The Future of Transport
Australia’s freight task is expected to see double-digit growth over the next decade. Which role will road transport play in meeting the growing demand for transport services?
Albeit delayed, the Global Financial Crisis hit the Australian road freight community hard in 2009. The shockwaves of the economic slowdown have since reverberated throughout the industry and took many a transport business down in the fallout – with some saying they can still feel the impact today.
Looking back, the magnitude of the crash is especially astounding against the backdrop of a 2003 forecast published by the Bureau of Infrastructure, Transport and Regional Economics (BITRE), which predicted a doubling of road freight by 2020 and went on to become one of the most frequently quoted industry statistics of the decade.
More than 12 years on – yet with the GFC still fresh in mind – the National Transport Commission (NTC) has now again dared a look into the future. The resulting Who Moves What Where report is painting a more differentiated picture of the industry, with NTC Chief Executive, Paul Retter, stating that “the next decade will be a crucial time for Australia’s transport sector”.
“The Global Financial Crisis slowed the growth of freight and passenger transport movements, but now that our economy is growing faster, we are back on an upward trajectory,” Paul says, quoting a 26 per cent rise in Australia’s freight task over the next decade.
Split amongst road, rail and sea freight, operators across the board will become increasingly busy as GDP and domestic population continue grow, he explains. In fact, the economy is one of the two factors that the new NTC report identified as major contributors to the increase in Australian freight, with the other being growth in Asia, which the NTC says will intensify demand for Australian commodities such as iron ore, coal and LPG by between 100 and 160 per cent.
Much of that bulk freight bound for Asia will likely be assigned to rail, the report predicts, a transport method that predominantly focuses on long distance bulk cargoes. Rail’s focus on bulk commodities, however, means it poses little competition for road transport – especially in the perishable food and metro delivery segments, which account for around 30 per cent of the total freight travelling by road.
While Paul says inner city transport is one of the most promising future growth areas, the NTC report found that for now, the majority of road transport tonnes (48 per cent) are still carried in articulated vehicles – mostly heavy-duty prime movers pulling a B-double trailer set that shuttle between capital cities and regional centres. As such, the trend for larger combinations that began with the advent of the B-double in 1981 is still unbroken – but the medium-duty market (46 per cent) is catching up. According to Truck Industry Council (TIC) T-Mark data, it saw substantially larger increases in sales since the GFC.
Then again, even though the number of heavy vehicles being added to the national fleet has plateaued somewhat, articulated vehicles are now increasingly getting bigger in size – most likely due to the increasing uptake of Australia’s world-leading Performance-Based Standards (PBS) scheme. “The trend toward larger trucks has continued, reducing the growth of heavy vehicles numbers, as previously noted, not only GVM or GCM in each class of heavy vehicles has continued to increase, but also there has been a trend for shifting from rigid trucks to articulated trucks,” the report states.
According to the NTC, less than half a per cent of all operators can boast a fleet of more than 100 trucks, with the market dominated by Toll IPEC (8.3 per cent market share), Linfox (four per cent) and K&S (1.6 per cent), followed by Border Express (0.3 per cent) and Kings Group (0.25 per cent). Owner-drivers and small fleets reportedly pick up the remaining 80 per cent.
In analysing a wealth of data from various sources, Paul’s team found that the current number of road transport operators is down around 5,000 from the last count in 2002. Australia now has some 42,000 businesses operating in the road transport space, 70 per cent of which are now estimated to be owner-drivers.
The predicted growth rate of 26 per cent over the next decade will likely be split across the country’s three modes of freight transport, wherein half is moved on rail, 30.4 per cent travel by road, and 14 per cent by sea. With nearly a third of all of Australia’s freight carried on the back of a truck, Paul says the road transport industry generated around $48.3 billion in revenue in 2014 alone.
By investigating exactly Who Moves What Where in the Australian transport industry, the NTC has attempted to provide a resource to help government and industry make the appropriate infrastructure, planning and investment, operational improvements and regulatory changes required to handle the anticipated double-digit growth, Paul says – but the learnings from the most recent slump must still prevail.
By providing data that shows just how much of the task will take to the roads, he says the good news of the economic growth that the transport industry has waited so long for won’t be obstructed by a lack of support.
The story appears in the November edition of Prime Mover - out now!