What is the National Freight Demand Study 2014?

The National Freight Demand Study is New Zealand’s most comprehensive study of freight movements. It provides a snapshot of New Zealand’s current freight task and a forecast of what New Zealand’s future freight task will look like over the next 30 years.  The study outlines freight movements by commodity, mode and region.

Why has the National Freight Demand Study 2008 been reviewed?

The 2008 study reflects the freight task as it was in 2006. Since then, the freight sector has been in a state of change.  Possibly the greatest impact has resulted from the Global Financial Crisis which emerged in full force just after the 2008 study was completed and affected patterns of supply and demand for a wide range of commodities in ways that could not have been foreseen.

Other events like changes in international shipping’s pattern of port calls and changes in industry supply chains have also altered freight flows within New Zealand.

What approach was used for the National Freight Demand Study?

The study is primarily a producer-based one, providing a snapshot of freight volumes and movements commodity-by-commodity on a region-to-region basis. A wide range of government and industry data from 2012 was analysed.  This data was supplemented with around 170 industry interviews that provided additional information and helped interpret the published data and the emerging trends in the sector.

The freight forecasts use a broad “business as usual” scenario and, like the analysis of the snapshot, have been done commodity-by-commodity. Each commodity forecast has been built up from a number of sources including official and industry forecasts for the sectors (or, where these are not available, by a review of historic trends). Each forecast is supported by official forecasts of key economic drivers such as population growth, gross domestic product, energy demand and housing demand.

The latest study is more robust than the 2008 study as it has expanded the number of commodities separately covered from 17 to 29. For example, logs and timber products have in the latest study been disaggregated into export logs, logs to sawmills, panels, sawn timber, and pulp and paper. Supply chains have also been analysed in greater detail. The latest study has also benefited from access to more data sources, such as the Ministry of Transport’s Freight Information Gathering System database.

Further explanation of the methodology is given in Chapter 4 of the study.

Why is the data from the 2008 and 2014 studies not the same?

Since the 2008 study, freight information has improved significantly.  This has made more accurate data analysis possible.  As a result, there are some differences between the 2008 and 2014 figures. Comparisons between the years need to be treated with some care.

How has the freight task changed since 2006?

Overall the size of the freight task has changed relatively little. The amount of freight increased by around 5 percent from 225.7 tonnes to 236 million tonnes. Yet total tonne-kilometres, which is a measure of how far freight was moved by the domestic transport system, fell by around 2 percent from 26.7 billion tonne-kilometres to 26.3 billion tonne-kilometres.

However, there have been some significant changes in certain commodities moved. There has been considerable growth in a number of primary products particularly export logs and dairy products balanced by sharp declines in building materials, especially aggregates.

The volume of export logs increased by around 108 percent or 7.3 million tonnes. Dairy products increased by 42 percent or 5.4 million tonnes. Against these increases, movements of aggregate declined by around 33 percent or 27 million tonnes.

Between 2006 and 2012, there has been growth in the use of rail to shift goods around the country.  In tonne-kilometre, an 8 percent growth in rail freight task has resulted in a one percent gain of the modal share.  This has partly been driven by changes in international shipping’s pattern of port calls, but also by the investment in rail capacity made through the KiwiRail Turnaround Plan.

Why is there a difference in the forecasts?

The latest study predicts that the freight task will increase by around 58 percent in tonnes, and by 48 percent in tonne-kilometres over the next 30 years. This compares with the previous forecast in the 2008 study that the freight task would increase by 74 percent in tonnes by 2031. This 2008 forecast was consistent with other forecasts at the time that projected a doubling of the freight task by 2040.  There are a number of factors driving the changed projections.

The first is the growth of the services sector. New Zealand is seeing an increasing share of its economic activity coming from the services sector.  Compared to goods-producing sectors like agriculture and manufacturing, the services sector tends to have lower freight requirements.  As the services sector continues to grow, we will see a greater decoupling of the relationship between GDP and freight demand.

Second, the 2008 study over-forecast growth in aggregate. Production of aggregate fell significantly from 2006 to 2012, when the last study predicted it would grow. To correct this, the 2014 study has a considerably more conservative forecast.

Last, many of our commodities are supply-constrained and are not expected to double in volume by 2042. The volume of export logs is expected to increase by around 74 percent until around 2022, when the log harvest reaches its maximum. Volumes will then plateau and decline from around 2032 to levels similar to 2012.

The forecasts project dairy products to increase by 60 percent to 2042 with productivity growth offsetting the effects of increasing constraints on land availability.

Why is it still important to invest in freight infrastructure?

The study predicts that by 2042 New Zealand’s freight task will increase by around 58 percent in tonnes, and by 48 percent in tonne-kilometres.  That is a large increase, taking the total freight task to the equivalent of about 67 tonnes each year for each person in New Zealand.

The freight movement also reflects the changing population and economic activity of the country, and the rate of increase is expected to be disproportionate across New Zealand. Auckland’s freight task, in tonnes, is forecast to increase by around 78 percent, and Canterbury’s is expected to increase by around 73 percent. 

The projected increases in the freight task underscore the importance of completing the existing programme of roading improvements. These roading improvements respond to today’s transport pressures and make it easier for New Zealand to manage an increase in the future freight task.

What will the study be used for?

The National Freight Demand Study provides a practical understanding of how the current sector is working, while the forecast provides useful information for planning at both a nationwide and regional level. The movement of freight is vital to the economy, and understanding the drivers of future demand is critical to help determine what infrastructure and support will be needed in the future.  The study will help guide central and local government decision-making in transport infrastructure.