North Queensland Bulk Ports (NQBP) wanted to demonstrate the economic benefits to the state of Queensland and regional industry in North Queensland of coordinating upgrades to the road and port network to achieve supply chain efficiencies.
NQBP required a comprehensive, evidence based assessment of the productivity benefits that are likely to be achieved from road upgrades and other measures designed to improve heavy vehicle access to the Port of Mackay. Synergies assisted NQBP and used our economic analysis to prepare a business case for improved road funding.
The Port of Mackay is a multi-cargo import and export port that services the Whitsunday, Central Highlands and coal field regions in central Queensland. The three key cargoes handled at the port are fuel imports (primarily for coal mining), sugar exports and grain exports. The port’s land and facilities are not fully utilised, but there are access constraints, with key road linkages lacking the capacity to accommodate high productivity freight vehicles (i.e. Road Train Type 1 (36.5m in length) or B triple equivalent 3 heavy vehicles).
With around $1.3 billion in state and Commonwealth funding committed up to 2022 to road infrastructure upgrades in the Mackay region, the transport corridors between the Port, Mackay region, Central Highlands and Whitsundays will see significant infrastructure and efficiency improvements. While the new road projects are designed to cater for high productivity vehicles, some road sections will remain rated only to B-Double standard. This will prevent the use of higher productivity vehicles on the supply chains between the port and regional mine and agricultural areas, undermining efficiency.
NQBP had identified the road upgrades required to allow the operation of higher productivity vehicles for these supply chains. However, as such upgrades can involve significant government financial outlays, any proposal for road enhancement would need to demonstrate the productivity benefits associated with this investment.
Synergies undertook a cost-benefit analysis of road upgrades required for the logistics chain between the Port of Mackay and coal mines within the Port catchment to accommodate Road Train Type 1 or B triple equivalent vehicles.
Synergies developed 20 year fuel projections for each mine located within Port of Mackay’s potential catchment area, and identified which of these mines are currently serviced through Mackay. Synergies then assessed the full economic cost for these mines to transport fuel from east coast ports with and without road upgrades. These costs were quantified using a standard cost-benefit analysis approach and published estimates on road freight costs and the economic cost of road freight transportation.
The analysis produced a robust estimate of economic benefits that would result from the road upgrades. These benefits were categorised as follows:
cost savings associated with mines currently serviced by the Port of Mackay (i.e. the cost reduction attributable to the use of higher productivity vehicles); and
reduced costs associated with mines that are currently serviced by Gladstone, but following road upgrades, would likely be serviced by Mackay using higher productivity vehicles.
Synergies’ analysis showed that around half of the benefits would accrue directly to the mining and transport companies through vehicle operating cost savings and freight time savings. Other benefits would accrue to the broader community in terms of improved road safety outcomes and a reduction in other negative externalities associated with heavy vehicle use, and to government in terms of avoided road refurbishments.
NQBP endorsed Synergies’ work, stating that:
Synergies produces high-quality analysis that is fit for purpose and practical. They have a deep understanding of supply chain economics and the key drivers of project feasibility in the transport sector, including ports. They are great to work with and always put the client’s interests first and I have no hesitation in recommending their services to 3rd parties.