 Felly ydych chi'n meddwl i chi i gael. Felly ydych chi'n meddwl i chi gael, a fawr iawn i chi gaelion i chi gael fawr i chi gael ymlaen. Mae gwaith o'n fwy ffordd, o'i ddweud, o'r tymiadau a'r Cymru ar y rai. O'n fyddech chi'n gweithio'r ddull, mae'n ddweud o'r coridol. Rwy'n meddwl ymlaen i'r sgol o'r bwysig i gael'r llanau gwahanol. Mae'r sgol yma i gael gwybod y c offline. If you have any questions during the presentation, go ahead and ask. I figured I probably wouldn't have much choice to make it any other than interactive. cydnwn i, rwy'n meddwl i ni wedi'i gyffredin, achos cela yn fyrdd CR. Ar gyfael, yn ôl, yn holloredd roeddaeth. Mae'r cydnod ymlaen, Abercham, ac rydyn ni'n meddwl i ni, ac mae'r cerdd yn gallu eu prif iddynt i'r cydnod o'r mynd i ni. Roeddaeth yn ei ysgol, a'r cydnod, yn cael ei nod i'r cydnod, i'r ddwybod i'r ddefnydd y cwmion i'r fawr a'r eithaf ar yn meddwl hynny, yn cwmion i'r rhai o'ch bydd o'r ddawwch chi ar fanyddol ar ystyried. Mae hyn sy'n meddwl heddiw i'n cael ei ddechrau i'w gwych ar y dda yn mynd i gwych ar y prif ac mae hyn yn ydyn ni'n ffordd. Mae'n telio, yn debyg mewn gwirionedd, fe'r wych yn sygu'r cyfnod gwneud o dabasau ac amgylchedd yn diolch yn fynd i ddod… …a Llywodraeth yn cael ei wneud o'r marw Merdywyddor Cymru yn ymddangos i'r Urethbaeth Cymru. Ac efallai weithio ond eich cyfnod ymddangosill, mae'r cyfrifiadau yn eich rydw i'r ffordd afael ar y tafnod. a we'r rhanig we'r housing, a we'r rhanig transport o'r rhanig, heddiw i'r rhanig yn y container, yn y container movement space, a we run a ballgail business, which is really a frank or a nation business, which we really work with lots of different customers, and we bring them together and try and create an efficient supply chain. I guess our premise is we're trying to take waste out of the supply chain and therefore low, low the cost and create efficiencies and to support the big strip strategy that I talked about. I guess one of the reasons we can do it and take the direction we're taking is we do bring scale to our network. We move about six and a half million tonnes and when you look at the Fonterra network, which is our largest customer, there's about 30% of the Zealand's export TEU that goes through our system. There's over 50,000 TEU, which is 20 billion containers, and about 9,000 or even close to 100,000 important containers as well. When you think about a few other metrics, we move products on the road and on the rail, but we're about the largest user of rail in New Zealand. We run about 26 rail services a day. We run about trucks, we have on an average day between 600 to 1,000 trucks on the road under our control. We own about 100 trucks ourselves, so that's the 40-odd business that actually coordinates other people's trucks. We run those across about 1,000 laneways between about 100 or so different sites, customer sites. We have six of our own hub locations that we're developing and we've got other warehouses around the track, so it's a pretty large network. It doesn't compare to, say, a main freight or a toll or Breville infox or Peter Baker. There are a lot more complex than us. We're bulk, we're rail to hub, so simpler than that perspective. Logistics isn't here in the complex. And then when you look at the type of freight we move, it's quite simple. It's bulk, it's containerised, it's pelletised, but it's food-crate and it's dairy-crate. So it once again adds an element, I guess, of fixity. So when you sort of think about, I know I'm in an academic institute, so the next two slides will try to be a little bit academic on it. Wow, there's something you ought to be able to hear that I mean that I'm not actually going to put. Actually, I should add, I know I've got some pretty big boots to full. Philip and David has told me that the last one of the people that have spoken before me was John Key, so I do appreciate that. And some protesters came in, so hopefully I won't be as exciting as that. We'll see how it goes. So the basic premise that we run with, hypothesis, if you want to call it that, is working independently, everyone can deliver better, and everyone probably does it pretty well. But by actually working together and thinking differently, we can all make a step change around value efficiency and sustainability and any measure that can be interesting, but I guess what I'm going to talk through today is some examples of how we think we've done that. And just second thing about me, I am an engineer. I do like models, and given I'm an engineer, I think I've come up with a model. And for the academia in the room, someone might have thought of this before, but I googled it, and nothing came up, so I'm assuming it doesn't exist anywhere else. I'm sure I'll find out later whether this actually is something. But once again, we don't work on these models, but I did try and come into this going, well, actually what is a model that we sort of, all of this fits in? And, you know, you start at the left-hand side, and it all has to start with a problem. And generally it's going to be a problem that's bigger than any one person alone or more often than that. That can be a customer-driven problem that there are multiple people trying to solve. And at that point, you have got multiple people trying to solve these problems. And a lot of them will have a line strategies as to what they're trying to achieve. It's about finding those people. There's an element of cultural alignment that you kind of need to have to be working with these people, and there's a requirement to be able to see the value and share the value. And actually it leads me to a little anecdote and it goes in a way, which is the two things that really you need when it comes to collaboration is the ability to see the value and share the value. And the second one is what we call, and I didn't coin this per se, but the no dickhead's rule. Because actually if you're going to collaborate with someone, it's never going to be easy. No matter how much this model tells you it's going to work, it never quite as easy as you think. So you kind of need to, you know, you don't want to be working with dickheads. Simple as that. And the concept is you want to be able to invite them to your family barbecue. Actually the barbecue and dickhead's rule. But, and you need to trust, have a level of trust that when things go wrong you can work through it. The other thing that this has is the big circle around the outside has two things in that. One is you sort of need some scaling. You're really going to make a change and collaborate with the degree where you can solve some of the big customer problems. You need scaling. You need a motivated orchestrator. That does the orchestrator. You kind of need someone to take the lead. If you think that you're going to all combine around the fire and it's going to work out, generally you need someone that's probably the person with the scale who can then play that lead role. If you get all those working correctly, you know, you can make a step chart. It goes back to the, I'll spend a couple of slides going, now reverting to what we do and the problem that we were facing. It's not just about Coda or it does stem from Fonterra but it's really a New Zealand problem. It starts with the customer in particular getting our products on shelves in Asia and recognising that customers are getting more demand in terms of cost, service, quality. Particularly when it comes to food products and I'll make decisions looking at the products based on the the news buy day. Whether it's been used by or not I'll choose the one that is the newest. That's the mentality. You're competing against large global players that can get onto shelves a lot quicker than you can. So really, I guess the point from that leads to that actually as a country we need to be competing against the rest of the world and not against ourselves. Not against not competitors here. We need to be competing against the rest of the world. How do we work together to make that a reality? And then you look at the challenges that I know many in the room are once again more at worse than me. We are so reliant on ocean freight the old adages that we are more reliant on them than they are on us. It's not efficient to come down to New Zealand they might just not bother coming now there's a lot of reasons why that may not happen but you can lay on top of that the big ship strategy that I talked about before. Suddenly we need to change what we're doing if we're going to accommodate the bigger ships that are here today. And we need to prepare for them we need the ports to be dredged, bigger cranes etc etc that we've seen for that there's investment required investment requires business cases that requires someone to pay and it requires cargo to make sure that investment can pay off and then it actually the other point is that particular ship there is actually very efficient I think they not sure of the size relative but 26% to 30% more efficient than some smaller vessels but only if it's full and once again you think about the dynamics of New Zealand and the fact that we've got 10 I think container ports or even I'm not sure old days a smaller ship would be able to bounce around all the ports and fill itself up because products are all these different ports and it would had a certain time that it taught a bigger ship can't get to all those other ports so that ship comes in here can only go to one or two maybe three ports it's all that frames that has to get on that ship that's not actually at that particular port we've got a we've now got a challenge to fill that particular ship and that requires us to think completely differently about how the land side supply chain works how do you console that freight close to the big ship port so that when that ship comes in it you can very quickly offload it online and I guess once again a theory is that these ships don't want to hang around for much longer than a small ship so suddenly you've got to be so a simple customer problem has turned into quite a large logistics problem here in New Zealand so once again it all comes back to investment thinking about a different network and then how do you make that happen and of course you look at our New Zealand land side then work and the story I just told is just about how we need to change it and that requires investment and building hubs and it requires better use of rail and you know interchanges, intermodal capability all we do know about the New Zealand network it's inherently inefficient rail depending on where you look is in the order of 30% utilize 70% under you trucks anywhere between 60% to maybe 90% utilize if they're really going well but we have got lots of space in our network so I guess the point is how do we look at our land side network and take waste out of our land side network first create value out of that before we start looking to invest too much further and I guess we need to think differently because you know it's not just the old way of scale which is what I talked about before having a means you've got a big step because the old strong competition on every stage of the supply chain it's there today yet we still have an efficiency so the old way doesn't work from a procurement perspective the standard how do I beat my suppliers up to create a different way of working or to try and create value out of the supply chain doesn't work so we need to think differently and what's missing now we've got the demand, we've got the services we've got people that do stuff so what's different we don't collaboration, we're not talking all of these things are working independently trying to solve problems independently their own problems and they're probably quite good at it but when you start to look at that big problem that I've just taken you through people working independently can't solve it then you start to look about you know how you think differently you know what thinking differently means from a commercial perspective as well and if you think about and now you'll be familiar with now this is essentially a pretty simple supply chain or any supply chain and the way of thinking is to do it is eventually from the start of the supply chain through to the end of the supply chain you work out how your warehouse can be efficient and you run it really really well and you've got working hours and you've got labour, loasters etc because that's the way to make the warehouse efficient you then run the trucking company and tell them in this case imagine that's a truck you've already worked out you're going to go to the nearest port because surely the lowest transport cost is to get to the nearest port and you run the truck and you tell them what time they need to be there because you've worked out placed on your really efficient warehouse what time you've presented on the port port it's all got supply chain 101 fantastic and your truck then goes to the nearest port because you've got the lowest landside transport and you know what there's only one vessel there and you've negotiated the hell out of that you've got the best rate and maybe there's two vessels and that actually was the exact scenario for product in the low and the low on the island of at a fareraw and they went in for some new plumbers it was probably a quite a wise supply chain but then you looked at the relative cost of that supply chain and worked out that actually at a port of Tehran at the time there were versus the one or two services at New Plymouth there were 13 at a port of Tehran and they were quicker services to where you needed to get to in China and so you started to think well actually maybe I'll optimise this first I think that's the way to why am I dictated to by what's happening over here which is that sequential and you start to and then okay we can use rail and you start to think about the supply chain differently now your ocean freight's come down and these are obviously theoretical numbers your land transports are able to be gone up you're moving product further probably a lower unit cost per kilometre at the rail or verse road and then your warehousing may have gone up because to meet your rail schedule now you might need to extend the hours of your warehouse or change the way the warehouse works or even modify some components of the warehouse so you can see you're investing in a supply chain but your prize is captured because you are able to see the end to end supply chain and start to think differently about how not just about how product flows but how the value is flows captured so if you turn that into a um I guess a collaboration value model evolution I'm not really a theoretical one so hopefully this won't make sense and what I've just talked about is you've done a probably quite a classic rationalise and thinking to end and it sort of works but it's only in the very start of a collaboration journey in terms of how you actually capture value in that case I've just talked about you've lowered the end to end cost you've actually improved your services to China on this past you've got more services you've rationalised your ports in a way you are taking the freight to another port where more services are you've got the best mode and you've got a pretty damn good supply chain um so you can't argue too much but then and I'll use the Qatahi in the Coda formation model at this stage so Fonterra had done this particular piece of work and actually just to go back to the people on the tarant you couldn't understand why would you see into products what we used to see in the 150k and now you see in the 500k because they couldn't see that end to end value chain whereas Fonterra was able to go well I'll just say 20% of the motion that stacks up to be makes it work well but then see actually dairy is quite seasonal so if I can work with collaborate with other cargo owners now and I look at apples and I look at Kiwi fruit et cetera all those containers so I don't know why don't we collaborate with other cargo owners and we can now start to look at how we can square curve our demand and the first thing we do is we can commercialise some space on those vessels and make some money and that's why Qatahi was created so Fonterra spun off an organisation called Qatahi about now I think now and that Qatahi was able to go out and work with other cargo owners and square curve the demand and and arbitrar to rate in a way buy a certain rate and then sell it in the marketplace other cargo owners were paying a lower rate and the cargo was complimentary created an either stream but it also increased leverage so that Fonterra could then go to the carriers and once you rather than beat them up for better rates they go actually if we do this well enough and we screw that demand and we start to jointly plan about how your assets are operating we might be able to take a whole ship out of rotation and so there's one whole ship you don't bring down to New Zealand so what's that worth another layer of collaboration in a way where I think it's worth $25 million and there's a discount, still a price discount you're still about how your prices now come down and come down and you're complimented the price that you're paying with some EBIT over here and you're having really positive discussions with the ocean freight carriers around how you're helping them to be efficient and run their network and what does that look like in terms of the price and discount so it's working closely with the partners to optimise assets at a lower risk at a lower risk for the ocean carriers then you go a step further and you start to say well how do I how do we fundamentally change the cost base of the network now bigger ships come in here because it was going to change anyway in terms of the big ship strategy and what once again that's the real talent stuff on taro needed to do to make sure that it can accommodate big ships but how do you change the cost base and or lower the cost to serve to get a share in that value and that's taking collaboration to another whole level again because suddenly this is where I go back to that theoretical model about other queues etc people won't inherently share the value although you might not have a big stick you need to create the mechanisms and the aggressiveness having that scale and being that orchestrator helps so how do you say well okay Mr Oceanfailer you're going to move to a big ship we know that's going to create efficiencies for you we've taken a vessel out of rotation we're smoothing the volume to make sure that we can accommodate your ship you're going to save a lot of money how do we get rid of that so then you start to think about long-term deals because they need the cargo so that's when you had Fonterra through Tatahe joined with NERSC joined with Port of Telong to go or a 10-year deal stake in the port we'll give you our volume you can go on and be as you can create what you need to do and you start to get skin in the game and that's when Coda was born because Coda was actually a formation of the landslide entities from Fonterra which was DTL and the landslide entities from Port of Telong who were the TAPA priority and box company called MetroBox and MetroPack so they brought the landslide entities together team over them and run them as a single organisation so once again it's taking another whole step of what collaboration means in terms of how commercial arrangements so that the value can be shared so you go back to that model you're now sharing the value in more unique ways long-term ways you're working with people who you're invited to value you're all strategically aligned and in the case of the landslide Coda became their orchestrator with the scale behind us at Fonterra to bring all those partners together to make this network operate so that we can solve ultimately the customer problem, we had our own customer problem just getting the port at the lowest cost given the learning effort and that's making the industry widely really to lower network costs, reduce waste, leadership, funds, marriage, that makes sense and I guess from that point I covered this one a little bit different because at that point you've got to write so how do I scale it further now you're starting to talk about well I think anyway about integrated planning how you seamlessly connect all the partners how you take ecosystem thinking how you basically bring more people into your model and how you can do that seamlessly far beyond what you can do I guess through traditional mechanisms we start to look at digital technology growing scale quicker obviously to create either streams etc, new value opportunities and things like the TNX marketplace that we invest in and as an example of that type of thing that I'll just show a quick screenshot of later. So I guess that was my attempt in a way to think through what we've actually done in terms of Fonterra, consolidating ports, creating Qatar, smoothing demand, creating big ship capability for forming CODA and then even investing in TNX. All examples of where we've had to work across the industry collaborate, think about the commercial models that we can put in place so that people would actually work together and construct it Any questions at that point? It's kind of a natural break before I go on a bit of a death by power point example Quick question Scott. Are you inviting people to your family barbecue at the outset of this exercise? Have you already selected who you're going to invite and know they're not decades using your terminology? Or have you picked them because of their volumes and their likely synergies and you find out later their decades? It's a tough question. I think there's a bit of advice. If you look at the laxer is where you've got to start. That strategy piece really is where you need to start. I probably shouldn't answer the second piece of what you find out about people later but you do need to assist that. It's like any selection process I guess you have to be structured about it and you do need to assist a number of factors and one of those is the cultural fit but that can be found out just by a willingness to come to the table. It's actually, my dickhead thing is a little bit facetious in a way because even if you don't quite like them you kind of need to trust them which is probably more like family right? Which is the barbecue piece. You often go to barbecue or something like that. Anyway I might be on the page so I don't have quite an answer to that. I didn't expect a precise answer on this. It's interesting but I didn't have the answers. I wonder if you did any research on this beforehand because in the US they do a lot of this sharing and co-sharing and reducing costs. I looked down three couldn't find anything and moved on. I've been a little bit facetious there as well. I don't think I don't know what other industry players in the room think but I don't think we're that theoretical about this. We kind of New Zealand does have some unique challenges. We just looked to solve problems we had in front of us. We had to work on the partners we had in front of us where the ocean carrier was only a few ports. I would maybe we could we possibly could learn more by going further afield and looking but I personally haven't done much other than the Google I did to see if anyone else had done more. I don't think this is rocket science to be fair. This is just moving trucks to trains to but look this all started and you might have even been around in Fonterra where a lot of it started. This started by some smart people coming in and advising. But even at that point the big ship strategy was just something we knew was happening so you can sort of see the factors that are starting to evolve people's thinking. So once again I'm not sure I'll answer that question as well but I don't think we have which is why I'm interested to see what other people think. That's why coming and talking to an organisation like the University of Auckland in this supply chain program is interesting for me because I love to know what we're missing. So the question is if I could go back to one slide because I think the story tell us a great story and it starts at the left hand to be able to get to investment and your commentary if I can ask you around a New Zealand temperature controlled network which I think is underinvested bursting at the seams and decay because of the age of the assets and the suitability for modern supply chain requirement in New Zealand. So I think it's a New Zealand industry question so you would be if I see a problem one, two, three, four blocks along the journey do we start there to solve a collaborate problem or do we really need to start at the beginning to get to trust to make the big investment in the cool chain? I think you've got to think about I mean the first thing about this is ending to me so people are really aware we run obviously chilled containers because of the containers container but when you start to think about the landslide network particularly the model I'm about to show you the way we've changed the network it would be difficult to do chilled particularly frozen so there's an element of it's quite hard and as soon as you've got a frozen transport leg or chilled one you need the right infrastructure either index or index but it does become more tricky I think there's something about even just the biggest issues web blocks in the can is just being able to find complementary cargo from others and then be able to consolidate it becomes inherently more difficult with chilled web bounds an example for example is that you can't put frozen chickens on the same you remember this one on the same space as frozen butter not too sure why because they're both frozen but you just can't now there are often things around food and great ambience that you can't do either but it's a little bit more flexible there are some things around children but I think if you get over how you can scale the landslide network because once it's in a container it doesn't matter then you could start but really unlocking this right away through this supply chain is every mode needs to be connected every mode needs to be able to be shared if you like they're going to say you might have a warehouse to the truck the train, the boat once it's in a container it becomes easier so I I'll answer your question I think you're here the answer to New Zealand's infrastructure challenge in the temperature control spaces to be the scale and I think back up to your model which was Tom's question earlier what's interesting about the children again is finding that orchestration is quite hard because unlike the ambient market where you've got a lot of small players and there's space for one large player to come in and start to create some of this activity if you look at the children network and there are less players for a start I think it's a higher barrier to entry those players are inherently bigger as a result so you've got a number of quite large players they're probably finding amongst themselves that here could be the best and then ultimately you need the customer finding us a large customer that can I guess take the lead and you look at once again this isn't based on theory you look at the chilled market and there's a supermarket Fonterra is not dominant Fonterra was dominant in the ambient food trade so it gave it I guess that but their scale was enough that they could start to try to change they even don't have that scale in the children network so you've got all these players that are about the same and so no one of them and I think this almost comes back as a model of one it does maybe someone can help me quite fear later and that's always the challenge we've had which cargo owner can we go to and start to have this discussion knowing that if we have that discussion we can actually change the market everyone you go and talk to you never think enough to change the market everyone in the one room but then they all got different that's that complexity things which I think still comes back to here in this case Katani was able to be around containers be that have the scale of commercialised we have been able to do that from a land side ambience trucking district doing it in a chilled network because none of us really have the scale like I say like BBQs you don't actually need to like them you just need to respect them and you need to know that they have got some pulling power in the scale great answer may I ask you to go back to your model it's worth publishing that putting your name against it you actually want to go back we just want to tell me that I want to ask a question because I think once again if I may just talk about the temperature control challenge for New Zealand ingredients are there to find the right answer it's maybe the match how do you light the fuel with different thinking I think part of the issue New Zealand though is like that Ford dealer is always seeing the opposition as the Ford dealer he's never seen Toyota or Honda or it's been Ford against Ford whereas instead of thinking about New Zealand or New Zealand we tend to think about exactly the same products that he's company does whereas if you're going to collaborate that together and start thinking like this and start planning with the dealer it almost does go back to that chicken burst butter example we struggled to go why can't we do that it was early before I had to into that that chilled this model of the chilled we just couldn't get it across the line so does it have to be limited to chilled food does it have to be limited to chilled food couldn't it be a cross industry collaboration oh well yeah and from a chilled perspective you mean I think so I know so your question is does it just have to remind the chilled product that it can't be across the spectrum I think as soon as you're dealing with food there are certain requirements that really do restrict what you can do I think that's what that might be just the question of design of the vehicle that you're using or design of the 711 dead and you go back to this model in a way actually what's not on here and is depending on what the problem is somewhere in here there's investment and these partners all need to invest in different ways like to go and invest in a new sort of kit so suddenly share share assets you only really want to do it if you know that you've got all the cargo owners on board that are going to then commit to that there are often often truckies going to create new types of kit because there's a market for them but when you're starting to do the spoke type arrangements and you'll see the example I'm going to take it through you're starting to invest in the spoke type assets to solve a problem like this and they're quite unique you kind of want to know you've got 10 years out of it so you still need to know that first so you needed to have really got these people all lined up before you work out how you're going to solve the problem in a way because you've all got a you're all involved in the problem you've got a line of strategies and you're all kind of born into it you then set about trying to solve as opposed to I guess the old way which is I'll build a truck I'll build it like this and I'll see if I can get you know what and then I'll respond to the next area and see if I win and I might get a two-year contract and I might get a one-year contract I might get no contract so it's that challenge of investing base and particularly once again this is a big problem, this is a significant investment to change the network that other model I just talked about is people operating the same network but trying to get there you know get a little bit of competitiveness which goes back to that wherever I had that other thing there just trying to compete and it works but it's still inefficient and you're still thinking Scotland, in terms of the large supply chain players in New Zealand how much more do you think there is for collaboration like how many are involved in this network that we're talking about I think there's huge scope we're just touching the surface we're quite we're getting the criteria but we're very specific around food graders and great companies doing similar sorts of things with a whole lot of more general freight company like main freight does it very well inherently within their own network but our needs are really within everyone else they're very good at filling a truck up with boxes and they probably fill it up both ways so this is once again just not the need to us but at the same time there's a huge amount of waste still on our network then we're also very focused on the rail and I'll show you an example next there's inherently more investment and thinking required to try and crack the rail and then this is scalable that model is scalable it can just be some people within their own network the guys doing a line whatever the connection thing is in Napier and Nelson through to why why it works to be in that line can you walk me down a great job two trucks thing is two maybe three bottles one way one pretty simple but pretty obvious but they weren't doing it before someone sat there and thought we can do that but we didn't have the flash model to work that out either just took some different thinking and the other thing about this is there is always some losers as soon as you take waste out of a trucking network and you have product in two trucks and empty leaves the other way and you put them in one truck there's one truck driver that hasn't been allowed so there is a natural selection that goes on it's not all beer and pizza at Cumbiara under fire you've invited some people in some people get missed out for waste to be taken out of a network it means that there'll be and often it's the noise you hear after the factors that people would have missed out because they've suddenly gone more waste they're empty and it takes a while for those assets to be removed from the system eventually they won't be there anymore and eventually only the top people will go through comes back to who you choose people have to be the quality players they need to be sustainable they need to be viable etc so there's always something you need to think about so it's a it has some tough money what I thought I'd do then this is something we use this is really just an example of what we've done and from a contextual perspective this is the North Island Auckland where you've got importers and you've got distributors this is a port it's actually a port of Taronga but it could well be port of Auckland this is the low on North Island where you've got and I guess the dynamics of New Zealand as a country is that most of our most of our importers distributors are actually in Auckland most of the stuff is consumed in Auckland a lot of our large exporters are down country and in particular this is IRA that we brought in this case that we talked about before and in the case of imports and domestic product probably if you think about this very general supply chain stuff that's made in Auckland that's a percentage that gets consumed in Auckland 25% gets consumed in the low on North Island 25% goes to South Island roughly so this is a model in Old Island and of course the problem I talked before about and I'll start with the import supply chain and the import supply chain is not too bad import containers come into the port they get railroaded through to the import so where they get debanned the stuff gets by on the shop and the empty container goes into the storage facility interestingly enough I don't know how many don't know what percentage it is I think New Zealand's biggest import still even though what New Zealand's biggest import is empty for you yeah we bring in more empty containers than what we do before now might be some theorist might tell me that's a good story but it's about right I'm pretty sure it's wrong it was your name so that's why that's there that's empty containers once you've been going into the container stack so we've got an import container that's now a container sitting on the stack because it's got a staff then you look at the export supply chain and we send them the empty container down to the manufacturer of the export when we put them on rail to get to the port two things about this which are interesting one is that it's obviously empty still a container and that is only partially utilised because once again the ship comes in and it's loading the order in the order stack and it's put on a train and it's order by order the warehouse is being very efficient and it's loading the orders and it realises where the train comes in and it's quite an efficient supply chain and actually Q-Rail I think it's quite good because they're getting paid both ways the fact that nothing's in there and actually Fonterra's quite happy then you've got your so your actual train is 70% underutilised even though it's got a container both ways 70% of the time there's sort of air in that in that train because this rail here is not often not fully used because you've only packed enough to go under the order to go under the boat and you haven't thought about maximising that train then you've got your you've got your then you've got your domestic supply chain where you've got your importer's seam-stucked distributors who've seen 25% of it down to the Royal Royal Parliament and ordinarily that truck might go back empty not always but we end up with trucks being about 40% empty or empty 40% of the time so once again you look at that supply chain and in each individual supply chain you've probably worked quite hard to get it quite efficiently so that's how you can have a look and a lot of dotted lines and so you go and then you overlay the strategic issue that we had which was to fill a big ship and to get product close to port to be able to fill a big ship and you go and say what are we going to do how are we going to rethink this network and at that point it's all about bringing the supply chains together to take waste out of the network and we start to fill that supply chain and rather than take those shipping containers that are sitting here down to the product we thought well let's take the export product to the consolidation point and a couple of useful things about this we've filled that train that particular train there whereas you had the dotted lines going down here we've filled that train because we're a 40 foot container was on a 50 foot wagon in the original model there was nothing literally a container that was 40 foot we've now got two of these 25 foot curtain sider units so we've added 30% capacity going up then so 30% more product is now on that rail network that's a huge win and we've consolidated our freight close to the port ready for that big ship now we've had to change the whole model no longer picking on orders don't have picking just to replenish the order that's going to be placed up here so it's all the things we're going to work through and this is now a very great facility because we're unpacking that container and we're sitting that product in the crosstalk there's a cost involved in that at that point we bring the container across to this point here stack it into an export box and rail it straight to port what's interesting about this rail line is we're filling that train as well because it's shorter closer we can get multiple orders on the train and by the way that's actually got more capacity on that rail line than that rail line and so in the old model we were driven by the capacity of that one so that went round there so that you couldn't that was not only underutilised but you couldn't put as much on it even if it was fully utilised so you've got that one fully utilised and you're pumping more product out to now what is the bigger ship so it's loaded so you've solved that initial strategic problem you had about getting freight close to the big ship port and then being able to move freight a lot quicker than that port and you're taking waste out of that out of that you've lowered the cost of the export supply chain but you're double handling and you've had to invest in a smart bit of kit around intermodal units and you've had to build a big unit facility because one didn't exist but it was driven by rail see how do you pay for that if you actually look at the import supply chain probably not much changed still product could come in and might even come in Auckland burst harrowman but it just still goes to the importer but empty containers can possibly come straight to this facility where it can be close to the export container or import product can come to this facility as well so suddenly you've got import product you've got export product all in the same facility so you're utilising that facility a little bit more and you're getting a bit more revenue and return out of it once again complementary product and how you manage that segregation etc and the next bit is where the gold dust is because at that point you're taking the domestic product remember these guys, we're not rail service so they don't don't have access to rail and they're used to doing because in fact rail is all about export containers predominantly but you need to have they're used to trucks and the other thing, I hope rail was inherently unreliable and a truck's not a bad thing it turns up got rubber wheels and move wherever it needs to move to and you know that when it leaves it's kind of going to go straight and might stop for a time on the way but it's going to get to where it needs to and probably pretty quick time and if there's a block which on the motorway or it might go to go around but rail ridges out unreliable and historically it always was so we had to really work with rail to convince the distributors that actually we can road your product to this facility or we can take one of these units to your site, you can load it up bring it to us here we'll put it on the train and take it down to our hub down here you've now got both ways rail 100% full on-road again across to the distributor they undo that they take the stuff out and then there's only one um leg that's actually got nothing in it and in terms of the pacifier rail this is a leg between Palms to North and the gun almost just down the road better utilisation of rail list trucks on the road so quite complicated and someone's going to manage it people have to change you come back to the frontier they have to fundamentally change how they load export boxes they used to load them on that's a container now they're loading the site on in fact they're now taking that's quicker so they had to modify their whole operations amount that happened but they got savings so quicker loading of containers they got savings because they get lower cost because you're actually fitting more on a wagon still paying the same wagon rate from a coded perspective we can fund that because we're now selling that space going south people that are in that the FMCGs that are in that are now on rail and paying less what they were on road and we've managed to work with Q-Roll to make sure the reliability is where it needs to be different than what it used to be on a truck but then that's reliable so if you think about overall strategic benefits we're taking the picture strategy because we're close to the port in terms of their consolidation point we're creating, we're sending stuff further which goes back to the very left-hand side of their continuum of the collaboration continuum but we're creating more efficiency because we're using road and rail better we're increasing the utilization of the return trip to actually 100% we're full-boat weight from where I had it earlier which was 30% we're actually full, that train, that particular train between Fyrra Auckland and then Auckland and Tauron it's full-boat weight and we've increased rail capacity by 30% which is what I mentioned in terms of that 54% in a 44 container this is 25 ft on that 50 ft container and we've lowered staff and we've created new trucks off the road and saved fuel reduced carbon emissions and equivalent plantings and trees so that's a great story at the strategy benefits, at the economic benefits social and environmental but it's been hard I had to create assets cross-stop intermobile units but the thing about intermobile units is that if you're going to invest in these you need to have long-term contracts because in fact they fit through two tunnels between Palmerston North and Fyrra the other units, the other intermobile units in the New Zealand Rail Network don't they might eventually if they start being pulled very quickly but right now they don't and so we had to design these and the lights you actually noticed are slightly in we had to design them because we've got normally an export container doesn't have pellets in it so it can be a bit lower that's why it can get through the tunnels we had to design the opening height so that we could look at the product coming out of Fyrra and I think 85% of it in terms of density can fit on these with pellets that point we had to work out how how much structural rigidity you had down the boundary in terms of the height of the actual unit you really had to get through tunnels then we had to have a high door height so it's a lot of design when in these they had to be food grade in terms of sealable all the other intermobile units on network wouldn't be sealed in terms of and to make the food grade requirements security requirements they actually needed doneage bags that you can't see there they just put it in here so that the low stability was there so we had to specially design doneage and blow up bags and things like that and you'd pump it up and you'd let it out again so it kind of makes sense but you've got to think through all these things through which is sort of the quality compliance, the dairy compliance and the business system even getting the order now placed on several drives which is where our Auckland facility is versus the order being placed on quite a lot of huge until they had to change their way of thinking the FMCG had to change their business systems we had to get the humeral working far far more better than what they were so they had to see value in this go back to the collaboration model they had to see some value in this but we had to turn that into dollars and make sure that they were happy with that and culturally they had to make some bit of mind-seek shifts to think about to be proud of kind of make sense but it's a big organisation getting them on board was tricky same with all years all years we were losing at this we were taking the trucks off the roads we had to keep them engaged because we still need them and as I mentioned FMCGs had to think about how their network ran differently because actually not all the FMCG products could go on this so we had to go and actually think about your product in terms of base verse flex what's your base product that you can pump up every single day put it in here and all the stuff seemed to go on a truck so they had to start thinking about what their and I know many of them do anyway but just making sure that they think about the lead times etc and their replenishment verses critical and then when you think about going back to my model around and I'll give you an example of countdown we bring countdown on the seven drivers an import box rather than that box going to their site where they work out where it's going to go they leave it on our site they then bring us in the evening and they tell us the box is weedy then we know exactly what product is going to go into that TSF unit we know what product is going to go to their warehouse for replenishment and all that or which product is going to go straight into a container a different container to be coiled down to Christchurch so once again we take that away from them because we've got this central unit with all the export containers the exports are where the imports are arriving so we start to do that type of multimodal a different way of thinking about the supply chain that the FNCGs had to really be in their mind and change their mindset to adapt or adopt so I want to move away from a physical model and I want to actually go to the this is a segue again so let's go back for it any questions on it so I remember when we moving to that very right hand side collaboration piece because the other might go back to a question actually the other thing that we we said there about two years ago and we've got all this great network and we're talking about our truck network now 100 trucks 1000 A1s etc 600-900 trucks on the road a day every day at about 3 o'clock we were still on the phone looking for a truck and every day we still had some freight that we couldn't find a truck for so here's Edward so that truck doesn't take that freight there's some structural challenges for the trucks on the road and everyone else was doing the same thing every other company was 3 o'clock everyone was looking for trucks whereas there's a ton of trucks and a ton of freight but just not connecting so the standard way of connecting just was on the phone and it didn't quite work so we just did the old classic imagine that we had Uber for trucks because in an Uber the person that knows where the taxi is is the taxi driver the person that knows where they want to be picked up from is waiting to be picked up and we need to do this to match very seamlessly so we did a bit of research this time rather than once again trying to do it ourselves because we I hadn't thought about doing it ourselves but this was just a little bit out of the league and we found a couple of guys or three guys in Switzerland two Americans and a German that were doing and this was it so we realised that it's what we were looking for we also realised that these were pretty smart guys and we could do well by having them help us out they were looking for somewhere to incubate and develop this model in a different detail they were looking for investor so we ended up buying 30% of the organisation so we went from a I guess a physical asset type organisation we'll be able to break a role to being a tech investor sort of but we were able to help them develop it and start to work on how it will work in New Zealand and I actually went back to Europe to start to sell it out there and it works and there's two things it's smart logic that can mean that you can connect and go back to the collaboration mantra lots of people lots of freight with lots of trucks seamlessly now there are obviously constraints and there's things you need to fill in the closed pool may work in versus the open market but from technology perspective and you've got these sort of interfaces that people actually quite like using one of the biggest challenges we've got is that most cargo owners don't want this because they know which trucks are coming to pick up their stuff and they want that person so they don't want and they like blue star taxi so once again it's a mindset because how do you take people on a journey that actually this is still a useful tool and in the States for example there's a very big open market spot market for trucks, New Zealand New Zealand's very relationship based so it comes back to the collaboration question most people actually in New Zealand like collaborate with the people that they've already invited to the BBQ which is fine, I've made the analogy slightly before and over there but they don't spread their minds to go who's out there doing some stuff who can I work with maybe I don't know and tools like this enable that but there's still this cultural mindset within New Zealand that makes that and the States I think they're over it just because of the sheer scale so New Zealand creates challenges around collaboration as soon as you've got mates working with mates well you know what, you're just going to work with your mate you could well be and you're probably party to this, missing out on something at least we had scale that we were working with so many people we kind of could pick and choose and weave it so it goes back to that comment about who you choose and are you thinking more broadly through my model but this is fascinating there's still a learning curve for us but it takes that level of collaboration to a whole new space and I think this is going on in two more slides this is actually our internal we call it strategy on page I suppose we are about keeping New Zealand competitive global access creating domestic efficiencies and thinking collaboratively with mate owners to try keeping New Zealand competitive on a global stage that's what we're here, that's what we're set up our strategy is to optimise the network it's about intermodal capability 4PL which includes the technology and 3PL solutions that need to be quality and trusted and none of that's unique either we're technically doing that not many people are doing all of these in one go but it's a bit more line that really differentiates us a little bit now we have the scale that helps we've got the partnerships once again through that network that we've created and as a result we're able to take the network you be innovative and create the network that we need to create so that's that approach where you're harnessing the power of many to keep us all one step ahead so yes we've got a close call of many people working with and the ones we've selected but that creates the power to be able to do this but actually the bit that I this is the cultural piece actually the bit that I think really makes the difference is what loosely we call the mission which is where we are trying to think long term and trying to make life better we do once again take that orchestrator role we want to be the lead we're in the position to be the lead and we're using that position wisely and we're honest and we share I'm not afraid to tell people what we're doing because I'm sure I'll get better off to work with people working collectively you're going to get more done so we're quite happy to share most things that we're doing and why we're doing and we are about reducing waste working smarter being efficient because you're not going to be able to achieve what we're trying to achieve if you are just using the scale to have a bigger stack just won't cut it and it comes down to the last one people just won't hang around because there is no value on that there might be short-term value but not long-term value so it's about thinking differently being transparent and actually sharing those benefits which is why that last one creates value if you can't do that you can't put people into the value you share the value effectively none of this will it will stay and we call it smarter logistics together and it's fine, it's just a nice way but you know we live by that and it works, it has its challenges which goes back to the last slide which I thought I'd better begin so why not now this is tough because you know logistics together is a great theory but any one of these starts to erode and life changes and I go back to my 1.37 or 1.37 model that I talked about actually we had a global economic downturn and the 7 went to 5 before we even started this whole thing because suddenly motion freight carriers were dropping their rates trying to stay alive so suddenly 1.37 sharing the value the value wasn't there to share and people didn't need to do all this great stuff to get a low ratio so you have to sort of rethink it so things are always changing if you think you've got a collaborative model and the value proposition is really clear and everyone's aligned on your strategy strategies changed value propositions changed people changed, organisations changed therefore your partners might change and be able to do the best which any thoughts, questions if I'm stalling someone's model I'll still have to do that Doug Landliff question on your 4PL network how wide did you make available beyond your partners were you open free model like mistakes no I wish you we're pretty limited really and I think that's one of our challenges over the next couple of years is how we could actually make that a little bit more open and I think the 10x model would help but in fact it's funny I'm going to segue slightly in a way this can be a bit of a wrong feedback as well because and we find it our model is very much around the area it's very much around the compliance levels so we don't think too much beyond that, we're looking for compromise we can't find it, we give it a miss there's lots of value out there that we think we could capture, we're just not going up and our competitors do it really well and I would consider you're kind of a hamstrung a little bit of a wonderful collaboration tool that we've created but it means you can tend to be you know, you stick to your if you're very clear on that very clear on that you're kind of, you're walked into this so your level of entrepreneurialness can be can actually be a little bit you know, hindered I guess so, you know, you might have multiple of these but in our particular case around our 4PL it's probably hindered our growth a little bit and that's it's not a secret, it's just we are we are in some of our next phases so once again 10x was an example to go a while how we plan our space to be part of something question certainly my experience has been that continually changing landscape shipping lines come and go, change reports strategies change, people go changing sort of partnerships that I have established it is Australia that keeps them together you know, you think you've got it all lined up and then within a year or two years you can see things beginning to move you started off with a 10 year term a 10 year term again would you go 5 years or 20 years or what's your how do you feel that dynamic plays out given that there's a real investment to be made or what I was actually going to say as you were talking time was that it was really important to have the tees and seas and the legals behind it no matter how much you think your family or your family and your loved ones coming to your barbecue you know, you can't you've got to do all that as well there's another thing on the model which is you cover your ars so that's the first point I guess all of those things are vitally important if you think you're going to do this just based on absolute trust then I think there's a way to count you'll be equal there I think 10 years I wouldn't go longer or will your investment, whatever that may be has got to be sent over that period and I think it would probably demand that and I think there's another part is that most organisations this is a mindset thing most organisations you couldn't commit you go to any board and you go to any room because no one no one actually will think no matter how long to them they'd like to think I'll go and get that but no no, do 10 10 plus 10 I'm not sure 5 plus 5 but I don't think you need to go much longer than 10 10 is a long time I mean what's interesting you look at but then you look at someone like Hebrew and you look at governments and local bodies and I think in 20, 30, 40, 50 years they need to there's always this disconnect between what you're doing now and what you're investing for now versus where how the net works might change there's lots of different dynamics you need to consider I don't know how long they are investing out but I've got a lot of a lot of resources that they can absolutely think on to so how do they how do they play it everyone has different risk to advertise you need to consider something thank you thank you nice to meet you what you've worked on is fixing a problem which wasn't solved by competition or I guess it's blind spots in businesses where supply chain wasn't major focus so putting it into a new organisation to do that so how is this going to kick on from a New Zealand perspective with a port strategy and what we're doing with these big lumps of infrastructure and I guess the public investment behind some of these assets you know there's another thing that's sort of related that we're doing this but there are competitors you know also what can you do the same thing the same thing a little time exactly the same thing and there's two scores of thought one is that we're actually duplicating assets and you're going to go look at little time and look at bollustyn and go that's a long story we're going to take some containers and there's another one right next door so you go that's a bit straight the reverse Mike's just left going a very similar sort of model in terms of nexus in terms of what they're doing which all works but there's the second score so your first score is actually why don't we all play together and then it begins a bit hard as well a line score is surely the ports can be a little bit more strategic because what doesn't I need in the most in all of this is that it's port on port and we're still seeing ports competing against port and we're just a pawn in the ports game if I could be a little bit bold but where I was then going to take it is that I actually think you take a long term view and you know we're only getting more and more freight and we are there's always going to be too much for one one collaborative outfit anyway so the challenge then is short term, this long term how do you work together now or do you only wait until you have to you know you go to Robleston for example they'll be both both middle and metric will both be outgrown within sort of probably 10 years so at what point do you go let's work together right now we're hugely competitive so so I don't quite it's a tricky one you can only play the ball that's in front of you you can only play within the time frame that you will prepare to do risk you will prepare to take and you are going to be competing for the customers for example on a Robleston area but at the same time you need to be confident as we are with our Fonterra volume or our Western volume and we're happy with that so it's a real tricky one in terms of whether New Zealand goes back to a New Zealand discussion whether we should all sit back and kind of all throw our cards on the table everyone come into the same room the ports, all the trucking companies rail and go right down and make the swing with the tricky ones where you go you know what, I'm going to make my little thing work and I know how much weight I need and I'm going to have a competitive advantage I am going to compete against those guys but I'm going to do it in a very collaborative way and a sustainable way but it's going to work for me might not work for me where is the tipping point I'm not sure so we kind of play the ball with some fun of us we play just certain key customers that we have we're not, as an organisation Coda we're not sitting there trying to capture the market and warn everybody we're going food grade dairy containerised, pelletised complementary to Fonterra where it makes sense so we'll target them because actually if we get them this model works and we can lower the cost for them and we can lower the cost of Fonterra and we can create the model and that should be enough compelling proposition so that the other guys go well in some cases we directly compete even on those you win some, you lose some but it becomes quite a this goes back to my point around you do become quite particular who you deal with and why you deal with them which frame is going in the opposite direction that's compatible how much is it how much of it is there who are they currently used the business development becomes quite targeted and it becomes more talking about money so Marcus someone about you become quite particularly focused as opposed to just there's no such thing as a cold call in this model it's very much around who you use, think you can work with goes back to the model and why they fit why they are in this box probably the key who you talk with can you get on with them are they prepared to come to the table I'm not prepared to actually there's alignment but they might need to change a bit but they're not prepared to come to the table or they don't take that policy maybe you need to take them here showing them your money but knowing that actually they have to invest to get that money and they need to change what they do so it becomes a bit of a trying just to get them all set up and then things change and as you get bigger and then you have a box the real link to me is a little bit of a misnomer in a way we often talk about it but they're kind of yeah my first comment about how we compete against the globe and not each other I buy into a degree because at the end of the day we aren't weird but important we need to make sure we get volume across just the same as Dale we've got a large customer they need to get their containers there they just want to know that they can balance that and get a lower rate so you know what we all have competing factors and that's how you overcome it I try to mark it as I can see it that's my time if you do have any more questions for Scott we do have about 10-15 minutes of drinks where you can discuss and ask questions Scott thank you very much it sounds like you're trying to solve many problems and it's a globalisation technology ever changing interesting model I think our collaboration is a way to go so it does work anyway right now so thanks very much thank you thank you