Transporting New Zealand’s 2022 The Road Ahead Conference looked at what’s on the horizon for transport operators. The conference focused on a changing workforce, sustainability and environmental requirements, future fuel sources, supply chain issues, and disruptors like the digital revolution. In this final report, the Commerce Commission’s David Chrystall discusses cartel conduct, the University of Otago’s Rebecca Lilley focuses on driver health, Success Formula’s Kelly McLukie talks about safety culture, and Datacom’s David Ffowcs-Williams discusses digital disruption and transport supply chain. We also report on a panel session with Retyna (EV sector) and Z Energy.

David Chrystall
Principal investigator at the
Commerce Commission

The Commerce Commission is warning New Zealand companies against entering into cartel-like arrangements with competitors following a 2021 law change that made it a criminal offence to do so.

According to Chrystall, a cartel is a collaboration between a group of competitors to control prices, output and other areas where they would otherwise compete.

“It’s the removal of the competitive tension – that rivalry that should exist in any properly functional market,” he says. “Competition is a cornerstone of any economy. The rivalry between competing businesses to do better with customers is very important.”

Chrystall says cartel conduct isn’t just about raising prices to rip off consumers.

“A lot of people think that price fixing and cartel conduct is about ripping people off. When you have these cartel agreements, not only does it increase prices, but it decreases what we call consumer surplus and creates what we call a deadweight loss. And it’s the loss of that consumption that we’re concerned about,” he says.

“There’s nothing good about a cartel from an economic standpoint. Most of the cartels I’ve investigated are always secretive. They end up involving a level of deception to the clients, and it’s essentially a kind of economic theft. You’re stealing from society, denying consumers the benefits they should be getting in a normal functioning market. It’s akin to fraud, essentially.”

Penalties

Chrystall says the penalties for cartel conduct is up to seven years in prison for individuals or fines of up to $500,000.

“The first thing to think about is, who are my competitors? Competitors are businesses who do or could offer the same or similar services to your customers. The Commerce Act under Section 30 is essentially a prohibition on competitors entering into a contract arrangement or understanding. This is purposefully very broad – there only has to be some form of communication that results in a shared expectation or what the courts deem a meeting of minds. You must have the intention to fix prices or allocate markets, but you don’t necessarily have to know that you are breaking the law. Ignorance of the law is no excuse.

“Our priorities really are to make New Zealanders better off. And we are currently focusing on this piece of legislation to educate people around cartels. There’s a range of enforcement outcomes. Just because the law is being breached, it doesn’t necessarily mean we bring a prosecution. It depends on the amount of harm associated with the conduct.

“The commission does recognise that there are genuine, pro-competitive reasons why competitors do need to get together to collaborate on certain deals. Is it adding additional competition into the market? There are parts of the act that allow for genuine collaboration.”

David Ffowcs- Williams
Head of supply chain, Datacom

Using data and technology to get the most out of the supply chain can result in major improvements to the running of your business, says Ffowcs-Williams. Sharing data information is vital and results in huge savings for businesses and the industry as a whole.

“When we work as an industry and share information, everything gets better for everybody. We are not very good at this in this industry,” he says.

“And I see this across every single business I work on – there are emails coming in and there is paper moving around the place, and there are different standards. This is one of the biggest problems we could solve if we can move data faster to be in the right place at the right time. The cost reduction to the industry is literally hundreds of millions of dollars.

“Every single business I go into has paper and email everywhere. You don’t need to get rid of it. You just need to treat it appropriately.”

Williams says when changes are introduced into your organisation, you must embed the change within the culture of the business.

“The biggest challenge we are finding within businesses is communications within the organisation. And what we find is that you must put that communication across seven times to get it down to the grassroots. Organisations are putting the information out there, but no one feels that it is being communicated to them. So, we have to drive through those user groups to actually get that information to the grassroots.”

Williams says organisations can use artificial intelligence and machine learning to work through their data to uncover opportunities within the business.

“You’ve now got something that allows you to regulate patterns that will tell you where to change the business,” he says.

“And this really does work, and it makes sense and it’s not expensive. You don’t need to get to four to get to five – that’s the cool thing. You can actually go from two to five, and you can choose what you want out of this to get different outcomes for the business.”

Williams says dispatch and visibility should be as automated as possible.

“How do you pre-build runs for the next day so you know your capacity? The worst thing you can obviously do is go and buy freight capacity at 10pm. It tends to be reasonably expensive at that time of night. Automating this enables you to see the freight that’s coming in – you can see what’s forecast.”

Rebecca Lilley
Senior research fellow, University of Otago

Truck drivers are at a high risk of adverse health and injury events, with working conditions a significant factor.

Lilley, who has undertaken a feasibility of a national survey of truck drivers, says the health of professional truck drivers is of growing concern.

“Our economy and national wellbeing is intimately tethered to trucking,” she says. “It became abundantly clear to the New Zealand public and businesses during the Covid-19 lockdown that it’s a critical service, and we really need to keep our truck-driving workforce healthy and safe to keep our economy moving.”

Despite that, Lilley says very little about this occupational group is understood at a population level.

According to the 2018 census, there are more than 37,000 professional truck drivers in New Zealand, and this group is predominantly male. It is mainly European, followed by Maori.

“But most concerningly, this group is rapidly ageing, with 60% of professional truck drivers over 45 years old. And that is a concern with regards to some health and safety aspects,” says Lilley.

“Previous research into work-related injury throughout New Zealand has identified that far too many professional drivers are being killed while working on New Zealand roads.”

Of the average 346 fatalities on New Zealand roads a year, at least 96 are work- related. About 27% of the annual road toll is associated with work activities, and of this, 21 deaths occurred in workers for which the road is their main place of work. Around 10 professional drivers are killed on New Zealand roads yearly while working.

“This occupational group is placed in the top five hazardous occupations in New Zealand. We kill more truck drivers on our roads than other comparative economies,” says Lilley.

“What has us most concerned about these deaths is the major role that fatigue and driver health is playing and triggering or contributing to these truck crashes, particularly single-vehicle events. Our study identified that in one three crashes resulting in the death of a professional driver occurred when the driver was impaired, be that due to fatigue, a pre-existing fatiguing health condition, and in a very, very small number, due to legal or illegal substance use.

“The truck-driving workforce is rapidly ageing, and we can expect this workforce to have increasing health concerns that may affect their safety, but also public safety and vital supply chains.”

Lilley says there are many health-damaging aspects regarding professional truck driving, and improvements in driver health are urgently needed across the workforce. “We know very little about the current health status of our professional drivers, making it a highly neglected area of knowledge,” she says.

A national study funded by the Health Research Council found that one in four drivers reported poor health status. The most common health complaint was pain caused by work, commonly attributed to back pain, followed by pain experienced in the knees and shoulders.

Other commonly reported diagnosed health conditions included high cholesterol and high blood pressure, both preconditions for heart disease that can manifest through sudden heart attacks or strokes. Asthma was also common in one in four respondents, and other concerning diagnosed conditions included depression, migraines, diabetes, and sleep apnoea, which is a highly fatiguing sleep condition and prevalent in overweight people.

Lilley says broken sleep suggests work patterns need looking at among truck drivers. According to the study, 37% of drivers experience sleep problems two or three nights a week, and a further 28% reported having sleep problems four nights or more a week. Of those reporting problems, 40% said their poor sleep quality had troubled them during the day while they were driving. About 17% of this group used alcohol or drugs to aid sleep.

“Despite this being a small-scale survey, which is not representative of truck drivers as a whole, we are identifying some concerning trends in the current state of truck-driver health that should be acted on and managed by employees and employers under health and safety in the Employment Act and by government regulators of transport safety,” Lilley says.

“There’s sufficient early evidence here for the industry to start taking action to improve driver health within the transport sector.”

Kelly McLuckie
Success Formula

Not enough business owners in the transport sector invest in safety culture, according to McLukie. She says safety culture is something all organisations should prioritise to retain staff, be more productive, more profitable, and more attractive to the workforce.

Success Formula’s Traction programme was developed in 2011 with input from transport operators, regulators, unions, and academics. The intention of the programme was to measure safety culture and leadership within transport businesses and find ways to support organisations to improve.

“We used to have a very audit-based idea – as in, have we got policy and procedures? Tick. But it’s probably sitting on the shelf in a rusty ring binder, and we pat ourselves on the back,” McLukie says.

“When we developed the Traction programme, it was because this idea wasn’t working. It wasn’t improving safety in our businesses, it wasn’t making them more productive or profitable. It was just causing a whole bunch of work. We may have looked compliant to the regulator, but it didn’t really shift the dial in terms of what we were doing and the way we’re running a business.

“The programme is designed to say, ‘Is the work that you imagined, is your policy and procedure and how you plan, is that what really happens in the business?’ And at its heart, that is what culture is about – how we do things around here. It’s about what the people in your business believe, how they act and how they behave,” she says.

McLukie says culture is something everyone who runs a business should prioritise.

“If your organisation is running well and your people are engaged, they are more productive, they’re safer. You’ll have fewer accidents, and you’ll start to see some of your financial metrics go down, such as insurance claims and unplanned repairs and maintenance, and your turnover starts to decrease,” she says.

“When people are on the journey with you, and they believe in your organisational culture, your business runs more smoothly.”

McLukie says many factors influence driver behaviour. “More than two-thirds of the large losses or major accidents are driver error, but what are the conditions that influence driver’s behaviour on the road? We’re all part of a big system, and as leaders in your businesses, you influence the culture, you influence the dispatch, you influence the route, you influence the customers,” she says.

“So, when a driver is out there on the road making decisions, whether they be good or bad, there’s a lot of additional things that you are able to influence or control that make a difference. And that’s what safety culture is.

“Not enough of us in transport are investing in safety culture. And I really believe that’s going to turn the dial of making us a more attractive industry for people to come and work in.

“As human beings, we all want to feel part of something. So, the more you can make your staff feel engaged, valued, like they’re part of the team, the better you’ll be,” McLukie says.

“Culture is a reflection of the leaders. It’s worth investing in them. And safety culture and organisational culture make good business sense. It makes it a profitable, productive, successful business.

PANEL DISCUSSION – WHAT WILL POWER YOUR TRANSPORT BUSINESS INTO THE FUTURE?

Liz Yeaman
Retyna

According to Liz Yeaman, managing director of Retyna, a specialist consultancy focusing on electric vehicles and renewable energy for transport, New Zealand is good at renewable energy generation.

“Over the past decade, we’ve been at 80% to 85% renewable energy generation. But as things are changing, the cheapest new electricity source in New Zealand is now grid-scale wind and grid-scale solar. So, as we increase electricity demand, which has been static for the past decade – despite population growth, despite us all having more and more screens in every room of our house and everything down to our cigarettes becoming electric – we are now going back into a period of energy-generation growth, and it is going to be coming from grid-scale wind and grid-scale solar.”

Yeaman says New Zealand has a big advantage in renewable energy.

“We have massive resources for it. There are different ways you can take our advantage in renewable energy generation and get it to turn the wheels of the truck. The first of those is battery electric – direct electrification. It’s all made here in New Zealand, which means we are no longer sending money overseas to buy oil to come into this country. This is money that is going to be spent in our local economies rather than coming in from imported oil,” she says.

“One thing about charging battery- electric trucks is you can do it in your own yards. You can do it when those trucks are not being used – when they are loading and unloading. And you can even generate your own electricity. You can be involved in creating your own fuel as well as buying it.

“All of those technologies work. They all perform, and they’re really good. The real choice between them comes down to economics – can it do the job, and how cheaply?

“Volvo, Scania and Fuso have been bringing in electric trucks in the past few years. We have big companies like Mainfreight and Toll buying more and more electric trucks at the moment for those urban delivery trips where they can easily make them work with the technology that’s here right now.

“But what we’re not seeing here yet are the trucks that are on the road in the States and in Europe. And the reason that we don’t have them here yet is because there isn’t government policy that is pulling them here. And it’s really important that we look to the future about what’s coming.”

Yeaman says climate change isn’t the only driver behind bringing electric trucks onto the roads. “Obviously, climate is really, really important, but it’s not just governments, but the trucking manufacturing companies themselves are probably the strongest lead into this change in technology,” she says.

“So, if we look at the European truck makers – Volvo and Scania and Mercedes-Benz and so on – they have all come together in Europe and created an alliance and said publicly that they will no longer be producing diesel trucks by 2040. So, this change is coming, and it is being led by the industry as much as the government itself.”

Nicolas Williams
Z Energy

Z Energy is looking at all the technologies that may power transport in the future, says Williams.

“We are thinking hard about the rollout, deploying capital, and seeing where the customer demand is,” he says.

“One thing that’s important to note with the technology is how far away is the current technology from its theoretical limit.”

We are seeing really high efficiencies with hydrogen technology, whereas the battery technology and some of the electrical technology have a long way to run. That’s the other thing to think about over the next five to 10 years – how much does technology run to actually improve these chains.

“And then the other consideration is land use. We’re already having debate in New Zealand about our pine trees and the extent to which we are going to take out acreage in New Zealand to sequester carbon. New Zealand doesn’t have a lot of land, and that land is highly contestable in its land use.

“So, one of the things I think we need to be thinking about as a country, and certainly from a policymaker perspective, is how do we make sure that we’re diverting energy into its most efficient kind of use.”

Williams says Z Energy is increasingly seeing that biofuels are struggling to scale. “I can talk a little bit about Z’s approach to biofuels in regard to the mandate. But we’ve obviously tried to do biofuels at a low scale. We couldn’t make it work. So, there’s a really interesting conversation to be had about biofuels and where that fits in the mix.”

“We are looking at all of these technologies. But we are probably looking to deploy capital more in the battery-electric space and the DC fast-charging space.”