At the crossroads: The transport and logistics sector

3 MinutesBy NZ Trucking magazineNovember 22, 2019

The transport and logistics sector is vital to New Zealand‘s economic prosperity. But new approaches are needed to address the challenges it is facing, according to a new report from ANZ. 

The report (part of ANZ‘s Business Insights series) analysed 170 transport and logistics businesses from around New Zealand to create a snapshot of the industry and its future outlook.

The report emphasises the importance of the sector to New Zealand, exemplified by the strong correlation between freight activity and GDP growth. The transport and logistics sector itself contributes $12 billion to New Zealand‘s national income – around 4.7% of GDP (June 2019).

The prospects for the future look bright too, with the industry having to meet a potentially growing demand for its services.

Freight growth forecast 2012 – 2042 (in million tonnes)
Source: ANZ Analysis; National Demand Freight Study

Underneath the optimism, however, the transport and logistics sector is facing challenges.

“The industry has always been fiercely competitive and that hasn‘t changed,” said ANZ general manager commercial and agri, Auckland and Northland, Andrew Sheed. “But as the report makes clear, it‘s also facing low productivity growth, driver shortages, an ageing fleet, and pressure to become more sustainable.”

The report also shows that the gap between the most and least profitable operators has widened over the past few years.

EBIT margin

Source: ANZ Analysis

“While the industry has been a resilient performer, the status quo is increasingly under threat,” said Sheed. “For the industry to survive and thrive – and to ensure New Zealand continues to benefit from reliable, high-quality transport and logistics services – it‘s clear that new approaches are needed from both operators and end-users.”

Addressing the challenges

Encouragingly, both the industry and the government are taking steps to address these challenges.

In 2018 the government committed $2.8 million to train 700 commercial drivers a year, while the industry is calling for changes to the immigration system and encouraging driver diversity. The government is also making investments in road, rail and coastal shipping infrastructure.

When it comes to more environmentally sustainable freight, the report found no ‘silver bullet‘ and outlined a range of approaches that are likely to be implemented as businesses take incremental steps towards achieving their sustainability goals.

A different way of doing business 

All things considered, to fully enable these and other initiatives as well as address the challenges the sector is facing, the report argues that the transport and logistics sector will need to evolve into a more collaborative, whole of supply chain approach.

The report sees an opportunity for both operators and end-users to enter into closer working relationships and explores what a more integrated model could mean for specific sectors.