A lively panel discussion on distribution hubs was a highlight of the Freight Futures 2030 conference in Auckland, New Zealand, June 2019.
The session kicked off with a quick round up of some international examples of multi modal freight hubs. The huge scale of the latest sites in Chicago (USA), Winnipeg (Canada) and Moorebank (Australia) are not something we could contemplate in little old New Zealand. Yet the way they work and the benefits they bring can, even at our more modest scale, according to presenter Blair Morris, General Manager Ruakura at developer Tainui Group Holdings.
The main features of the examples given are being next to main road and rail transport (often at a major junction), on greenfield sites away from space constrained ports and able to provide more open access to transport links and multiple ports for import/export.
“They have universal co-location, warehouse and factory space, and multi-port access,” said Mr Morris. It’s a commercial eco-system and a way of approaching distribution that can also reduce emissions.
The panel discussed why hubs would work in New Zealand (Ruakura isn’t the only option). Murray King, long standing industry operator, said vehicle efficiency would improve and it reduces queueing at ports. David Brinsley pointed out that, like KiwiRail, hubs can offer port neutrality. “Like Switzerland.”
Congestion is also an issue, and due to get much worse in Auckland according to Allyson Wood, logistics professional development expert at the Manukau Institute of Technology. In fact congestion around ports, and their impact on the local community, was also mentioned by Blair Morris. Keeping those impacts in check, something that inland distribution hubs would do, helps with what he called ports’ public “licence to operate.”
Keeping impacts in check helps with ports’ public “licence to operate.”
Several panel members spoke about distribution hubs potentially changing the face of transport by allowing a redesign of transport networks. Something that would deliver cost reduction (Ruakura are suggesting between 19% and 38% depending on what you are doing and which part of the country you serve). It would also play well with reducing the carbon footprint of operations, a subject being brought into public spotlight.
That might include replacing line haul road transport with rail to connect ports and more distant locations, and shorter journeys by road. “As vessels get bigger, and there are fewer port calls, there are benefits of hub and spoke. You get a better bang for your buck and spend fewer of them,” said Mr Brinsley.
"You get a better bang for your buck and spend fewer of them”
It might also play into the hands of the nascent electric freight vehicle, as their limited range and shorter time between ‘refuelling’ (charging) are more suited to local and regional distribution. “We have to think of different ways of doing things,” said Allyson Wood. “Overseas that has happened. Large regional distribution centres feed down to local ones, with cross docking, and there’s a lot of automation appearing.”
“Technology and automation are great, but you’ve got to have scale,” Mr Morris commented. Things are moving that way though; “labour costs are high and continuing to escalate, while the cost of automation is coming down.”
Murray King pointed to the “significant fuel advantage” of rail and electrification, with a nod to the Government’s zero carbon targets for the country. Part of that redesign includes how we use ports for both import and export, and the panel generally agreed that things are changing.
“No port wants to be on a list for euthanasia.”
There are too many ports handling containers for a small country, but locally owned ports make it politically difficult to make changes. “No port wants to be on a list for euthanasia.” However some developments are already taking place, with Nelson dropping off the international port call radar. “You look at the future, you might have a super hub port and have a proper coastal network,” added Blair Morris.
Resilience, particularly with port operations following major disasters, was also tabled. David Brinsley said a healthy coastal service was needed to mitigate this, and that is still offered by KiwiRail even after reopening of the Kaikoura quake affected rail links. What that event did, though, was force a rethink. “We don’t run the same services and cargo now.” The panel’s consensus was that there is a happy medium between keeping options open and overinvestment in too many ports.
Import/export still goes through ports, in busy towns and cities. A move to hubs, and investment in linking them so freight can move without competing for the same space as commuters, is a way forward.
However Murray King warned that creeping local development around hubs could spoil their free flowing operations, giving the example of the Palmerston North rail line that was relocated out of the city, and might be moving again.
Significantly changing distribution patterns
Overall, I was left with the feeling that experts believe distribution hubs will form an increasingly important part of our New Zealand logistics landscape. More consolidation, more hubs, more rail, significantly changing distribution patterns.
[Panel photo: Panel members (left to right) Allyson Wood, Senior Lecturer, Manukau Institute of Technology, David Brinsley, IMEX Manager KiwiRail, Blair Morris, General Manager Ruakura, Tainui Group Holdings, Murray King, consultant.]
What’s happening at Ruakura?
Tainui Group Holdings say that ground works such as water and waste are going in now. The site, on the eastern fringes of Hamilton, takes advantage of rail connections to both Auckland and Tauranga and sits next to the under-construction Waikato Expressway.
Further stages of construction have been timed to align with completion of the Expressway and NZTA has moved this out to December 2021.
As a new site, developers are also keeping in touch with latest environmental trends and standards. This includes rain water collection, solar generation, micro-grid distribution and how occupants could use electric commercial vehicles and what that might mean for infrastructure to charge them.
Article first published FTD August 2019
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