New transport minister Michael Wood takes over the hot seat in what is an extremely turbulent time.
Not only does he have major infrastructure deficits and the usual political pressures to deal with but, as has become acutely apparent over the past few weeks, there are massive supply chain issues to contend with also.
Radio New Zealand reported recently that nearly 50% of retailers are expecting stock shortages ahead of Christmas.
That, I think, is going to come as a shock to many New Zealanders and will heap real pressure on the Government and the logistics sector to find a solution.
Unfortunately, Government doesn’t seem to have a really good grasp on the urgency of this issue, how it has come about, or how it will impact New Zealand businesses and consumers.
It’s easy just to write it off as a product of COVID-19 and other international matters, yet a lot of the problems stem from issues at our ports and domestically.
Container ships are currently having to wait for 8-10 days to gain a servicing slot at either Auckland or Tauranga and then we have a situation where a container offloaded in Tauranga could sit for another week or so while it waits to go via rail back to Auckland.
We have asked the Government to urgently address this problem but in many respects the horse has already bolted.
Backlogs are growing and while the trucking sector is doing its best to take up the slack, operators are already stretched keeping up with the usual demand.
It’s no exaggeration to view the last three years, where Government policy actively worked to slow down freight, as a wasted opportunity in light of these current issues.
Minister Wood therefore, has a big job on his hands to reposition the Government to assist with better integration of our domestic freight transport modes and facilitate the faster movement of freight.
RTF has submitted a briefing to the incoming minister, which is available on our website, and we look forward to sitting down and discussing the supply chain and other pressing industry issues with him in the coming weeks.
It hasn’t been all bad over the last few weeks when it comes to international trade, however. After many years of negotiations, the Regional Comprehensive Economic Partnership (RCEP) has finally been signed.
RCEP is a free trade agreement involving 15 Asia-Pacific nations including China, Japan, South Korea, Australia and New Zealand. RCEP countries account for around 2.2 billion people and 30% of global GDP.
This makes it the biggest trade bloc in history and could increase the size of the global economy by around US$186 billion and New Zealand’s GDP by $2 billion.
New Zealand exporters and those that facilitate our exports, i.e. the road transport industry, should be extremely excited by the opportunities that RCEP presents, particularly in the wake of COVID-19.
Both the previous National Government that helped initiate the negotiations, and the current Labour Government that signed the deal, deserve credit for getting it over the line.
Let’s just hope this kind of political bipartisanship on trade can be sustained in the face of the growing anti-globalisation agenda from the hard-left.
PREPARING YOUR BUSINESS FOR CHANGE
The recent Zoom seminar RTF hosted with well-known economic commentator Cameron Bagrie presented a pretty unambiguous piece of advice to New Zealand transport operators – be prepared to take some risks or risk being left behind.
Cameron’s background as chief economist at ANZ speaks for itself; he knows his stuff and is well-respected within our industry having spoken at RTF conferences.
The COVID-19 recovery, according to Bagrie, will be characterised by two different trajectories.
Those that are innovative, adaptable and are prepared to take some risks will find benefits to their businesses very quickly.
However, for those that are not prepared to make changes, think the world will return to where it was and can therefore keep doing things the way they always have, recovery is likely to be extremely difficult and may not happen at all.
Cameron’s advice, which I think is extremely prudent, is to focus on the small things in your business, and find efficiencies and better ways of operating.
This will help position you for a future where the pace of change is likely to increase and where only the fit may survive.
Cameron was unequivocal in his assessment that businesses that are prepared to take a few risks will be in the best position to take advantage of the recovery.
I was also interested in Cameron’s observation that big business is dominant in influencing government with regards to economic policy, often to the detriment of small and medium sized businesses.
Considering road transport is made up of small and medium-sized operators, RTF is very focussed on making government and its officials understand just how their decisions affect those businesses, which with more limited cashflow are naturally far more vulnerable to economic fluctuations.
For those that wish to watch Cameron’s presentation in its entirety, just go to YouTube and search for ‘do you want to be a tiger or a tabby’.
