Transportation and logistics are among key New Zealand industries to benefit from a high technology boom that could earn $1.5 billion a year, a BusinessNZ reports says.
The recent study Unlocking Commercial Opportunities from intelligent transport systems was commissioned by 16 public and private sector organisations.
Among them were Airways, KiwiRail, Fulton Hogan, Foodstuffs and the NZ Transport Agency.
Intelligent Transport Systems (ITS) refers to new and emerging technologies applied to vehicles on land, in the air and at sea, and the infrastructure used to support them.
New mobile apps, telematics devices and autonomous vehicle innovations are just some of the examples referred to.
The report estimates the value of intelligent freight movements in New Zealand could be worth $576 million a year in the domestic market over the next 30 years.
Exports could reach $158m a year and a turnover opportunity for local ITS suppliers could be $446m annually.
“There is significant potential for the application of intelligent freight movements in supply chain logistics.
Currently, the focus is on applying the software to better plan, optimise and adjust logistics and supply chain movements,” the report says.
Transport minister Phil Twyford announced a new Future Technology Leadership Group made up of more than 30 groups and organisations in response to the report.
The group, announced at Auckland’s T-Tech Conference in March, is tasked with developing a 10-year Land Transport Technology Roadmap.
The conference was hosted by ITS New Zealand and highlighted international and domestic trends in urban planning, smart city initiatives and transport technology and business models.
“New Zealand is seen as a world leader in ITS. This group will bring together the best domestic knowledge, as well as international expertise,” Twyford says.
“The Business NZ report focused on three areas – drones, smart logistics and autonomous self-driving vehicles – and found New Zealand has a good regulatory and business environment to benefit from ITS.
“This is an exciting time for transport and technology.
ITS have the potential to not only make transport more efficient, better for the environment and safer, we now know they can make a valuable contribution to New Zealand’s economy.”
Intelligent Transport Systems Advisory Group chairman David Prentice says the report is a call to action for businesses and the Government. It shows the huge potential for developing and manufacturing intelligent transport systems in New Zealand, he says.
The report calls for greater collaboration between the Government and businesses to unlock innovation and export growth around ITS technology and services.
Data sharing, greater research and development, upskilling regulators and aligning education and skills training with future needs are also recommended.
Prentice says New Zealand is a good location for the new industry because of its growing high-tech manufacturing sector, experience in manufacturing niche component parts and reputation as a test bed for new technologies and world-class connectivity.
“We want to grow business out of providing solutions to global problems – there is growing demand worldwide to solve problems such as congestion and emissions which ITS can help address.
“ITS have the potential to significantly improve traffic flows, reduce road congestion, increase logistics productivity, lower transport emissions and improve the safety and efficiency of personal travel.
“Businesses already operating in the tech sector and new businesses looking for growth opportunities should consider the economic and social benefits to be gained from moving into this new area.
“And the business community wants to continue working with the Government to develop policies that will allow an ITS ecosystem to flourish and help business and transport system users address our local transport challenges and compete on the world stage.”
Products already produced in New Zealand include GPS systems, drones, robotic port cranes, airport baggage-handling systems and wireless charging technology.
One company leading the way is transport technology services firm ERoad, which designs and manufactures in-vehicle hardware, while also being the largest provider of road-user charging compliance solutions. It’s exporting to a number of countries.
Fleet management solutions company Coretex is another which delivers services to the New Zealand market, as well as across North America and Australia.
It tracks around 40,000 vehicles across the globe for more than 1200 clients.
“There is significant potential for the application of intelligent freight movements in supply chain logistics. Currently, the focus is on applying the software to better plan, optimise and adjust logistics and supply chain movements,” the report says.
Fast-moving consumer goods (FMCG) is a particular area where greater cost savings and efficiencies can be created by adopting ITS, the report says.
“Both FMCG and trucking are highly competitive industries with low profit margins and high costs. Fluctuating demands, changes to delivery and various operational constraints place further strain on the profit margin.
“This is compounded by the fact that firms may be forced to decrease prices, at a cost to themselves, if their competition reduces prices and costs.
“As such, improvements in efficiency are an important part of the competitive strategy of firms in these industries.
“Any opportunity to reduce costs and improve efficiency means that the firm can raise its competitive advantage. For this reason, FMCG companies have already been using computer algorithms to optimise their logistics supply chain.
“However, there is opportunity to further improve efficiency through the application of ITS.
“In logistics supply chains, ITS could be used to develop optimisation algorithms and establish a transportation systems model to ensure the optimum allocation of resources – specifically,
ITS can be used to find the best possible route in both linehaul and distribution, in order to reduce costs.
“An extension of this includes cost-to-serve analysis, which allows logistics companies to calculate the cost of each route to make better-informed business decisions about pricing and operation.
“ITS is only in its starting stages and has thus been applied in small scale trials.
“We estimate that improvements through ITS, such as an algorithm to optimise freight movements in the supply chain, have the potential to improve freight efficiency between 7% to 10%.
“This would mean that businesses in New Zealand could increase freight volumes by the same amount without increasing costs.”
Data from road freight businesses gives estimated cost savings in areas such as labour and fuel by using the logistics technology. It estimates a 9% cost savings in linehaul operations and up to 25% cost savings in distribution transport, the report says.
“Considering the size of the freight task undertaken each year, we estimate these efficiency improvements within New Zealand would be worth around $19 billion collectively over the period to 2050.”
