Scott Brownlee - Dairy Transport Logistics - Improving the efficiency of NZ’s import and export supply chains

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Scott Brownlee delivered the presentation at the 2014 New Zealand Rail conference.

The 2014 New Zealand Rail conference explored issues that would help to secure the economic development of New Zealand. With a focus on new projects and balanced funding, this event discussed ways to ensure the seamless growth of the next 10 years.

For more information about the event, please visit: http://www.informa.com.au/nzrailconference14

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Scott Brownlee - Dairy Transport Logistics - Improving the efficiency of NZ’s import and export supply chains

  1. 1. Making the most of our nationwide logistics network Improving the efficiency of NZ’s import and export supply chains New Zealand Rail Conference – June 2014 Scott Brownlee Chief Executive DTL
  2. 2. Making the most of our nationwide logistics network DTL at a Glance • A cargo owner • Outsourced freight manager • No physical logistics assets • People, data and technology • South to north cargo flows Optimisation Value Creation Partnerships Safety and Compliance Customers Carriers
  3. 3. Making the most of our nationwide logistics network Our Rail Network • Series of closed loops • High volumes, long distances • Not time critical • Good access to rail • 20 train services a day • 6 main rail hubs • 10 rail served satellite sites Kauri Hamilton Whareroa Darfield Mosgiel CHC IFH ‘closed loop’ Land based Consolidation Future Freight Hubs
  4. 4. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Focus on Compliance • 61 NCR’s YTD • 140,000 containers YTD • 0.04% fail rate = best in class • 69% of NCR’s are temperature fails
  5. 5. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Centralised Container Management • Central visibility to manage constraints • 99.8% container supply • Contributing to a 19% increase in product onto rail over last 2 years CCM - Overview Container Ordered Container Released Container Delivered to Pack Site Container Inspected Container Packed Container Delivered to PoA DTL Fonterra Pack Sites DTL Box Co / CT Site Ship Cos Kotahi DTL Kiwi Rail Tpt Cos Fonterra Pack Sites Fonterra Pack Sites DTL Kiwi Rail Tpt Cos DTL Box Co / CT Site Ship Cos Kotahi % Containers Ordered within std. Lead times % Container Release Attainment by Box Co % Containers Delivered by agreed Gate-in date – incl. correct mode % Containers failing inspection – by Ship Co % Container Pack Schedule Attainment % Containers Delivered to PoA within port cut- off criteria Process KPI’s Daily DTL DMS Sessions Run by DTL with 3rd Parties contributing to container supply Daily Fonterra Site DMS Sessions Outputs from DTL DMS feed Fonterra Site DMS Daily KPIs used to manage quick fix aimed at minimising operational impact of failure Weekly trend analysis used to manage service delivery and to drive process improvement
  6. 6. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Physical Network Improvements • 50% reduction in mainline derailments in the last two years • Exponential decrease over last 10 years
  7. 7. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network A Joint Approach = An Efficient and Productive Network • Good access to assets • Taking a network approach • Managing flows end to end • Central coordination and visibility
  8. 8. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Emerging markets – dairy on the rise 1. Growth rates represent forecast compound annual growth rates. Current volumes are represented by the area of the circles displayed 2. Although strong growth in demand is expected in India, it is expected that the ability to supply into India will continue to be constrained by relatively high barriers to trade for dairy products Source: Fonterra estimates MENA 2% 4% 10% India2 7% 7% China 4% 2% LATAM 2% 2% ANZ 1% 1% Nth America <1% 1% Europe <1% Outlook to 20201 ASEAN 2-3% 4% Demand Growth Supply GrowthDemand Volume Supply Volume Opportunity
  9. 9. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Global trends – driving need for change • NZ is a long way from markets • Lacking scale and flexibility • Imbalance of trade flows • Bigger ships must be full ships • Infrastructure investment required
  10. 10. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Competitiveness – built on efficiency • Consolidating freight to fill ships • Integrating IMEX/domestic networks • Match service requirements • Taking an end to end view • We must collaborate Without freight owner/ stakeholder collaboration, there is a risk of an increase in waste and costs across the entire supply chain. CostsperTEU Ship Size LANDSIDE COSTS without collaboration LANDSIDE COSTS with collaboration OCEAN COSTS Co-ordinated Import, Export & Domestic Flows Napier (Multi carrier – Med Vessels) Current Future -9% $/MT -9% $/MT Transit Premium 3-4 Days Closest Port (1 carrier – Small Vessels) Current Future Baseline $MT Baseline $/MT Transit Premium 7-10 Days Tauranga (Multi carrier – Big Vessels) Current Future -16% $/MT -29% $/MT Transit Premium 0 Days Intermodal Freight Hub Whareroa Auckland (Multi carrier – Big Vessels) Current Future -16% $/MT -29% $/MT Transit Premium 0 Days
  11. 11. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Collaboration – making it sustainable • Build freight owner network • Aggregate complimentary freight – smooth flows • Optimise backloads - Increase utilisation • Container Triangulation • Increase commitments • Support infrastructure investment
  12. 12. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Intermodal – closing the loops • Two closed loops in NI • Import/Export triangulation • Export/domestic utilisation • Connected at Intermodal Freight Hub • Close to ports • Close to other cargo owners Auckland IFH Customer DC (AKL) Fonterra DC (LNI) Customer DC (LNI) Port Export Pack Cross- dock CT Site Fonterra Product; DC to Intermodal to IFH to Export Pack to Port Customer Product; DC to IFH to Intermodal to DC/Store
  13. 13. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Imports / Exports – Capacity • Import / Export Loop • 50% more volume • Rail corridor infrastructure largely in place • Work required at both ports • Intermodal exchange required
  14. 14. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Export / Domestic Exchange • Product to container model • Intermodal containers • Complimentary cargo • Train schedules are the key IFH / Export Pack PNTH WROA PHTA Customer / Freight Forwarder South – Depart Auckland 1930 4 ½ hrs. travel time each way 1 ¼ hrs. travel time each way 1500train departs Whareroa Arrive Auckland 0730 Afternoon Train departs for Whareroa and Pahiatua North – Depart PNTH2000 Arrive PNTH0600hrs. 12hr turnaround Proposed train plan NO CHANGE NO CHANGE
  15. 15. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Taking a Network Perspective • Not just about a freight hub • Managing freight flows • Network modelling • Partnerships to bring modelling to life – Government for rail infrastructure – Cargo owners for volume – Investors for interchange assets – KiwiRail for operations
  16. 16. Making the most of our nationwide logistics networkMaking the most of our nationwide logistics network Doing what we do well • KiwiRail to focus on strengths • Industry collaboration to further improve • Take a long term approach
  17. 17. Making the most of our nationwide logistics network Thank You

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