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Duynhoven: Institute of Logistics and Transport

Opening Address to the International Conference of the Chartered Institute of Logistics and Transport

Good morning and thank you for the opportunity to address you this morning. I am delighted to also welcome you all to the International Conference of the Chartered Institute of Logistics and Transport.

I would particularly like to welcome the international delegates and speakers to this conference which is being held in conjunction with the International Chartered Institute of Logistics and Transport Council Meeting.

Having delegates and speakers from such a diversity of cultures and perspectives allows us to better examine the challenges facing the transport, logistics and supply chain sectors.

Given the overwhelming interest in oil at the moment, it is appropriate that this conference focuses on energy, fuel, leadership and technology.

These subjects are of increasing importance for the transport, logistics and supply chain sector, given the wider global discussions around energy supply, security and climate change.

I consider the world is facing unprecedented challenges around energy and fuel, and the stakes are high.

Far sighted strategic leadership, coupled with innovative technology, are the precursors to successful outcomes.

The breadth, depth and scope of the Institute's activities are well reflected in the Institute's latest 'World Magazine'.

I was particularly impressed to read about your activities in Zambia, Shanghai, Malaysia, Ghana, the United Kingdom and North America and enjoyed reading about hybrid buses in London, 'Green Goat' locomotives in Southern California, and articles on greenhouse gas emissions, and the social and economic impacts of European airports.

Compared to other countries, New Zealand's transportation network and system is unique. We are a primary producing island nation relying on shipping and aviation to export our produce to the world. In this challenging environment, the distance from our trading partners becomes a major factor.

Internally, our transport system underpins New Zealand's economic prosperity by enabling the movement of people and goods, and providing connections to international markets in the world economy.

However, it is not just about getting our goods to distant markets in the quickest, most cost efficient manner. There are also environmental, social and safety issues to consider.

The transport sector uses the largest share of total energy, representing 43% of New Zealand's total energy demand in 2005. It is also the fastest growing sector in terms of energy use, with increases often outstripping GDP growth.

Land transport, including road and rail, represents around 90% of the total transport-sector energy budget. Private motor vehicles account for almost 90% of total passenger transport energy use. Nearly 20% of passenger vehicles in New Zealand are part of corporate fleets.

And what does this transport system run almost entirely on? Oil.

The challenge is to reduce transport fuel consumption by enabling the most efficient use of both fossil fuels and transport modes.

With this strong reliance on fossil fuel in mind, it is appropriate that I briefly talk about the government's National Energy Strategy.

The terms of reference for the National Energy Strategy are currently being finalised, with the target of developing and consulting on the draft strategy occurring over the next six months.

We see the development of the National Energy Strategy as a good opportunity to draw together the work that we are doing in a range of areas, including the review of the National Energy Efficiency and Conservation Strategy, and work on climate change policies and the New Zealand Transport Strategy.

We expect the National Energy Strategy to provide long-term direction and leadership for New Zealand, and to put us on the path to an energy system that supports economic development, while being environmentally responsible.

The strategy will look at issues such as:

- forward planning for new investment in generation and transmission;

- whether the current electricity market is delivering in terms of security and competitive prices;

- whether the current regulatory system is working effectively; and

- whether the government needs to take a more proactive role in some areas.

Most importantly, the strategy will need to incorporate a system-wide view, covering both demand and supply. Security of supply, particularly for transport fuels must remain a key priority. In developing the strategy, various scenarios will be developed, including those around fleet profiles and fuels.

We anticipate the strategy will also explore the impact of energy choices more broadly - for example, the potential impact on growing biofuel feed stocks versus other competing agricultural activities.

It is also important to view the development of the National Energy Strategy in the context of other work already underway.

The government has already put in place a number of initiatives designed to move New Zealand towards a more sustainable energy future with reduced reliance on non-renewable fuel sources.

The National Energy Efficiency and Conservation Strategy, or the NEECS, is a key policy response to climate change concerns.

The Minister of Energy, in conjunction with Jeanette Fitzsimons, Government Spokesperson on Energy Efficiency, recently announced that the existing NEECS will be replaced. The new NEECS will put New Zealand on a faster course to a sustainable energy system.

The Energy Efficiency and Conservation Authority is leading its development, and will draw on input from stakeholders, international best practice and domestic success stories to inform future policy direction. The NEECS will form an integral part of the National Energy Strategy and the two strategies will be developed in parallel.

In December 2002, the government published the New Zealand Transport Strategy. This set out the objectives for transport - i.e. "an affordable, integrated, safe, responsive and sustainable transport system".

To achieve this, government has implemented a number of initiatives and measures including the development of sector strategies, regulation, incentives, information and education, managing demand for transport, and facilitating a transition to renewable sources of transport fuel.

Key to government leadership has been the development of a number of high level transport sector strategies.

A number of these strategies have a direct influence on the transport logistics and supply chain industry. These include:

The Transport Sector Strategic Directions document 2006/07

Published in December 2005, this document sets out the government's priorities for achieving the cross agency objectives of the New Zealand Transport Strategy which includes:

- an integrated approach to planning

- the development and provision of research and information

- a cross modal approach to safety

- influencing demand for transport services

- managing environmental and public health impacts.


National Rail Strategy to 2015

In May 2005 the government published the National Rail Strategy to 2015.

The strategy builds on the objectives of the New Zealand Transport Strategy and focuses on supporting growth in two main areas: freight (especially bulk and containerised) and urban passenger transport.

I commend Toll and Fonterra for their work in the area of significantly reducing heavy truck movements on parts of the roading network.

Other areas where we are taking leadership include:

Vehicle Fuel Economy Information

Vehicle fuel economy may vary considerably among cars of the same engine size or weight. Over the past year, the government has been collating fuel economy figures for new and Japanese used cars entering our fleet.

This information will soon be publicly available on a website and will help incorporate the increasing cost of fuel into vehicle purchase decisions. This information will be particularly useful to procurement staff in the purchase of company or fleet vehicles.


Govt3Programme

Govt3 is a programme for government agencies to improve the sustainability of their activities. The '3' stands for the 'three pillars of sustainability': environmental, social, and economic.

This Government is strongly behind the programme, and the core government agencies are looking for appropriate and effective ways to demonstrate leadership in this area, including developing procurement policies for the purchase of more fuel efficient vehicles.

Biofuels

The Government is also active in developing the blending of biofuels such as ethanol and biodiesel with petrol and diesel to reduce fossil fuel use. Along with increasing the fuel efficiency of the national vehicle fleet, the development of biofuels is an area where this government aims to see real progress made within the next few years.

In August 2005, the Minister of Transport announced the government's agreement in principle to the development and introduction of a mandatory sales target for biofuels in New Zealand.

The Ministry of Transport is currently leading a cross-agency group in the policy investigations needed to set and introduce the mandatory sales target. A consultation document is due for release later this year.

All of these strategies and initiatives also align with the Government's focus over the next decade on working to progress our economic transformation to a high income, knowledge based market economy, which is both innovative and creative and provides a unique quality of life to all New Zealanders.

In conclusion, the challenges facing the transport, logistics and supply chain sectors must be faced head on, with clarity of vision, innovation and a willingness to adapt to the ever changing environment we all operate within.

I believe the Institute is well placed to facilitate thinking on alternative approaches and I am confident that the key note speakers and panel members will both inform and stimulate debate and discussion on how best the transport, logistics and supply chain sectors can meet these major challenges.

Thank you again for the invitation to speak to you this morning and I wish you all a productive and informative conference.


ENDS

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