Congestion Charging Plans Have Some Fishhooks For Road Freight

2025 is set to be a big year for transport policy, with Parliament set to debate legislation enabling time-of-use or congestion charging, the Land Transport Management (Time of Use Charging) Amendment Bill.

National road freight association Transporting New Zealand is backing the draft legislation, but says the Bill should be amended to allow goods-vehicle exemptions to avoid efficiency benefits being offset by freight fees and surcharges.

Transporting New Zealand Chief Executive Dom Kalasih says that all New Zealanders are currently indirectly paying for congestion, either through unproductive time spent in gridlock, or increased freight and delivery costs for everyday goods.

"According to the TomTom Traffic Index, New Zealand’s largest cities are significantly more congested than comparable Australian centres, with Kiwis spending up to 35 per cent more time commuting. That’s a massive drain on labour productivity, and we need time of use charging as a tool to address it," he says.

The Bill would allow councils to propose time-of-use schemes, with design and implementation being led by NZTA and subject to Ministerial and Cabinet approval.

Kalasih says this centralised control will be good for ensuring national consistency and effective delivery, but it risks deterring council participation.

"The Bill has a backstop allowing the Government to propose schemes through NZTA if councils don’t act within three years, but it’s difficult to see a congestion charge successfully going ahead without joint buy-in from local government.

"The Select Committee considering the Bill will have to take careful note of submissions from councils to ensure the enabling legislation will actually deliver enduring time-of-use schemes within a reasonable timeframe."

While the proposed legislation would allow congestion charging to be adopted across the country, Auckland is clearly the primary candidate. Ministry of Transport modelling suggests that effective charging could cut peak Auckland traffic by 8-12 per cent, reducing road congestion at peak time to around school-holiday levels.

Kalasih says that depending on the design of the scheme, congestion charging could be a game changer for freight movement around Auckland.

"While the individual cost benefit calculation will be different for all road freight companies, meaningful improvements in trip times should outweigh modest congestion charges during peak times. According to Ministry of Transport analysis, an Auckland time-of-use charge could reduce freight vehicle kilometres travelled in severe congestion by between 1.6-25.7 per cent."

While broadly supporting the Bill, Transporting New Zealand is concerned that the proposed legislation strictly limits exemptions to emergency vehicles only.

"This restriction on exemptions is bad news for bus users and road freight businesses who will have to pass those costs on to consumers. Overseas schemes allow for wider exemptions. Around half of all vehicles in the London charge area are exempt or qualify for a discount. Ruling them out entirely will prevent a context-specific assessment being completed, such as where a scheme operates on key freight routes or around freight or passenger hubs.

"Heavy goods vehicles represent only around six per cent of total vehicle kilometres travelled, making trucks a small element of urban congestion.

"Where at all possible, road freight firms already avoid peak-travel, with the overwhelming proportion of freight movements occurring during the inter-peak period. When a truck is travelling at rush-hour, it is almost certainly due to the customer’s "capacity to receive" being restricted by staffing and logistical constraints."

A practical illustration of this is the Port of Auckland’s container booking system that hikes charges for trucks picking up or dropping off containers during peak times. The end result has seen only small shifts in demand to off-peak times, due to inelastic customer demand. As a result, businesses and consumers have been stuck with higher freight rates and charges.

Kalasih says Transporting New Zealand will work with its members to ensure freight considerations are addressed during select committee deliberations later this year.

"With bipartisan support and constructive engagement, this legislation could be a game-changer for New Zealand’s transport system and economic productivity, as long as supply chain considerations are taken into account."

Road is the dominant freight mode in New Zealand, transporting 92.8% of the freight task on a tonnage basis, and 75.1% on a tonne-km basis. The road freight transport industry employs over 34,000 people across more than 4,700 businesses, with an annual turnover of $6 billion.

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