Report Lays Down The Facts - Road Trumps Rail

A report released today - Road and rail - delivering for New Zealand - produces evidence to counter the ideology that rail can be a serious competitor to road freight in New Zealand, Ia Ara Aotearoa Transporting New Zealand (Transporting New Zealand) chief executive Nick Leggett says.

"The Government has chosen to spend billions of dollars on rail - at the expense of the much more valuable road network - and this report unpicks the value of that," Leggett says. "We estimate about 12 percent of freight movement is contestable by rail.

"We don’t believe the Government should try to manipulate the market for no apparent reason other than some ideological view that trains are ‘better’ than trucks.

"The reality is that 93 percent of New Zealand’s goods are moved on trucks by road because that is faster, more efficient and more reliable than rail, delivering door-to-door.

"We are sick of the unsubstantiated rhetoric against trucks and believe this is a strange view-point for a trading nation to take given our vast distance from our nearest market and our need to get goods moved as quickly and efficiently as possible, in the most cost-effective way.

"Evidence and independent research point to the bulk of future freight growth being accommodated by trucks, both in New Zealand and internationally, even where there are excellent rail networks.

"Saying there are environmental imperatives behind the desire to shift freight from road to rail is all smoke and mirrors. The arguments don’t stack up.

"If the Government was serious about the environmental concerns presented by trucks, they would start taking some of the steps available now, rather than wait for some yet to be developed viable alternative to diesel-powered trucks, and trains for that matter.

"The Government seems to ignore the steps that have been taken for the truck fleet to reduce emissions. Trains have not been required to meet the same standards in New Zealand. Older trains, which are still in the fleet, are likely to be emitting nitric oxides and particulate matter at levels four and 18 times greater, respectively, than Euro 5 trucks.

"Progress won’t be driven by ideologically captivated politicians or government officials; it will be driven by tried and tested technology.

"Rail has never been able to run as a profitable business in New Zealand. Even with all the Government control and subsidies, customers still prefer to send their goods by road.

"We are not anti-rail and support Government investment in rail where it makes good sense because rail has a role to play in the movement of goods through the supply chain. In fact, the road freight transport industry is one of the largest consumers of rail. It is particularly good for moving the likes of coal, chemicals and other bulk goods over a long distance, with little if any, pressure on urgency of delivery.

"We want to bring evidence, balance and informed views to decision-making about rail investment where it is clearly detrimental to vital investment in roads.

"There is much at stake, primarily the well-being of people in communities all over New Zealand who depend on a strong economy and efficient, customer-driven freight systems for their lives and livelihoods."

Road and rail - delivering for New Zealand can be found here. 

About I a Ara Aotearoa Transporting New Zealand

Ia Ara Aotearoa Transporting New Zealand (Transporting New Zealand) provides unified national representation for the trucking industry, that is, about 1,200 individual road freight transport companies, which operate about 14,000 heavy trucks delivering for New Zealand.

The road freight transport industry employs 32,868 people (2.0% of the workforce), has a gross annual turnover of $6 billion, and transports 93% of the total tonnes of freight moved in New Zealand.

Questions and answers on Road and rail - delivering for New Zealand

What does this report say?

The report looks at the economics of road and rail freight and the aspects of the networks each operates on, environmental impacts, Government influences and policy settings, freight movement trends in New Zealand and overseas, external influences and a look back at where the networks have come from.

Who wrote the report?

Ia Ara Aotearoa Transporting New Zealand (Transporting New Zealand) has published the report. It contains views and opinions of the Policy and Safety team at Transporting New Zealand. It includes evidence from multiple authoritative sources, in particular contributions from the work of Dave Heatley and David Greig.

Why has Transporting New Zealand published this report?

Our goal is to assemble evidence to bring balance and more informed views to the Government’s rhetoric on the merits of rail freight over road freight.

The Government has committed $5 billion to spend on rail (New Zealand Rail Plan 2021). We are concerned that money is being siphoned out of the funds meant to maintain, repair and build roads, which road users pay for. The roads need urgent attention.

Given Government’s funding and rail’s performance over the past 150 years, we disagree with the recent budget allocations being described as investment. At best, these are misguided subsidies, and in reality, it is poor use of public funds to prop up a system that bar a few exceptions, is not commercially viable.

Transport has been politicised in New Zealand in recent years. We have been told roads, cars and trucks are bad. We don’t agree with that - good roads are essential to a well-functioning economy, particularly for an export driven economy such as New Zealand’s.

How can the truck lobby be impartial about competition from rail?

With this report we are presenting evidence from the research of economists with expertise in transport Dave Heatley and David Greig, among others, including international research.

The reality is that 93 percent of New Zealand’s goods are moved on trucks by road because that is faster, more efficient and more reliable than rail, delivering door-to-door.

We estimate about 12 percent of freight movement is contestable by rail.

Are you anti rail?

No. We support Government investment in rail where it makes good sense, particularly commuter rail in cities, which can help alleviate road congestion.

The road freight transport industry is one of the largest consumers of rail as it is particularly good for moving the likes of coal, chemicals and other bulk goods over a long distance with little, if any, pressure on urgency of delivery.

Road has an overwhelming advantage where minimal handling is important (e.g. livestock), time is critical (e.g. concrete), or endpoints are dispersed.

It should not be forgotten that the majority of rail freight journeys have to be completed by truck journeys at one, or both ends. The reality is that rail needs road, the reverse however, is not true.

We want to bring evidence, balance and informed views to decision-making about rail investment where it is clearly detrimental to vital investment in roads.

Have you got anything positive to say about rail?

Rail has an important, but small, part to play in the freight task. In some cases, particularly where the inherent challenges of our mountainous terrain have been reduced by the construction of railway tunnels, such as the Remutaka and the Kaimai Tunnels, it is a competitive alternative to road freight.

We are not anti-rail. The movement of freight underpins driving our economy therefore, rather than pick winners or have a myopic mode focus, we support Government investment in infrastructure where quality business cases stack up.

But rail is better for the environment, right?

The Government’s tendency to favour rail on emissions grounds is misplaced. We reject the efforts being made to establish whether road is more environmentally efficient than rail, or vice-versa, because it is like comparing chalk and cheese.

The wide range of values seen across international literature is indicative of the shortcomings with this approach and the low level of confidence in making any meaningful comparison.

While theoretically one can calculate a CO 2 (e) output per tonne-kilometre, in our view it is a purely academic exercise of little, if any, value when comparing modes because they each deliver a very different service and therefore, it is meaningless to compare them. We have raised this with Government previously and we are concerned that such flawed thinking continues.

We think the general policy of reducing New Zealand’s greenhouse gas emissions is best addressed by applying the Emissions Trading Scheme broadly so that the least cost means of abatement reduction are favoured.

The policy reason for choosing a carbon tax over setting limits via regulation is that it encourages and enables least-cost emission reduction. If emissions can be reduced at the least cost, then reduction targets are more likely to be met.

The use of emotive language such as "trucks are gross emitters" indicates significant bias and prejudice and borders on acting irresponsibly.

Over the past three decades there has been considerable development of international standards and the implementation of regulatory requirements to reduce emissions from nitric oxides and particulate matter, associated with burning diesel fuel, namely the exhaust emission thresholds - Euro 1-6.

The Government seems to ignore the steps that have been taken for the truck fleet to reduce emissions. Trains have not been required to meet the same standards in New Zealand.

Older trains, which are still in the fleet, are likely to be emitting nitric oxides and particulate matter levels four and 18 times greater respectively than Euro 5 trucks.

While urban trucks have relatively high emissions per gram CO 2/tonne kilometre, they are doing a task that simply cannot be completed by rail. Other important context is that while the heavier trucks travel a disproportionately higher share of the distance travelled, they will also generally have a much better energy intensity.

The trucks typically completing the urban activity are almost certainly the part of the heavy fleet that will be replaced by cleaner electric trucks and we have seen this with some electric trucks entering service in 2020.

Trucks are turned over faster than trains so the more efficient engine technology is more likely to be found in long distance trucks than in diesel locomotives.

The full journey needs to be considered when people are making environmental comparisons. Very few train journeys begin and end with the train. Trucks are used for the first and/or the last part of the journey.

Is there an economic argument for rail, given the Government can bankroll it?

Subsidising rail to keep it viable does not make economic sense.

Generally, it is accepted there is a positive correlation between economic growth and vehicle kilometres travelled.

We believe the Government’s basic strategy is fundamentally flawed. Government’s focus should be on supporting and improving the movement of freight to benefit the economy.

Freight movement in New Zealand must remain customer driven if we are to expect to remain competitive in international markets. The customer will decide the best way to get their goods and they don’t need the Government intervening in that decision-making.

The Government has indicated it will spend $5 billion on rail over the next five years, without any specifics around where that might be spent and what the return on investment might be.

This is against a backdrop of deteriorating roads and not a lot of planned investment in road infrastructure for cars and trucks, but a lot for cyclists and pedestrians in cities.

Road freight is essential to New Zealand. No other method of freight transport is as flexible and cost effective as trucks.

Roads are the lifeblood of the economy - pretty much everything you need every day comes to you on a truck.

Road is the only way New Zealand’s primary producers can get their products off the land and into processing plants, supermarkets, or export markets. Almost all manufacturing requires trucks and trucks are essential to housing and construction, as well as major infrastructure builds that boost our economy. 

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