Logistics Leading the Recovery - A Practitioner’s View
Road Freight • Context – Tax take – Volume of goods moved by road – Energy and Environmental issues • National Fleet – Energy – Emissions – Policy • Case study • The way forward
Table 1. Transport Taxes and Levies 2008 Euro’ 000 2008 Excise Duty 2,520,658 VAT 982,012 Corporation Tax 11,031 PAYE & PRSI 23,878 NORA Levy 75,994 Total 3,613,573 Source: IPIA
Table 2. Inland Oil Consumption 2008/2009 Oil Consumption 2008 2009 + (-) % ‘000 Litres Gasoline 2,336,758 2,127,651 (8.5) Kerosene 1,244,923 1,280,152 Gasoil 1,460,747 1,246,095 Diesel 2,961,761 2,691,749 (9.1) Fuel Oil 114,275 108,209 Total 8,118,424 7,453,856 Source: NORA
Table 3. Rates of Transport Taxes and Levies on Fuel in Euro Per Litre Item From To Date Duty (Diesel) 0.3681 0.4093 07/04/2009 NORA Levy (All products) 0.0100 0.0200 01/10/2009 Carbon Tax (Gasoline) 0.0420 09/12/2009 Carbon Tax (Diesel) 0.0490 09/12/2009 VAT % 21.5 21.0 01/01/2010 Source: NORA , Revenue Commissioners
Table 4. Modal Split of EU Freight Transport (% tonne-km) 2008 Roads Rail Waterways Pipeline EU 27 72.5 17.1 5.6 4.8 Ireland 99.4 0.6 0.0 0.0 Source: Eurostat
Dependency • Ireland is in a club of three EU countries that is near totally dependent on road freight – Others are Malta and Cyprus
Road Transport in the Irish Economy • Road transport delivers 99.4% of total freight in Ireland (76.4% EU) • 2008 Transport contributed € 3.6 Billion to the State • 2009 Transport fuel volumes declined by 9% but tax revenue up • 2010 tax revenue up again • Reynolds not anti rail or pipeline
Key Characteristics • Government Revenues from Transport are largest sectoral contributor • 99% of all freight in Ireland moved by road • 99% of transport energy is imported • Transport is largest contributor to energy related CO2 emissions
Conclusion It follows that transport policy has the potential to profoundly impact • on government revenues, • the cost of Irish goods, • international competitiveness, • to a lesser extent- energy supply security • level of national CO2 Emissions
Road Freight • Context – Tax take – Volume of goods moved by road – Energy and Environmental issues • National Fleet – Energy – Emissions – Policy • Case study • The way forward
Figure 3. Composition of the Road vehicle Fleet 1990-2008 Source: Energy in Transport -2009
Table 8. Composition of the Road Vehicle Fleet 2008/2009 2009 2008 Private Cars 1,924,281 1,902,429 Goods Vehicles 351,307 343,940 Others 221,980 221,291 Total 2,497,568 2,467,660 >12 tonne 11,123 9,079 % 0f Total 0.45 0.36 Source: Department of Transport Bulletin of Vehicle and Driver Statistics 2008 & 2009
Govt. incentives for transport efficiency? • VRT and Road Tax changed from engine capacity to CO2 emissions - Cars • Investment in public passenger bus and rail transportation infrastructure and capacity to encourage modal shift - Passengers • Demonstration budgets and incentives for hybrid and electric vehicles – Car & Vans? • Smarter Travel programmes - bus lanes, cycle paths • Spatial planning to reduce work-related commuting - Passengers
Government Transport Policy • Smarter Travel 2009 - Passenger • Transport 21 - Passenger • National Transport Authority - Passenger
Budget 2010 • Little point in pleading for reduced fuel duty for road freight • Consideration could be given to – Smarter Freight incentives – CO 2 based Road Tax to accelerate the replacement of older, inefficient, heavily polluting vehicles .
Road Freight • Context – Tax take – Volume of goods moved by road – Energy and Environmental issues • National Fleet – Energy – Emissions – Policy • Case study • The way forward
Case Study • what policy changes would enable the Irish roadfreight sector to make a significant contribution towards national recovery?” • one contract stands out – Speed and scale of results delivered
Case Study A contract for delivery of bulk lubricants • Unique logistical and commercial challenges • The requirement for delivery within strict contractual lead-times • From single production source Northwest England • Customers UK-wide inside normal business hours • The requirement for segregation of quality-sensitive grades within and between trips • A multi-market drop profile skewed towards small- volume city deliveries • Contract unsuitable for groupage.
Pre start up targets • Vehicle design • Network/infrastructure rationalization • Routing and scheduling • Loading interface • Application of technology • People management
Table 9 Case Study Key Performance Indicators Base year =100 Year Prior Contract Contract Contract Contract KPI to Contract Year 1 Year 2 Year 3 Year 4 Number of 100 97 85 71 68 Trips Average 100 107 124 133 142 Load size Capacity 100 117 125 128 131 Utilisation Litres delvd 100 112 125 134 139 Per hour Litres delvd 100 103 114 123 128 Per Km Fleet Nos 100 67 60 55 50 Unit Cost 100 70 67 65 54 [1] Fleet numbers at end-period
In a word - Utilisation • Single-minded pursuit of improved utilisation – Hourly and Volume • Utilisation improvements could not have been achieved had the Client not been prepared to radically challenge internal procedures • Shared vision • Some measures were counter-intuitive, such as the re-introduction of certain manual processes in parallel with the highly- automated systems…..
‘ Dynamic Supply Chain Management and Logistics leading the Recovery’ • In the example the fleet was reduced by 50% for similar annual volume • Can we transfer the learning to Irish scenario? – Some improvement can be achieved by improved working practices with existing fleet – Major improvements can be made with changed regulatory conditions
Road Freight • Context – Tax take – Volume of goods moved by road – Energy and Environmental issues • National Fleet – Energy – Emissions – Policy • Case study • The way forward
Road Freight Target Areas • Under utilised motorways (toll shortfalls) • Under utilised hours (365 x 24 v. 9 to 5) • Under utilised vehicle capacity (volume & weight)
Motorways & Hours • Incentivise off-peak & nightime use of main trunk routes • Reduce congestion & travel times on existing traffic & attract new business • Reduce loading and discharge times • Reduce risk exposure • Rebate fuel, tolls, licence fees • Use technology to monitor & measure
Vehicles • Allow longer & heavier vehicles (LHV’s) • Not a new concept, tested & implemented • Make LHV’s fit the roads, not VV • Modular truck & trailer combinations • Up to 25.25M and 60-80 tonnes • Higher limit for motorways, port access
LHV’s • Multiple studies & reports, EU & others • Dutch experience most extensive • Load consolidation major benefit (lower costs, congestion, accidents, emissions) • Offset by modal shift to rail (direct and induced) & infrastructure upgrading cost • No increase/decrease in road ware
LHVs in Ireland • Modal shift not significant • Advance & broaden scope of current study • Introduce higher limit for motorways/ports • Apply special standards: drivers, vehicles and operating conditions • Low cost to introduce, large benefits • Numbers small, use technology to monitor
? In any other area of the Irish economy, is there an alternative single regulatory measure that compares with the potential of motorway LHV introduction
• Consistent with EU, national, and sectoral objectives • Reduction in freight cost and emissions • Sweating existing assets – motorways and vehicle fleet • Minimal cost relative to benefit & no cost to the Government • Improvement in road safety • Capacity to deliver immediate results
In Summary • Can the road • And deliver transport industry breakthrough contribute to the change? recovery? YES YES
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