Rampant congestion spells disaster for freight productivity gains

While congestion adds mere minutes to commuter travel times, it adds thousands to freight costs through higher fuel and wages bills from vehicles sitting in traffic, and productivity losses from operators making fewer deliveries.

Congestion reduces productivity throughout our economy. For transport operators, losses are magnified thanks to already wafer-thin margins.

So it’s easy to understand why worsening congestion is disastrous for operators, especially coming off a period where the average productivity of road freight vehicles has more than doubled, according to BITRE.

Conversations about congestion will inevitably turn to solutions needed to ease the burden for motorists. Public transport, bigger and better roads, and metro and regional rail infrastructure are all important considerations.

A recent Grattan Institute report about investments in transport was sobering reading about how infrastructure projects are prioritised. The report showed marginal regional electorates over the past decade have received well over their fair share of road funding, typically at the expense of investment in the big cities that are the engine rooms for growth.

For example, Victoria’s Geelong-Colac highway duplication reportedly returned only eight cents for every dollar spent on it. In other words, it cost $12.20 for every car using it over the past 10 years. Not to be outdone, a 135 km road between Perth and Bunbury cost an astonishing $18.90 for every car that used it.

Revelations like this are important not just because they make headlines, but because they expose the genuine need for independent decision-making bodies like Infrastructure Australia, and its state-based counter-parts, to prioritise economic needs-based infrastructure, instead of that which is politically needs-based.

More importantly, there is alignment between federal and state infrastructure bodies to maximise and create efficiencies when it comes to spending tax dollars on road, rail and sea transport.

Population distribution will be increasingly important for bodies like these to assess when making infrastructure decisions – a challenge that is exacerbated with the conflict between our huge land mass and the trend to people concentrating themselves in a few urban areas. The Grattan report rightly points out that our major cities will drive our future.

With the highest proportion of people in its two biggest cities of any OECD nation, and almost three out of every five people living in our four biggest cities Melbourne, Sydney, Brisbane and Perth, we are highly urbanised. GDP growth is expected to be highest in these cities because that is where jobs are expected to be created.

These facts underscore the need for transport infrastructure funding to be proportional to where people live and work, however not at the expense of maintaining and improving regional infrastructure where genuinely needed, and where there are productivity benefits for freight operators that use it most.

While the freight task is increasing with population growth, it is interesting to note per capita population travel has stabilised. Higher concentrations of people in cities helps explain this, as does the fact those people are travelling shorter distances to get to work; 40 per cent of jobs in Melbourne, Sydney, Brisbane and Perth are within 10km, and 25 per cent within five kilometres.

These facts also underscore the VTA’s encouragement of policymakers working to reduce private vehicle usage, freeing up the major roads for the long haul and delivery vehicles that are carrying more freight than ever.

We cannot let congestion undo years of productivity gains for transport operators, especially when they create jobs and investment. So we must advocate for well-targeted infrastructure investment that creates long-term productivity benefits, evidenced by the freight task quadrupling over the last 40 years, and an average ratio of benefits to cost for road and rail projects of about 2.7.

Infrastructure will be a major talking point at the VTA’s State Conference 2016, being one of the five fundamental aspects of transport we must get right for operators to experience sustained success.

The VTA is now accepting registrations for this important event at Lorne, Victoria in May, through www.vta.com.au. Pricing and further conference information is available at the website, and I hope to see you there.

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