm this important role. It would be unwise to ignore the findings of those studies.

Decisions in respect of the future of the Port of Auckland affect the entire New Zealand freight supply chain. It follows that the focus of any Upper North Island ports study should be on what is best for NZ Inc. which, from the Council’s perspective, means delivering the best option for cargo owners to move their cargoes in and out of the county as competitively as possible and at the lowest environmental cost. Cargo owners should be comprehensively consulted in this decision-making process.

NZCCO does not support moving the port to Northport nor does it support the creation of a new port at Manukau. An urgent investment focus should be improving access to the current port.

FREIGHT TRANSPORT INFASTRUCTURE INVESTMENT

Decisions on investment for freight transport should be mode neutral and based on what is the most efficient and competitive way to facilitate freight movement across the entire supply chain – the right mode in the right context.

INTEGRATED TRANSPORT PLANNING

Integrated transportation planning is crucial for the supply chain as all modes connect as a system and impacts to one have significant and immediate impacts on the others. Investment decisions need to be integrated to optimise and appropriately sequence spending so that they achieve the best outcomes given limited budgets.

IMPORTANCE OF MAINTAINING A QUALITY ROADING NETWORK

NZCCO urges the government to continue to invest in quality roading that supports the efficient and safe movement of freight across the supply chain.

Roads remain the main mode of transportation for 90% of the freight volumes moving around the country. It is critically important that the Government continues to invest not only in new roads but also in the maintenance of existing roads to ensure they are fit for purpose and able to support resilience in the network. Rural roads in particular play a critical role given that most exports originate in rural areas. The adequacy of roads that provide access to the port network e.g. the Port of Tauranga, are also critical to support efficient cargo movement.

We look to the Government to ensure that there is continued investment in quality roading infrastructure across the total roading network.

COASTAL SHIPPING

NZCCO would oppose any change to New Zealand’s cabotage policy.

Coastal shipping supports a road network by creating an efficient and sustainable network that can reduce congestion, emissions and safety instances, and it provides an important source of resiliency to the transport system should a disruption occur.

RAIL

Rail supports a road network by creating an efficient and sustainable network that can reduce congestion, emissions and safety instances.

NZCCO welcomes the increased investment in rail that we have seen under the current Government. Rail is a critical mode of transport for our members.

We support the Government’s intent that rail in New Zealand should transport people and goods where they need to go, support productivity and business growth, reduce emissions, congestion, road deaths, and strengthen social and cultural connections between communities.

As KiwiRail is responsible for providing funded rail activities there is a need for additional measures to be put in place to ensure delivery against this objective; including providing greater accountability for the efficient operation of KiwiRail as a service provider.

As a State-Owned Enterprise with a commercial imperative, KiwiRail’s current profit-related purpose can lead to outcomes misaligned with the Government’s intent.  Currently, KiwiRail’s model calls for each laneway to be commercially viable, which puts pressure on KiwiRail to price above non-rail alternatives or cease service on unprofitable laneways, without full consideration of wider social and economic benefits to New Zealand.

As a result, customers perceive rail prices and services as potentially unstable which discourages long-term commitments to using rail.  We suggest that KiwiRail focus on serving its highest volume routes efficiently with long term, price stable agreements.

Pricing constructs should be long-term for all customers, thereby providing both certainty around pricing to customers and certainty around returns in infrastructure investments to the Government.  The use of long-term, price-stable agreements would remove commercial tension between customers and KiwiRail and would allow both parties to focus on seeking efficiencies through collaboration.

NEED FOR RESOURCE MANAGEMENT REFORM

Council welcomes the report of the Resource Management Review Panel and has taken careful note of the recommendations. We have argued for many years that the RMA needs fundamental reform. We recognise that goods must be moved with minimum impact on our environment and communities, and that this must be balanced with the need to develop supply chain infrastructure that is fit for purpose.

For example, as the international shipping fleet deploys increasingly bigger vessels the challenges of larger tonnages impact landside infrastructure (adequacy of roads, bridges, freight corridors), seaside (dredging, berth faces, moorings) and shoreside facilities to ensure physical volumes can be accommodated and cargo can flow. Time delays, expense and uncertainty of outcome delivered under the RMA undermine necessary infrastructure investment across all these pressure points and constrain supply chain efficiency.

We look forward to working closely with government on the response to the recommendation and the drafting of the consequential legislation to replace the RMA.

We support the fast track process that has just been passed into law as part of the COVID-19 response.

BORDER AND SECURITY SYSTEMS, ASSURANCE PROCESSES

NZCCO enjoys a close relationship with NZ Customs and the Ministry for Primary Industries. These relationships are important to the Council. We work closely with these agencies on any changes that might be contemplated to the regime operating at the border.

BIOSECURITY

Effective biosecurity management has never been as important as it is today. In the face of biosecurity risks becoming more challenging as trade volumes, passenger movements and climate change impacts increase, rigorous biosecurity measures are paramount for the long-term future of New Zealand’s trade.

Whilst there is risk of significant disruption to the flow of goods and the costs to trade associated with safeguarding New Zealand from pests and disease, the cost to industry of contamination outweighs these burdens.

NZCCO is a signatory to the Biosecurity Business Pledge and has a representative on the Biosecurity 2025 Steering group.

CUSTOMS

NZ Customs is a critical player in the economic security of the country. In an increasingly complex trade environment, efficient cargo movement requires modern systems that deliver certainty of process, predictability of outcomes and a trusted environment for trade.

We support the good work undertaken on behalf of NZ Inc. and urge continued investment in digital supply chain transformation technologies that are developing at pace globally e.g. blockchain.

Council is aware that Government has given NZ Customs additional responsibilities for managing the border amidst the COVID-19 challenges and note that we would not want such added responsibilities to be to the detriment of Customs’ primary responsibilities.

NZCCO has been represented in NZ Customs reference groups and provided advice on the modernisation of the Customs Act.

COMMERCIAL / REGULATORY ENVIRONMENT

Efficient, reliable, cost-effective movement of cargo is facilitated in an environment that strongly encourages all participants to operate in a truly commercial and competitive manner.

SHIPPING LINES

NZCCO members require a range of shipping services that are sustainable and competitive. We require shipping lines to call into New Zealand with the required frequency, capacity and reliability that enables NZ Inc to effectively compete in global markets.

New Zealand is a long way from its key trading partners therefore reliable services to deliver freight in a timely manner are critical to the competitiveness of New Zealand.

In particular, the shipping lines need to actively engage with the shippers to ensure empty containers are available with the appropriate lead time for packing and vessel schedules are adhered to.  Any changes or blank sailings need to be communicated in a timely fashion to enable the shippers to react to this.

VSA’s / BLOCK EXEMPTION

New Zealand’s small share of world trade and its remoteness create vulnerability around levels of service from international shipping lines. The preservation of Vessel Sharing Arrangements (VSAs) are necessary to guarantee levels of service to and from countries like NZ at reasonable cost. VSA’s must therefore be allowed to function efficiently within New Zealand’s competition framework.

NZCCO supported the passage of the Commerce (Cartels and Other Matters) Amendment Bill subject to a block exemption for VSA’s.

INTERNATIONAL SHIPPING POLICY

New Zealand is nearly totally dependent upon international shipping for our exports and imports.  The International Maritime Organisation (IMO) is responsible for regulation of this activity. We are pleased with much of the work done by New Zealand officials at the IMO.  On the Verified Gross Mass (Container Weight Verification) issue there were two clear instances of New Zealand leading the world and creating great outcomes for New Zealand business. We note that the work of the IMO will become even more important for us in the future.  An example of the new agenda is the treatment of international shipping in the climate change debate.  The implications for New Zealand are arguably greater than for any other IMO member. It is time for New Zealand to consider upgrading its investment in the IMO by having a permanent presence at the IMO, based out of the NZ High Commission in London.  We note that there is a permanent presence at the OECD, WTO and World Customs Organisation.  The IMO is possibly more important to New Zealand trade in terms of actual activity and impact and should be treated the same as the other organisations.

EMISSIONS | DECARBONISATION OF SHIPPING

NZCCO supports New Zealand’s accession to MARPOL Annex VI: Prevention of Air Pollution from Ships. In our view New Zealand should have signed this international treaty without delay. The way the world views New Zealand is critical to our success in international trade. Our products must continue to be seen as being of the highest possible integrity.

Developments at a global level have significant impact at a local level. We recognise the potential for the MARPOL Annex VI treaty and future international climate change regulation applicable to the ocean freight industry to increase shipping costs for New Zealand’s exporters and importers and to have a particularly adverse impact given our distance from markets.

Future IMO decisions are inevitable on issues such as the level of shipping emissions, the application of carbon charging for the industry and the speed at which ships travel.  It is important that New Zealand is actively able to participate in and vote on policy recommendations. To do so we must have direct representation at the negotiating table.