Nathan Guy

7 December, 2010

Launch of the Manawatu Logistics and Supply Chain Profile

Good evening and thank you for inviting me to speak tonight.

We’re here tonight to launch a very important study into what is a very important industry.

The Logistics and Supply chain includes wholesale trade, transport, postal and warehousing activities. Nationwide it accounts for about 12 to 15% of New Zealand’s GDP.

Manawatu’s advantages

The Manawatu region has experienced strong growth in this sector over the last 10 years, which is a great achievement. It provides 5,870 jobs in this region, and has been identified as a key area for future growth.

Already many major companies have chosen to base themselves here, as they realise the benefits Manawatu has to offer with its great location and distribution network.

There are plenty of advantages this region has, on top of location.

You have Palmerston North International Airport, which has no curfew and can deliver overnight airfreight anywhere in New Zealand. It’s a key link on the main trunk between Auckland and Christchurch, and has good passenger connections around the country.

You have Massey University, which provides an educated workforce. Massey provides a range of study options around logistics and supply chain management, and students provide a keen and flexible workforce.

This is especially important given that the transport sector has an aging workforce and needs to attract more attention from young generations.

The recent Defence Force White Paper proposes moving more personnel to the Ohakea defence base, which would be good news for the region.

Government priorities

Logistics and transport are interrelated – how to best get people and freight from A to B safely and efficiently, with a minimum of hold-ups.

For the government, our top priority for transport is to maximise its contribution to economic growth and productivity.

For an exporting nation like New Zealand, how we move people and goods to markets is crucial. We rely on roads, rail, sea and air travel to make a living in the world.

To be a competitive economy we have to make our transport network as safe and efficient as possible.

The amount of freight moved around the country is expected to double by 2040, and we have to start preparing for that challenge now.

Roads

Of course, no single mode of transport can meet this demand alone.

Roads, however, are the core of our transport system.

In particular, upgrading the State highway network is a major priority for the government. We are well underway in making the largest ever investment in our country’s roading network, $10 billion over the next 10 years.

The major priority for this funding is the seven Roads of National Significance. These projects will also be an important step in improving highway safety, which is a priority of Safer Journeys, the government’s road safety strategy for the next 10 years.

The road of most interest and importance to those of us in this region is the Wellington Northern Corridor, running from Levin to Wellington Airport and including Transmission Gully.

Upgrading this section of road will bring real benefits for transport between Palmerston North, Wellington and the South Island. It will mean quicker and safer journeys, less congestion and a real boost to the economy.

I can report that work is well underway on various sections. As the local MP for Otaki I spent last week at public meetings discussing the Kapiti Expressway and the benefits it will bring to the region.

Vehicle Dimensions and Mass Rule

Work is also underway on improving the efficiency of how we move freight on our roads.

Earlier this year the Vehicle Dimensions and Mass Rule was amended to allow vehicles up to 53 tonnes to operate on specified routes. Previously, the maximum was 44 tonnes.

The change also allows for some increases in vehicle length. These vehicles are known as High Productivity Motor Vehicles (HPMV).

Due to the nature of freight moved in New Zealand, and Manawatu’s geographical location, high volumes of goods are moved through this area by road.

The New Zealand Transport Agency, as the State highway manager, has received more than 550 applications across the country.

As at the end of October there were 23 applications for HPMV permits in the Manawatu-Wanganui region, with 4 being approved so far.

The amendment is expected to provide productivity benefits of about 16 percent without compromising safety or environmental standards.

KiwiRail Turnaround Plan

As freight volumes increase it’s also clear that rail will have to play an important part.

In this year's Budget the government committed $250 million to the KiwiRail "Turnaround Plan". This is designed to make the rail freight business sustainable within a decade, so that it can stand on its own two feet.

In principle, we've committed $750 million over the next three years to KiwiRail. Final decisions will depend on business cases and meeting performance targets.

Key areas of work for this Plan include reducing transit times and improving reliability along the Auckland to Christchurch route.

It represents a new focus for KiwiRail as it looks at its future role within the transport sector as a commercial freight and trade operator. It will play a big part in helping transport logistics – for both freight and passengers.

It’s worth noting that the bulk of the $4.6 billion required for the turnaround will need to come from KiwiRail itself.

As part of this, the first six of Kiwirail's 20 new DL class locomotive engines were unloaded at Tauranga a few weeks ago. More will be arriving in the New Year when the Prime Minister will officially launch them.

Capital connection

Locally a hot issue has been the future of the Capital Connection.

Major improvements are being made to the Wellington rail system with around $258 being invested by the Government into new trains, electrification and double tracking all the way to Waikanae.

This is great news for people using these trains, but it may change passenger behaviour and reduce the numbers of people using the Capital Connection service in southern Kapiti.

KiwiRail will review the Capital Connection six months after these extended services begin to see what impact it has. They will have a number of options, including maintaining the status quo, a shuttle service using existing Silver Fern rail cars, or integrating both.

Of course this is a commercial service and it needs bums on seats to survive. To a large extent now, the future of the service is in the hands of Manawatu people.

Conclusion

So it’s clear that transport is a big priority for the government and there will be a lot happening over the next 10 years.

I expect the importance of transport and logistics to the Manawatu region will continue to grow, as set out in the profile we are launching tonight.

This is one of 14 sector profiles being developed and one of the most important.

Congratulations on this work, congratulations on what this sector has already achieved for the regional economy, and I looking forward to building on this success.

Thank you.

ENDS

© Scoop Media