REDUCING WASTE IN

THE NZ SUPPLY CHAIN

‘Ports of Auckland Journey’

5 June 2015

Ports of Auckland | 2

1. Defining what is meant by waste

2. The market

3. About POAL

4. Productivity

5. Port Development Plan

6. Supply Chain

7. Q&A

Today’s Presentation:

NZ Rail Conference 2015

Ports of Auckland |

Defining the Problem – what is waste?

• Any activity that does not add value to the supply chain

• Why does waste occur in New Zealand?o Population imbalances (demand)

o An imbalance between imports and exports

o The seasonality of primary exports

o Container type variances between import and exports

o Hinterland location of exporters

o Commercial drivers

Definition

NZ Rail Conference 2015

Ports of Auckland |

Structural imbalances in the economy create supply chain challenges

4

TAURANGA 762,245

NAPIER218,808

LYTTELTON376,736

AUCKLAND874,018

OTAGO 169,400

Top 5 NZ Port’s Total – 2,401,207 TEUBut……Top 5 Australian Port’s Total – 6,922,197 TEU

Despite a lack of scale NZ ports compare favourably with Australian ports for productivity and $$

NZ Rail Conference 2015

Source: Ministry of Transport FIGS data for year ending December 2014.

Ports of Auckland |

About POAL

5

• One of NZ’s largest ports – 968,741 TEU, 5.6 million tonnes of Bulk & Break Bulk cargo, and 207,591 cars

• 1,541 Ship calls connecting to 176 Ports in 69 countries

• 89 Cruise Ship calls, 195,944 Cruise Passengers - 2014

• Four sites - Waitemata, Onehunga, Wiri and Longburn

• 100% owned by Auckland Council (ACIL)

• Handles cargo valued at $28.685 billion annually (FIGS Jun 2014)

NZ Rail Conference 2015

Ports of Auckland |

About POAL

Our Locations

Auckland Seaport (76 Hectares)

Onehunga Seaport

(9 Hectares)

Wiri Inland Freight

Hub

(10 Hectares)

Longburn Intermodal

Freight Hub

(2 Hectares)

NZ Rail Conference 2015

Productivity

Ports of Auckland |

Productivity

8

20

22

24

26

28

30

32

34

36

38

40

2011

- Q

1

2011

- Q

2

2011

- Q

3

2011

- Q

4

2012

- Q

1

2012

- Q

2

2012

- Q

3

2012

- Q

4

2013

- Q

1

2013

- Q

2

2013

- Q

3

2013

- Q

4

2014

- Q

1

2014

- Q

2

2014

- Q

3

2014

- Q

4

2015

- Q

1

MOT & Australian Waterline - Crane RatesCrane Rate by Quarter

AUS Total

Auckland

Tauranga

NZ Total

Crane Rate is defined as the number of containers handled as an average per hour for one

POAL 8 moves less

than POT and 3 moves

less than Australian

Port averages

Industrial dispute.

POAL closes the gap

with POT, aligned with

Australia.

Changing labour

model, improvements

in yard planning trend

continues.

POAL on the

move…watch this

space!

NZ Rail Conference 2015

Source: Ministry of Transport Productivity Data.

Ports of Auckland |

Productivity

9

0

1

2

3

4

5

6

7

Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15

Day

sDwell Days: Export/Import/D Tranship

Export Import D Tranship

Average dwell times; Imports =2 days; Exports =3.3 days and Transhipment = 4.5 days

NZ Rail Conference 2015

Source: Ports of Auckland.

Port Development Plan

Ports of Auckland | 11

Current and future Capacity Planning• Consolidate container operations in Fergusson Terminal to East

• Consolidate multi-cargo operations in West - Bledisloe, Jellicoe and Freyberg (for bulk

cargoes)

• Takes port container capacity from 1.0m TEU to 2.4m TEU ( and ultimately to 3-4m TEU

includes 3rd berth)

• Potential to release port footprint back to council to enable greater public access to the

waterfront

Port Development Plan

NZ Rail Conference 2015

Supply Chain

Ports of Auckland | 13

CHRISTCHURCH

PALMERSTONNORTH

(Longburn)

TAURANGAWAIKATO

WIRI3 key work streams

Facilitation

Strategically located Intermodal Freight Hubs

Road and rail served transport corridors

Collaboration

Strategic partners to develop and operate

Reduce duplication of infrastructure

Leveraging the Network

Providing cargo owners with Logistics solutions and choice of operators

First and last mile freight services

End to end visibility

A network of interconnected freight hubs designed to

eliminate waste from the supply chain

Supply Chain

NZ Rail Conference 2015

Ports of Auckland | 14

• Devanning imports

• Cross docking freight – domestic

and international – 1st half 2016

• Coldstore with Polarcold – Oct 2015

• Packing Exports

• Empty container services

• Multi-modal connectivity

Supply Chain – Upper North Island solution

MT Depot

Inland Container

DepotCustomer Export

Facility Intermodal Operation

& Rail Siding

Coldstore

Cross-dock

NZ Rail Conference 2015 Wiri Intermodal Freight Hub current

Ports of Auckland | 15

Supply Chain – Lower North Island solution

Longburn

Intermodal

Freight Hub

(2 Hectares)

Auckland - Wiri

Longburn –

Palmerston North

Hamilton

NZ Rail Conference 2015

Ports of Auckland | 16

CHRISTCHURCH

PALMERSTONNORTH

(Longburn)

TAURANGAWAIKATO

WIRI

Waikato solution

3 – 5 year horizon

Auckland’s sprawl – change in distribution Centre's

Potential to better balance imports with exports and reduce empty positioning

Bay of Plenty

Ability to help balance the train demand

Offering the customer a Port choice

South Island

Greater collaboration

Better container utilisation

Better slot utilisation – coastal feeders and International network design

Supply Chain - there’s more in the pipeline…..

NZ Rail Conference 2015

Ports of Auckland | 17

Supply Chain - Rail is a key solution

• Key to the Logistics network is greater use of rail

• POAL target is to increase rail throughput from 6%

currently to 30% over next 5-10 years or sooner.

• Wiri rail shuttle increased from 4 to 8 services per

week, 16 from Sept. 2014 and 21 from June 2015.

• Potential to run 50-60 services per week between

each direction Wiri/Seaport as confirmed by AT and

KR (subject to agreed train plans)

• Potential for greater use of rail on domestic corridors

to tap into return freight solutions for export cargoes

• Developing with rail point to point fixed consist

services

• A more scalable solution for staging freight on and

off inland port locations

Rail Focus

NZ Rail Conference 2015

Ports of Auckland |

Context- Supply Chain - Dynamics

18

Imports

ExportsCost of empty

container move = $22/tonne

Exporter’s typical cost of transport to PoT = $15/tonne

• Total system cost for export product to get to port for packing = $37/tonne

• Requirement to reposition empties, particularly as currently almost exclusively reliant on rail solution, also:

- Creates timing and scarcity issues, inhibiting efficient logistics chain operation and compromising service

- Carriers significant risk of failure

Imports

Exports

Exporter’s typical cost of transport to POAL = $22/tonne

• Total system cost for export product to get to port for packing = $22/tonne

• Much more efficient and robust logistics chain operation ensures superior service outcomes andsignificantly reduced risk of failure

Inherent inefficiency of current model:

• Not transparent to market

• Partially mitigated by MetroPort strategy

• Requires comprehensive logistics solution to address

Exports

Exports

Imports

Current Model Alternative Model

NZ Rail Conference 2015

Key Messages

• There are structural imbalances that cause waste in the Supply Chain – these

are not new, but are becoming more visible and considered in our decision

making

• As NZ’s cargo profile and Shipping networks (including vessel sizes) change so

does the influence of waste in the supply chain

• There is cause and effect – also heavily influenced by commercial realities and

behaviours

• Significant gains to be made in reducing the amount of empty transport legs,

including empty positioning by “triangulating container moves” and “bringing

the cargo to the container”

• Rail is a key enabler to a more efficient solution as it can provide scale

For NZ to remain competitive there is a greater need for integrated transport

solutions and more collaboration between key stakeholders throughout the supply

chain (Cargo owners/Transport providers/Lines/Ports)

Supply Chain

Thank you!

Craig Sain

General Manager Commercial

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