Logistics Leading the Recovery - A Practitioners View Road Freight - - PowerPoint PPT Presentation

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

2008 Euro’000 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 ‘000 Litres 2008 2009 + (-) % 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

2008 2009 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

KPI Year Prior to Contract Contract Year 1 Contract Year 2 Contract Year 3 Contract Year 4 Number of Trips 100 97 85 71 68 Average Load size 100 107 124 133 142 Capacity Utilisation 100 117 125 128 131 Litres delvd Per hour 100 112 125 134 139 Litres delvd Per Km 100 103 114 123 128 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
• bjectives
• 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

transport industry contribute to the recovery?

YES

• And deliver

breakthrough change?

YES