NZ LOGISTICS & TRANSPORT - SUPPLY CHAIN CONGESTION: A BIRD'S EYE VIEW TRANSITION OF FREIGHT IN NEW ZEALAND INTIME NEW RESEARCH REVEALS TRUE VALUE ...
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Logistics & Transport nz
$15.00
THE OFFICIAL PUBLICATION OF CILT NEW ZEALAND Volume 19 Issue 4
June 2021
Supply chain congestion: a bird’s eye view
Transition of Freight in New Zealand InTIME
New research reveals true value of rail
ON THE COVER
Aerial shot of Lyttelton Port
Photo: Lyttelton Port Company
LOGISTICS & TRANSPORT NZ
IS THE OFFICIAL JOURNAL OF
THE CHARTERED INSTITUTE OF
LOGISTICS & TRANSPORT NZ
6 Contents
COVID-19 and the impact of the Suez Canal obstruction................................... 3
Supply chain congestion: a bird’s eye view..............................................................5
Transition of Freight in New Zealand InTIME.........................................................6
Biofuels: The immediate option to decarbonise transport ...............................8
Government commitment to investment in rail...................................................11
Decarbonising the freight supply chain.................................................................. 12
8 Work site traffic management.................................................................................. 15
New research reveals true value of rail.................................................................. 16
Lyttelton Port Company – future-thinking and community-orientated...... 18
Call for nominations for the 2021 Awards............................................................ 20
In the next edition
The editorial team welcomes expressions of interest for submitting an article for the
September 2021 edition of this journal, especially from young professionals (those
under the age of 35). Contributors should in the first instance contact the editorial
convenor, Murray King (email murray.king@xtra.co.nz) to discuss their article.
12 Deadline for the September 2021 edition: August 3.
18
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June 2021 3
MSC Ship at Port of Rotterdam. Photos : Port of Rotterdam
COVID-19 and the impact BY EMILE HOOGSTEDEN
of the Suez Canal obstruction
THE PORT OF ROTTERDAM ALONG WITH OTHER PORTS AROUND THE WORLD
HAS BEEN IMPACTED BY COVID-19 AND THE SUEZ CANAL BLOCKAGE RESULTING
IN DELAYS IN ARRIVAL TIMES OF VESSELS WHICH HAVE LED TO AN INCREASE IN
DWELL TIME FOR EXPORT AND TRANSHIPMENT FLOWS.
This combination of events has disturbed The Port of Rotterdam and the port Together with terminals and Portbase,
supply chain equilibrium and led to an community have taken various actions Port of Rotterdam launched a website
imbalance in empty equipment, and also to limit the effect including additional www.portbase.com/suez in order
congestion caused by full and empty anchorages for container vessels. Ships were to share information throughout
containers left in the container yard results in also allowed to anchor closer to the pilot the shipping and port community. In
lower productivity in ports and terminals and boarding area, allowing swift exchanges addition, regular sessions with the
longer dwell times for containers. with departing vessels. Logistics Alliance were set up to keep all
parties informed on current situation.
Ports and terminals have acted by limiting Agents and terminals received a heads-up
acceptance of containers (empty, export and, regarding container vessels with a vertical Other measures that have helped include
transhipment) to avoid yard congestion, and tidal window as this effects the berth increased use of night distribution,
Port of Rotterdam has worked with other planning. strategic hinterland hubs, and bundling
port infrastructure operators (such as depots, concepts.
The Coast Guard also allowed bunkering at
hinterland, and regional trade hubs) in order
sea provided the vessel could demonstrate Port of Rotterdam also received calls
to act as a buffer.
immediate need and weather was suitable. from hinterland operators who actively
Current Suez situation and action Proactive dredging was instigated during approached the market to offer support
plan the slow period in anticipation of the ‘Suez as overflow locations for export cargo
Armada’ so that dredging activities during and for bundling import cargo.
Currently, all vessels (63 excluding the Ever the busy weeks can be limited.
Given) have made their call in Rotterdam.
Nevertheless, it will remain very busy for the Infrastructural works during daytime were, Cont. on page 4
weeks to come with relief expected around when possible, postponed and we found
June. This is dependent on efficiency of other additional empty depot capacity on request
modes and improving reliability of deep-sea to deal with overflow of boxes on the
vessels. terminal.
4 Logistics & Transport NZ
Longer term plans for optimising the supply chain In the meantime, we have the year-to-date
Optimising infrastructure in the port area include the on-port road system called the Container figures for January-April 2021 and we see an
Exchange Route. There has also been work undertaken to deepen basins, and new quay walls ongoing increase. We are at 6.3 per cent in
have been built at Prinses Amaliahaven and Theemswegtracé. twenty-foot equivalent (TEU) compared with
2020 (which equals the 2019 Jan-Apr figures).
Optimising port calls has been managed through the digital platforms such as PortXchange, while Asia – Europe volumes are at +11 per cent
hinterland calls have been managed via Nextlogic and data sharing via Portbase datahub, compared with 2020 (2.443 mio TEU).
Navigate and Scope.
Collaboration between sector players has resulted in the bundling of container volumes in the
hinterland and in the port. New agreements with deep-sea terminals regarding call times (fixed
windows) and call sizes can further improve the reliability of the container shipping product.
Terminals are offering fixed windows, on certain conditions, to support bundling initiatives by
means of guaranteed handling times.
Small and medium-sized shippers and forwarders are seeking fast, efficient, and sustainable
solutions for their supply chain. We believe that transparency of container routeing possibilities
will facilitate and optimise the decision-making process of shippers and forwarders and meeting
their needs.
Two major trends in recent years
There has been a consolidation of carriers and alliances and we are handling larger
vessel- and call sizes.
Causing major impact on port and terminal operations globally and the Asia – Europe trade
specifically are:
• Fewer port calls and greater peaks;
• More pressure on port infrastructure;
• Hinterland modes need to match deep-sea scale to avoid congestion and longer
lead-times;
• First lockdown led to capacity adjustments carriers by cancelling port calls
(‘blank sailings’); Emile Hoogsteden
• Reopening of economies led to unexpected increase in demand; In this role as Vice President
Commercial at the Port of Rotterdam,
• Mismatch between surge in volume versus fixed terminal capacity led to delays; he is responsible for acquisition
• Labour shortage in several ports due to COVID-19 health measures; of shipping line calls and leases
concerning containers and other
• Ripple effect of congestion between ports; and general cargo, logistics, customer
• Schedule reliability has dropped drastically. relations management and networking.
June 2021 5
BY HARRIET SHELTON
Supply chain congestion: a bird’s eye view
This time last year New Zealand emerged from
a nationwide lockdown. The general consensus
was that while there might be a few hiccups
ahead, the worst was behind us. Little did we
know that the scene had already been set for
some of the most significant and widespread
supply chain disruption the sector will ever
see. Months later, the challenges continue. It
is only due to the hard work of people across
the supply chain that the wheels have not
fallen off completely.
Containerised supply chain congestion
appears likely to continue for at least a while
yet. The passage of freight around the world
and throughout New Zealand is beset with
delays and uncertainty. Ships queue outside
congested ports, container yards are full, and
to meet demand surges, particularly in the and provide’), more willingness to use
transport and storage costs are increasing. The
case of rail. technological solutions even if they appear
reasons for this unprecedented worldwide
costly, and more investment in innovation.
congestion are complex, and so are the An obvious solution to this problem would
solutions. be to simply build extra capacity into the Optimisation and coordination
system, whether infrastructure or labour,
As the Government’s lead transport advisor Supply chains operate as a delicately balanced
or both. But it is much less straightforward
and steward of the transport system, the ecosystem. With so many inter-connections
to agree on where additional capacity is
Ministry of Transport is one of the few and inter-dependencies between all the
best provided, given that every shock will
organisations that is able to take a bird’s-eye moving parts, there is an ever-present threat
view of the supply chain system. While we be different and may place demands on
of contagion risk; the possibility for a failure
are well-placed to draw the pieces together different parts of the system. Extra capacity in one part of a network having a knock-on
and make connections across what is a highly also comes with a high price tag, which may effect across the whole network. This has
complex and dynamic network, we rely on be difficult to justify if the need for it only occurred on a massive scale over the last
operators and cargo owners to tell us what’s exists during sporadic disruptions. 10 months, with multiple factors causing
going on the ground. The workshop participants agreed that it was reverberations across the entire global system.
We recently brought together a range of not cost effective to build in lots of idle The recent Suez Canal blockage is a classic
industry representatives from all parts of the capacity to guard against shocks, but example; in less than three days more than
supply chain to share their views on the core suggested other ways to improve resilience 500 ships started backing up, disrupting
issues and to generate ideas for solutions. The such as better information visibility and already-constrained shipping schedules all
atmosphere was positive and constructive, mechanisms to enable more effective over the world and creating flow-on impacts
and many issues and possible mitigations coordination. for landside operations.
were identified. Three key themes emerged: A complex problem like this can only be
Data and information visibility
resilience and capacity, information visibility, solved through all components of the system
and optimisation through better coordination. International supply chain commentators
frequently point to a lack of information playing their part. For example, reducing
Resilience and capacity container congestion at ports needs to be
visibility as a key barrier to better resilience
managed while shipping lines’ schedules
New Zealand’s supply chains are optimised for and risk management. Our supply chain
remain unreliable. This relies on the combined
efficiency, as they are the world over. workshop participants reinforced this view.
efforts of rail and road freight to carry imports
Networks and infrastructure have been As supply chain networks have become more away in a timely fashion while also avoiding
designed to minimise costs, with ‘just-in- complex over the last few decades, they have too-early delivery of exports to ports. This
time’ having become the dominant logistics become harder for operators to control and in turn requires off-site container yards,
model. This works well under stable market predict. The ability to see from one end of distribution centres and depots to be open to
conditions, but a lean system is not designed the pipeline to the other is crucial, especially receive and dispatch cargo whenever needed.
for volatility and is poorly placed to cope with when conditions are volatile and uncertain
shocks and disruptions. Extending depot opening hours was suggested
as they are right now and will likely be in the
as a short-term mitigation at our workshop,
The lack of resilience in our supply chains future.
but achieving this will require alignment
became painfully apparent as COVID-19
Access to real-time data enables operators to among shipping lines, rail and road freight
lockdowns drove up global consumer demand
react to changes and adapt more quickly, operators and cargo owners.
just as port productivity fell due to social
and information sharing provides a powerful
distancing measures and COVID-19 infections. The challenge for New Zealand
platform on which to build collaborative
In New Zealand, reduced productivity at Whatever New Zealand does to address its
working relationships across the supply chain.
Ports of Auckland resulted in shipping lines own domestic congestion issues, there will
diverting some Auckland-destined cargo to Achieving these things will require a culture
continue to be delays and disruptions as
other ports. Returning this cargo to Auckland shift towards more openness and data
long as the global congestion and disruption
required extra rail and roading capacity – fixed sharing, a commitment to more continuous
infrastructure that cannot be scaled up quickly monitoring (as opposed to ‘predict Cont. on page 6
6 Logistics & Transport NZ
Transition
continues. Our small, remote country is the whenever they need or want them. Most
final stop at the end of the world’s supply people only interact directly with freight
chains, and as an island economy we are when they momentarily get stuck behind a
heavily reliant on sea freight for our imports slow truck on the open road.
of Freight in
and exports. A blockage in one part of a Last year’s lockdown and subsequent
supply chain on the other side of the world disruption brought freight closer to the
can quickly cascade through to the South forefront of people’s minds. They discovered
Pacific, where the impacts may be felt more that they might have to wait longer for
New Zealand
strongly because of our small size and their stuff to arrive. This is a good thing; it is
geographic isolation. important that people don’t take freight for
New Zealand has limited influence over the granted.
InTIME
international drivers of supply chain disruption, The need for better freight literacy was a
but we can try to alleviate the pressures common aspiration amongst participants at
domestically. What we can also do is organise the supply chain workshop. When freight
ourselves to ensure that we are better only operates below the radar, customers
positioned for future shocks and disruptions. assume there will always be capacity to meet
This longer-term planning task is a better fit demand whenever or wherever they require BY DR SUSAN KRUMDIECK
for Government in an environment where it, whether that is on a truck, ship or train, at
supply chains are primarily market-driven and a port or on the shop floor.
the appetite (and likely success) for centralised IMAGINE THAT A
But customers and consumers are also part
coordination is low. of the supply chain system, and their BILLIONAIRE HAS ISSUED
It does not make sense for Government to decisions and requirements influence the A $100 MILLION PRIZE
intervene in the day-to-day operations of way the system operates. This can create
the supply chain. Voices from across the unreasonable pressures, particularly when FOR FINDING THE NEXT
freight sector are supportive of the Ministry times are tough. STEPS ON THE PATHWAY
of Transport’s plans for an inaugural national
freight and supply chain strategy.
Greater awareness of the important role that TO 80 PER CENT LOWER
freight plays in the economy has many
Last year we began scoping a comprehensive benefits; for supporting public decision- EMISSIONS IN NATIONAL
work programme that will take us to all the making on tricky trade-offs, for investment HEAVY FREIGHT, WHILE
corners of the supply chain system over the in essential infrastructure, and even for
next two years and beyond. Our strategy will boosting the attractiveness of freight as a CONTRIBUTING 50 PER
consider issues as diverse as climate change, career option – particularly important for CENT MORE TO THE NZ
resilience, and efficiency. some parts of the sector currently facing
skills shortages and an ageing workforce.
WELLBEING ECONOMY.
The Government intends for this strategy to
provide a context for longer-term multi-modal New Zealand’s supply chains are not broken;
planning and infrastructure investment, as they can be very adaptable, and operators
The University of Canterbury InTIME Team
well as a framework for collaboration and have coped admirably with the multiple
are going for the prize, identifying next big
coordination between industry players. We challenges that the last year has thrown at
steps that turn the corner to low carbon,
need a system-wide and inter-generational them. We have an opportunity to use the
and we only have three days.
approach to help make better decisions about learnings from these experiences to create
where to focus our efforts within the freight a better system that benefits everyone. Let’s The draft Climate Change Commission
system and to provide more certainty for the not waste it. (CCC) report spends a lot of time setting
sector. Because it has not been done on this out how bad New Zealand’s transport
scale before, it will take time to get it right. system is compared to other countries.
We certainly don’t find the next steps
In the meantime, most of the short-term
to transition in the CCC report. The CCC
mitigations to the current supply chain
advisory groups were largely purged
congestion rest with industry. Our workshop
of technical people who challenged
participants came up with great ideas,
the assumption that hydrogen was the
but these will require market players to
miracle solution to emissions reduction.
collaborate with each other – a challenge
Therefore, it isn’t surprising that the
for a sector that is fragmented and naturally
“solutions” mentioned in the report revisit
competitive.
the biofuel policy from the 2000’s and
Depot and yard opening hours, for example, the current favourite, hydrogen long-
need to work for the market and are not haul trucks, delivered by one particular
something the Ministry can lead. But our door company with no technical track record.
is open to facilitate and support the sector to
respond. HARRIET SHELTON has worked in Our InTIME Team will use the
transport planning and policy for Interdisciplinary Transition Innovation,
There are opportunities to leverage too. The over 20 years, mostly within local Management and Engineering (InTIME)
experience of the past year has highlighted government, and recently made the Methodology.1 The first job is to discuss
the importance of freight to people’s move to central Government. In her the operations, costs, and technologies
everyday lives. In times of stability, freight current role at the Ministry of Transport, of the current system with the industry
operations are almost invisible to the general Harriet leads a policy team focussing on stakeholders. The InTIME Team has
public. Supply chains operate smoothly strategic freight and supply chain issues training from University of Canterbury2
and seamlessly, providing producers and including rail, ports and shipping. in how to engineer the realistic, reliable,
consumers with all the things they need, regenerative, and renewable projects.
June 2021 7
for decades. Currently 93 per cent of freight one stevedore can move them around, and
New Zealand heavy freight is a wicked is carried by trucks on the road, with rail they have very clever structure and internal
problem (a situation with no plausible carrying about 5 per cent, mostly bulk, and bladders that keep damage to a minimum.
solution) because things now work great! coastal shipping around 2 per cent which
The central and regional governments It is clear that the freight task is much lower,
is mostly containers.4 One tonne-kilometre
build and maintain roads, fuel companies perhaps 80 per cent less than in 2021. The
of freight consumes 50 per cent less fuel
provide fuel depots around the country, port is a lively place with warehouses and
on diesel rail compared to road. Shipping is
and super-sized linehaul trucks can wholesale distribution hubs. Numerous
about 80 per cent lower emissions per tkm
be imported since 2010. None of the small freight ships sail in and exchange
than trucks.
stakeholders have propositions for next cargo. It makes us smile to see a lot of the
steps, but they do point out even more The next InTIME step is to “crash test” the America’s Cup technology being put to good
problems not even relating to carbon current policies and scenarios for emission use as these ships seem to fly in and out
emissions: reduction to see if they are the best way of the harbour. The Transition Team build
forward. The hydrogen trucks5, the blue simulations of the system to understand how
• Supersized trucks are causing road hydrogen with carbon capture and storage6 it works. This takes most of day two!
damage at accelerating rates and and the biofuels7 fail the crash test and need
road risks, to be set off to the side. The next InTIME step is to back cast
• There is a serious driver shortage The issues of impracticality, insufficient what we learned in the future – what
and it is getting worse, supply, high cost, energy inefficiency8 does New Zealand have in 2121 that we
• Congestion is killing productivity, and low technology readiness put these don’t have?
“solutions” suggested by the CCC report • An extensive electric rail network,
• The rail network is not sufficient, out of the running. In addition, ecological
and is in managed decline on many intermodal connections at the ports,
economists are starting to realise that the manufacturing and agriculture hubs
lines, very low Energy Return on Investment means as well as with the urban trams.
• There are only a few coastal ships that using less fossil fuel is much better for
left with almost no windows at the the economy than trying to substitute very • Amazing fast sail ships and a lot of
ports, low or negative energy technologies like people working as sailors,
hydrogen.9 Improving efficiencies of existing stevedores, and warehouse goods
• Empty runs and empty containers ships, trains and trucks can deliver near term handlers.
add to costs, and emissions reductions as well as cost savings.
• M
anufacturing and processing in
• The capacity can’t handle any future Given the scale of fuel used, even small
different parts of the cities, and
growth. efficiency gains can represent the first run
in every small town which supply
on the board. But what next? Our first day is
goods and custom-made finished
done already!
products from micro-manufacturers
The InTIME Method first step is to take a step The next InTIME step is great fun. We directly to local or national
back, literally. We dig into New Zealand “assume” that the targets are met. Somehow, customers via electric rail and fast
history and look at how the freight duty was the world turns business as usual around, and sail ship.
handled in 1911.3 We observe that a century global warming stays below 1.5oC to the end
ago, all of the cities were established on port • Many more families living in the
of the century. Then we take a trip forward
locations with frequent coastal shipping. regions producing foods and fibres,
in time to see what it is like in New Zealand
Importing and exporting was from major wood and stone, and smelting and
beyond coal, oil, and natural gas. The InTIME
ports. recycling glass and metals.
Team finds that in 2121, all of the urban areas
Regional freight moved mainly by rail and we are familiar with are still in the same • They have very energy efficient
drayage using horse and wagon. The rail places, but over the past 100 years there has buildings, and electric transport.
and steamer ships were the modern freight been a lot of change. As we walk around (yes
• And, of course, they have those cool
technology of the time – burning coal. The walking, cycling, and hopping on the trams
cargo consolidation pods that
freight infrastructure was financed by private to get across town) we notice that there are
allow tracking and efficient, secure
companies and local governments. micromanufacturing facilities and retail hubs
delivery of goods.
in each of the suburbs.
Big changes came after World War II.
The old uninsulated and leaky homes have
Roadbuilding, trucks, and even airplanes
been replaced and roadways take up much What would trigger changes from the
extended oil-based freight delivery to all
less space. We hop onto the electric train business as usual and into this future
corners of the country. The wicked problems
and ride out into the countryside, stopping direction, but would also provide near term
of today have their roots in political actions,
at towns along the way. The InTIME Team growth and benefits? That exploration took a
mainly selling the rail network to overseas
pays special attention to what the freight is, whole day. We really need to get cracking as
corporations, the council ownership model
where it has come from, and how it is moving we only have one day left.
of the ports, and massive investment into
around. There are small re-useable container We start out fresh in the morning on the
roads of national significance.
pods that are used to consolidate produce, InTIME innovation step, developing project
A major carbon problem is the low materials, and manufactured goods from concepts. The InTIME Team review the
importance of much of the millions of around regions and move them to markets. numbers and models across the whole sweep
tonnes of stuff – 65 per cent higher than in
Curtainside trucks run on the tram network in of the InTIME journey and look for insights.
2000 – most of it packaging on its way to the
the night to all of the manufacturing and What could entrepreneurs, corporations,
landfill.
retail centres, again carrying these small local and central governments do? What are
The next step in the InTIME method is to get container pods. The pods have tracking the first steps to decarbonisation?
the current data regarding where the electronics on them which provide security,
emissions are coming from. We find that the as only the authorised receiver can open
New Zealand freight task has been growing them. They have wheels that pop up so Cont. on page 8
8 Logistics & Transport NZ
The very obvious first step is a research and development project to BY SHEENA THOMAS
develop a National Information Artificial Intelligence (NIAI) for freight
Biofuels:
demand. The concept is that the data for all receipt of goods is
collected and mapped over the country. This information is mapped out
to show the demands for goods and products. It is used to firstly set up
the national freight grid where producers bid to meet demand and the
artificial intelligence optimises the logistics, consolidates the freight,
selects the closest source and the most efficient modes, sets up the
intermodal connections and dispatches, tracks and records the receipt
The immediate
option to decarbonise
of the freight.
Incentives are available for development of small businesses to meet
demand locally, which can be driven by the NIAI demand map.
transport
Government puts maximum investment into building an extensive
national electric rail network with total connectivity to ports. An
entrepreneur develops tracking and packing pods. Corporations increase
investment in coastal shipping as it becomes the preferred mode for
centre-to-centre trade. De-Value taxes are added to imported products YOU HAVE PROBABLY HEARD THE
according to their packaging intensity and product life. We only have
two hours left in day three – can we get our projects over the line?
WORD “BIOFUELS” MORE IN THE LAST
The InTIME Team race to complete the final step. Now we must
FOUR MONTHS THAN YOU HAVE IN THE
critically consider where all of this innovation in the national freight PRECEDING FOUR YEARS.
grid, the NIAI, and investment in networked rail and coastal shipping
would lead us. Would it create enterprise and good work? Would it
provide for needs? Would it grow the wellbeing economy while driving Ever since the Government agreed “in principle” to a biofuels
down the oil use? Would it reduce reliance on imported trucks and oil mandate (https://bit.ly/3fllGV4) and the Climate Change
and grow local capability and productivity? We say yes. Commission released its draft advice (https://bit.ly/3vopBpJ),
The InTIME Team has identified next steps that are practical and biofuels are finally having a moment in the spotlight and being
immediately do-able. Importing outrageously costly, and unproven recognised as a meaningful part of the decarbonisation puzzle,
hydrogen trucks and electrolysers, or committing to biofuel targets alongside electrification, and hydrogen in the medium to longer
would lock in the business as usual for another political cycle. That term.
would not be the preferred option. This is not the first time a biofuels mandate has been floated
Note: InTIME Team with Professor Susan is a proposed BBC TV show, in New Zealand. In 2008, the Clark Government introduced
following the formula of the famous British television programme, Time a biofuels sales obligation – basically a mandate that would
Team with Tony Robinson (1994-2014).10 require 3.4 per cent of total fuel sold to be biofuel by 2012.
As it was pointed out during the announcement, had the 2008
1
S. Krumdieck (2019) Transition Engineering, Building a Sustainable Future, CRC sales obligation remained in place, New Zealand would have
Press, 254p.
reduced emissions from transport by over six million tonnes
2
www.canterbury.ac.nz/epecentre/research-and-innovation/professional-
development/
by now.
3
www.kiwirail.co.nz/our-story/history/ But what exactly are biofuels, is it safe for my engine and is it
4
R. Paling, M. King (2019) National Freight Demand Study, Ministry of Transport actually better for the environment are all questions that we
5
S. Page, S. Krumdieck (2009) System-Level energy efficiency is the greatest often get asked.
barrier to development of the hydrogen economy, Energy Policy, 37(9): 3325-
3335 There are all sorts of different terms used to describe different
6
S.C. Page, A.G. Williamson, I.G Mason (2009) Carbon capture and storage: types of biofuels, but here are the key things you need to know.
Fundamental thermodynamics and current technology, Energy Policy, 37(9):
3314-3324 Types of biofuels, feedstocks and technology
7
S. Krumdieck, S. Page (2013) Retro-analysis of liquid bioethanol and bio-diesel Biofuels are made from bio-based materials and generally fall
in New Zealand, Energy Policy, 62: 363-371 into two broad categories: “Conventional” and “Advanced”.
8
www.csrf.ac.uk/2018/06/should-lorries-be-powered-by-hydrogen/ Even these terms are used slightly differently internationally,
9
A. Jackson, T. Jackson (2021) Modelling energy transition risk: The impact of but for the purposes of clarity, Conventional biofuels usually
declining energy return on investment (EROI), Ecological Economics, 185: refer to established processes that produce biofuels that
107023
are subject to a “blend wall” because they still contain some
10
www.youtube.com/channel/UCvmEISc6e4tLwn8TyS14ncw oxygen molecules. This means that they must be blended with
fossil fuel or its equivalent “renewable fuel” counterpart. Over
the years, safe limits have been established and approved
by original engine manufacturers (OEM). Typical examples
Dr. Susan Krumdieck of conventional biofuels include fatty acid methyl-esters,
is a Professor of Mechanical biodiesel, and ethanol.
Engineering and Chair in Energy Which brings us to Advanced biofuels. Advanced biofuels are
Transition Engineering at the made using more recent, more complex processing that
Heriot-Watt University, in typically requires hydrogenation. These biofuels are often
Edinburgh, Scotland. called “renewable”, so usually referred to as “renewable diesel”,
“renewable petrol”, and “sustainable aviation fuel (SAF)”. These
fuels are hydrocarbons, effectively molecularly identical to
their fossil-based counterparts, which is why they can be safely
blended with conventional biofuels. While there are some
June 2021 9
Technology Transesterification Fermentation Hydro-processed Gasification Gasification Pyrolysis Alcohol to Jet Catalytical
Pathway (Conventional) (Conventional) Esters & Fatty + Fischer-Tropsch + LanzaTech hydro-processing
Acids / Vegetable process
Oils (HEFA/HVO)
Can produce • FAME Biodiesel • Ethanol • Renewable diesel • Renewable diesel • Ethanol • Renewable diesel • SAF • SAF
• Glycerol • Sugar • SAF • SAF • SAF • Renewable diesel • Renewable diesel
• Renewable petrol • Renewable petrol • Renewable petrol • Bio-LPG • Renewable petrol
• Bio-LPG • Bio-LPG • Bio-LPG • Bio-LPG
Application • Any diesel-based • Petrol vehicles • Any diesel-based • Any diesel-based • Petrol vehicles • Any diesel-based • Blending with jet • Any diesel-based
applications applications. applications. applications. aviation fuel. applications.
including • Jet aviation fuel • Jet aviation fuel • Jet aviation fuel • Any diesel-based • Jet aviation fuel
vehicles, shipping, applications
generators and • Petrol vehicles • Petrol vehicles • Petrol vehicles • Petrol vehicles
equipment. • LPG applications • LPG applications • LPG applications • LPG applications • LPG application
• Animal feed,
pharmaceuticals
etc
Feedstocks Tallow, used Corn, sugarcane, Tallow, used Woody biomass, Woody biomass, Woody biomass, Ethanol, iso-butanol Woody biomass,
cooking oil, wheat, beets and cooking oil, other lignocellulosic other lignocellulosic other lignocellulosic other lignocellulosic
vegetable oils, other similar crop vegetable oils, biomass biomass, municipal biomass, municipal biomass, municipal
tall oil tall oil solid waste solid waste solid waste
Blend ratio/ • 7% (20-30% for • 10% • 80% • 80% • 10% • 80% • 50% SAF • 50% SAF
blend wall some equipment) (renewable diesel) (renewable diesel (renewable diesel • 80% • 80%
• 50% (SAF) • 50% (SAF) • 30-50% SAF (renewable diesel (renewable diesel
• Over 20% • Over 20% • Over 20% • Over 20% • Over 20%
(renewable petrol) (renewable petrol) (renewable petrol (renewable petrol) (renewable petrol)
Lifecycle ~80% (if using 0-85% ~80% ~80% ~70-80% ~80% ~70-80% ~80%
emissions sustainable (depending on (if using sustainable (if using sustainable (if using sustainable
reduction feedstock) feedstock) feedstock) feedstock) feedstock)
(per litre of
pure B100
biofuel)
Maturity Full scale Full scale Full scale Small scale Small scale Small scale Small scale Small scale
commercial commercial commercial commercial pilots commercial commercial pilots commercial commercial pilots
Z biodiesel plant
blending limits, particularly for SAF, these biofuels we manufacture or import. For to produce biodiesel instead of ethanol,
are quite high – in the range of 80 per cent for example, biofuels made from crops or because heavy transport vehicles that rely
renewable diesel, and 30 to 50 per cent plantations that have caused deforestation on diesel are harder to decarbonise than light
for SAF. would be arguably worse from a vehicles that can be electrified. It was also
sustainability perspective than the use of a deliberate choice to use inedible tallow
Above is a summary of the main, proven
fossil fuels. The good news is that many of as a feedstock as it is a by-product of the
biofuels manufacturing pathways that are
our major trading partners have mandated agricultural industry, does not compete with
either at commercial scale or close to food production, and already has meaningful
commercial scale. Note that this is not a biofuels for over a decade and there is a lot
we can learn from their experience and how volumes – enough to supply around seven
complete list of all possible technologies. more biodiesel plants similar in size to our
they have since tightened up their policies
to maximise the emissions reduction they plant in South Auckland.
Not all biofuels are created equal
As illustrated above, there is a range of can achieve through biofuels. With the right We began production in November of 2018,
technologies with the ability to use a range policy settings, biofuels can start displacing and have been supplying customers with B5
of feedstocks to produce biofuels. So, it is even more than the amount modelled by biodiesel (5 per cent biodiesel blended with
important to note that not all biofuels are the Climate Change Commission (140 million 95 per cent mineral diesel) since that time. In
created equal. While the lifecycle emissions litres by 2035), sooner and sustainably. 2020, we hibernated production at the plant
of biofuels can be impacted by things such as because of the sustained, steep increase
Local production in the price of tallow – driven by demand
the type of energy used in its manufacture,
the main indicator of the sustainability of a For local production, it is particularly by overseas biofuel producers selling into
particular biofuel is the feedstock used to important to take into account what is best subsidised markets – and an understandable
make it. Unsurprisingly, biofuels associated suited to New Zealand – what will be the lack of appetite from many customers,
with land-use change (such as palm oil) or hardest to decarbonise sectors without grappling with the implications of COVID-19,
that compete with food production, have biofuels, which feedstocks are abundant, and to pay slightly more for a cleaner fuel. Some
lower environmental benefits than biofuels how can we also ensure that the co-benefits customers have continued to use biodiesel
of local production are realised here in New to reduce their transport emissions, and we
made from woody biomass waste like
Zealand. currently import biodiesel from Australia
slash, by-products such as inedible tallow,
to supplement our own biodiesel stock and
or feedstocks that are carefully farmed as
Z Energy decided to invest early in biodiesel meet this customer demand.
rotation crops that improve the quality of the
production, despite a lack of enabling policy
soil.
at the time because of our commitment
Given this, New Zealand needs to be careful to providing lower carbon options for
about ensuring the sustainability of the our customers. It was a deliberate choice Cont. on page 11
10 Logistics & Transport NZ
Z Energy Chief Executive Officer Mike Bennetts speaks at the company’s south Auckland biodiesel plant, surrounded by
Climate Change Minister Hon James Shaw, and Prime Minister Rt Hon Jacinda Ardern. Photo: Getty Images
While an import supply chain for biofuels mandated biofuels for over a decade. It is not will become increasingly available in New
will continue to be used, we would like to a new fuel, and it is used safely around the Zealand, giving transport and logistics
see more local production come about as a world, even for aircraft. The Motor Industry operators lower carbon options for their
result of this mandate. Association has provided guidance on vehicle existing fleets.
compatibility here in New Zealand, so it is
easy to check OEM guidance on conventional
As Crown research institute Scion biofuel blend limits.
has previously summarised in the
New Zealand Biofuels Roadmap Z also has real world experience of supplying
(https://bit.ly/3yGpTKX), local biodiesel to customers. Since 2018, we have
production of biofuels would: supplied customers’ bulk tanks, private truck
stops, as well as Z Highbrook in Auckland,
• Reduce our greenhouse gas (GHG) which is a truck stop accessible to anyone
emissions; with a Z card. There have been no issues with
• Help us meet our international GHG our product, it simply lowers your emissions.
reduction commitments; While some vehicles and equipment are
• Rejuvenate regional economic and compatible with higher biodiesel or ethanol
employment growth; blends, there are risks associated with higher
blends when used in vehicles that are not
• Make New Zealand less dependent compatible, such as reactions with fuel
on oil imports; and system elastomers and corrosion of fuel
• Maintain access to international components respectively. This is not an issue Sheena Thomas
with advanced biofuels. Strategy Lead – Z Energy
markets for our goods and services.
Sheena leads the development and
The report estimates that even The low-hanging fruit delivery of low carbon fuel options
establishing a biofuels industry in one Biofuels are the low-hanging fruit to lower for Z Energy. Her interest and expertise
region alone could create over 1,000 transport emissions because they are are in accelerating the low-carbon
new direct, indirect and induced jobs. a realistic option right here, right now transition in a way that delivers value
for our existing fleet, at the same time for New Zealand. She has worked
as we accelerate the uptake of electric in the transport energy industry for
Engine compatibility vehicles. Between the Commission’s draft over 10 years, and has a background
As for whether biofuels are compatible with advice and the Government’s recently in strategy, communications, and
your engine, the short answer is yes, within announced package of measures to tackle government relations.
the guidelines of the above table. Europe has decarbonisation, it seems like biofuelsJune 2021 11
Government commitment to investment in rail
IN MAY 2021 THE NEW ZEALAND RAIL PLAN WAS RELEASED.
IT OUTLINES THE GOVERNMENT’S VISION FOR THE NEW ZEALAND
RAIL NETWORK AND THE IMPORTANT ROLE THAT IT WANTS RAIL
TO PLAY IN A MULTI-MODAL TRANSPORT SYSTEM. BY JOANNA HEARD
The Government is committed to two key
investment priorities. Firstly, supporting
investment in the national rail network to
restore rail freight and provide a platform
for further investments in growth. Secondly,
investing in the Auckland and Wellington
metropolitan rail networks to support growth
and productivity in our largest regions.
The Rail Plan also reinforces other existing
investment priorities for rail, including those
found in the Auckland Transport Alignment
Project, and the New Zealand Upgrade
Programme. It also reflects regional rail
investments and supports our inter-regional
rail passenger services in New Zealand, like
the recently launched Te Huia.
The Rail Plan will guide future investment
The Government acknowledges the significant ambition for rail in New Zealand and sees the Rail Plan’s
decisions taken by the Government under
investments as an important first step for the rail network. Photo: KiwiRail
the Government Policy Statement on Land
Transport 2021 (GPS), and through future
Budgets for Crown investment. As part of the changes to the LTMA, KiwiRail connections, and in existing and new
is required to prepare a Rail Network metropolitan rail networks.
New planning and funding frame- Investment Programme (RNIP) that will be The Government acknowledges the
work for rail considered by the Minister of Transport, significant ambition for rail in New Zealand
The Rail Plan is an output of the Future of in consultation with KiwiRail Shareholding and sees the Rail Plan’s investments as an
Rail review, which recognised that significant Ministers, by 1 July 2021. The RNIP will then important first step for the rail network. The
parts of the rail system were in a state form part of the upcoming NLTP. investment proposed in the core network
of ‘managed decline’. The Government KiwiRail has also joined the Regional Land creates a platform from which to consider
recognised the benefits that rail could Transport Committees in Auckland and further investments for New Zealand.
deliver to New Zealand, including emissions Wellington to support rail and transport
reductions, congestion reduction, safety There were also a range of other comments
network planning in those regions, which on the amendments to the LTMA, and
benefits, and supporting productivity and currently have commuter networks. This
jobs in our regions. changes to the overall structure of the rail
is important to support regional planning system. We expect further work on the rail
However, in order to deliver these benefits, processes and more integrated land transport system to continue in the coming years.
the Government needed to plan and fund rail planning.
differently. Remedial investment was needed,
but this alone was not sufficient. Public feedback on the draft Plan
A long-term planning and funding approach Public feedback on the draft Rail Plan was
was required to guide investment in the sought from March to May 2020, alongside
system, and integrate it into the overall the draft GPS. Due to the COVID-19 alert
approach to the land transport system under level measures in place at that time, face-to-
the Land Transport Management Act 2003 face engagement was not possible, and the
(LTMA). Ministry of Transport made content available
The Government made changes to the on its website. Despite this there was
LTMA last year to bring rail into the land significant feedback and the draft Rail Plan
transport management system and allow the received over 1,100 submissions from a range
network to be funded through the National of stakeholder groups. The feedback was a
Land Transport Programme (NLTP), with the key consideration in finalising the Rail Plan.
support of Crown funding and track user The majority of submitters supported the
charges. intent of the Rail Plan and the Government’s
KiwiRail’s freight, logistics and tourism proposed investment. However, submitters JOANNA HEARD is a Principal Policy
businesses will continue to be expected to also sought a greater level of ambition Advisor, Rail and Freight at the Ministry
run commercially and will be funded as they from the Government for the rail network, of Transport.
are now through the Crown if required. including freight rail, inter-regional12 Logistics & Transport NZ
Marinus La Rooij (left) poses with Minister of Transport, Hon Michael Wood, at the Pathway launch of a fully-electric Fuso eCanter.
Photos: Sustainability Business Council
Decarbonising the freight supply chain
TO MITIGATE THE EFFECTS OF CLIMATE CHANGE AND MEET OUR INTERNATIONAL
COMMITMENTS FOR CLIMATE ACTION, NEW ZEALAND MUST ACHIEVE NET ZERO
EMISSIONS BY 2050.
BY MARINUS LA ROOIJ
While this is challenging enough for most To give a sense of the scale, each year we on the customer requirements at the heart
parts of the transport system, decarbonising move an estimated 280 million tonnes of of the system – having their freight delivered
the freight system has its own specific freight or 30.6 billion tonne-kilometres of in full, on time and at low cost. But the use
and significant challenges. As we embark travel. Around 70 per cent of this freight of ICE vehicles cannot continue as freight
on this work, we must be mindful that is moved by road transport using around transport is a key contributor to New
decarbonisation solutions for other parts of 800,000 vehicles that travel over 3 billion Zealand’s greenhouse gas emissions.
the transport system do not translate well kilometres a year.
into the freight system. Freight is a major source of green-
That equates to around 50 tonnes of freight, house gas emissions and growing
Freight volumes are growing and and 600 kilometres of truck travel, for every
New Zealander, every year. Our freight Current emissions from freight movements
the system that supports it is com- are around one third of the emissions
plex volumes are also forecast to increase 30
per cent by 2042. The whole system is generated by the wider transport system,
Our freight system is complex and expanding underpinned by the internal combustion which makes up around 47 per cent of
as the flow of goods increases to meet engine (ICE) using fossil fuels (predominantly New Zealand’s total carbon dioxide (CO2)
the needs of our growing population and diesel). emissions. The Climate Change Commission
economy. These are all the goods we buy and estimates that this equates to 4 million
sell every day, their movement critical for our The current system is cost effective (ignoring tonnes of emitted CO2 each year, which
economic and social wellbeing. externalities), reliable and proven to deliver is forecast to grow to 5.5 million tonnesannually by 2050 as freight-related travel Initial focus is on optimising existing fleet looks to make this big (and expensive) leap
grows. operations to reduce diesel use, with work into what for them will be largely unknown
started on developing viable bio-fuel technologies and new fleet practices.
A massive migration to low carbon freight
alternatives to replace fossil fuels – requiring
transport is possible – if carefully planned, The uptake of high productivity motor
the ramping up of production and importing
staged, co-ordinated, and implemented over vehicles (HPMVs, including 50MAX) provides
environmentally sustainable biofuels.
a 30-year period. The Sustainable Business valuable lessons here. For that transition,
Council (SBC) has developed such an E-fuels (synthetic fuels) may also be an industry confidence needed to be cultivated,
initiative, looking at how we can develop a option for parts of the system (notably with government officials providing a high-
common industry pathway for decarbonising aviation and shipping), however the level of certainty that the considerable
the national freight supply chain. economic viability and practicality of this investment made in new vehicles would not
will need to be explored and tested. While leave vehicle owners with stranded white
The work was initiated by the SBC Freight elephants. A highly engaged process between
this all happens the third horizon begins,
Group, which is made up of thought-leaders industry and Government was used to
with the progressive development of
from some of New Zealand’s largest freight successfully develop specifications for new
infrastructure, vehicle specifications, and
companies – from cargo owners, logistics vehicles approved for operation. Something
supply lines required to discontinue the use
operators, ports, and haulers. Along with similar, but on a much larger scale, is needed
of internal combustion engines altogether.
their expertise, what is valuable about this now.
Trials and testing will be an important part of
collaboration is that their experience and
this eliminate horizon.
thinking extends across the supply chain – Lead infrastructure requirements
being comfortable in the multi-modal space. Managing down the cost of transi- National and local power generation and
tion distribution systems also need to be
Freight Group members were working to
considered. Upfront support from
decarbonise their own logistics, which A focus of the report is how to manage down
Government will likely be required to
prompted them to examine how the whole the high transition costs. We still have the
provide confidence and create private sector
sector could move to low-carbon operations. benefit of time (if we act now), with costs
demand. But there are many “chicken and
With assistance from Sapere Research being able to be minimised by managing
egg” challenges. One of the main criticisms
and DETA Consulting, the Freight Group out the existing fleet over time, allowing
of hydrogen, for example, is the high loss
developed an outline as to how this shift vehicles to reach the end of their useful
of energy from when the fuel is created,
could take place – the Low Carbon Freight economic life. As vehicles age, work can start
through to use in a vehicle. However,
Pathway report. progressively replacing retired vehicles with hydrogen seems better suited to the range,
lower emitting alternatives (likely battery refuelling and torque needed to haul heavy
We need a shared pathway for electric for light trucks and hydrogen for loads. This could be resolved through green
moving the sector to a low carbon heavy). hydrogen generation occurring off-peak and/
supply chain or from variable generation sources (such as
Released in April, the Pathway report sets out Providing industry with confidence
wind), effectively making use of electricity
ambitious targets of halving emissions by and a high degree of certainty that would otherwise neither be used or
2030 and achieving net zero by 2050. The Migrating the fleet to new vehicles will stored. All new technologies should be
Pathway establishes three horizons of work require testing and financial analysis to examined critically, noting that the continued
seeking to Reduce, Replace and Eliminate the ensure the needs of the sector are met – status quo of fossil fuels is no longer a viable
use of fossil fuels. Importantly these horizons notably capital and operational costs and long-term option.
operate concurrently, but with different reliability. Learning the lessons from these
levels of intensity over the 30-year period. trials will be essential for the sector as it Cont. on page 1414 Logistics & Transport NZ
A new report by the Sustainable Business Council Freight Group, comprising nine members, states that decarbonising New Zealand’s freight system by
2050 is “ambitious but achievable”.
Importance of short-term actions to the programme of work – such as the the launch emphasised, it is incumbent on
While longer-term planning and development of next generation HPMVs on all of us to move now from talk to action.
implementation for new vehicles is underway, some routes. The Pathway should therefore Decarbonisation will not happen by itself,
we should look at what we can do now to be used as the basis for developing an nor will we be rescued by some wonderous
shave off our fuel use and CO2 emissions. adaptive work programme – driven through and easy technology that comes along at the
The single biggest, and in some ways easiest, collaboration between the freight sector right moment. With the limited and shrinking
solution is to lift the fuel efficiency of heavy and Government. With many decision- carbon budget available to us between
vehicle drivers through training. Many firms makers across the freight sector, driven by today and 2050, now is the time to start the
have already had their people go through commercial considerations and customer process to Reduce, Replace and Eliminate
training with up to 20 per cent of diesel requirements, the approach to decarbonising fossil fuels from our freight system.
(and emissions) saved. Safe and efficient freight will need to be quite different from
More information on the Pathway can be can
driver training also demonstrably reduces other parts of the transport system. An
be found on the SBC’s website: www.sbc.
minor road crashes. More could be done industry accord, as part of an action-focused
org.nz/insights/2021/low-carbon-freight-
to see this training become standard across freight strategy, would be a great start.
pathway.
the heavy vehicle fleet, noting that it is an An accord would recognise the need for
upfront investment by trucking companies Disclaimer: TSA Advisory is providing
industry actions and the need for bespoke
in time and money – often with the fuel advisory services to support the
Government interventions that shape
savings passed on to their customers. We advancement of the SBC’s Low Carbon
the transition, including incentives and
should look at financially rewarding drivers Freight Pathway. However, the views in this
disincentives. Without genuine Government-
who undergo such training. After all, those article are the views of the author.
industry partnership and meaningful
drivers that are heavy on the gas will reduce dialogue, there is the real risk that efforts
the range of electric and hydrogen fuelled will be uncoordinated and less successful.
vehicles also. Government may also bring in measures that,
despite good intentions, end up hampering
Value and limitations of mode shift
industry or disrupting supply chains (with
There is also the opportunity for encouraging economic impacts). We also must address
mode shift to rail and coastal shipping. the risk that some in the private sector feel
This features heavily in the Government’s no compelling reason for change. But thanks
thinking and is accepted in the Pathway as to the SBC’s Pathway, we have a detailed plan
an important part of the reduce horizon. to begin the implementation phase – a plan
However, the opportunities for mode that goes further than anything currently
shift are discrete and limited to certain available in New Zealand for the work that is
commodities in some locations where required.
the freight task is contestable. An over-
reliance on mode shift, in a way that slows Let’s start now
the necessary transition work required on The SBC Freight Group is committed to
road transport, will make net zero by 2050 continuing the decarbonisation of their
unachievable. own businesses and has some exciting
work underway and in delivery. However,
A detailed implementation pro-
they also appreciate that the whole sector Executive Consultant
gramme is needed must progressively reduce emissions to be – TSA Advisory
Importantly, the SBC Pathway sees all the ultimately successful. As more businesses Marinus La Rooij has over 20 years’
options to reduce CO2 emissions as join the Pathway, so will the costs come experience on transport and
complementary. All must also proceed, down as economy of scale are achieved – infrastructure matters, with a focus
to make their contribution to the overall such as having the critical mass to attract on freight (across road transport, rail,
task – effectively “slicing up the mountain”. sufficient vehicle imports into the country ports, coastal, international shipping,
There will also likely be other opportunities as demand for low carbon vehicles spike and aviation).
not yet in the Pathway that could be added in the future. As many of the speakers atYou can also read
