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Logistics and Supply Chain Manawatu Region Sector Profiles 2010: Logistics and Supply Chain Providing you with a better understanding of the different components of the Manawatu Region economy and the contribution each sector makes to the demographic and economic growth of the region. Images below are courtesy of KiwiRail and NZ Post The sector profiles for the Manawatu have been developed by the Palmerston North City Council to provide a better understanding of the different components of the Manawatu economy and the contribution each sector makes to the demographic and economic growth of the region. Even within the broad industrial sectors of the Australian and New Zealand Standard Industrial Classification (ANZSIC) 2006 there can be a diverse range of activities undertaken and it is useful to understand which sectors are growing and are likely to grow in the future and their overall contribution to jobs and incomes in the region. The profiles are drawn primarily from Statistics New Zealand data. Background material on the logistics sectors was drawn from the book The Handbook of Logistics and Distribution Management (3rd edition) by Alan Rushton, Phil Croucher and Peter Baker. Valuable advice was also given by Walter Glass, Corporate Logistics 2010 Ltd. For further information please contact Peter Crawford, Economic Policy Advisor, Palmerston North City Council, Private Bag 11034, Palmerston North (email: [email protected]). PUBLISHED BY: City Future Unit Palmerston North City Council Private Bag 11034 Palmerston North Phone: 06 356 8199 Fax: 06 355 4115 www.pncc.govt.nz Manawatu Region Logistics Sector Profile: and Supply Chain Contents Acknowledgements inside front cover Executive Summary 3 Introduction 5 Logistics and Supply Chain Management 6 Key Business Categories 7 Manawatu Region Logistics and Supply Chain Sector 9 Estimating the Economic Benefits of the Logistics and Supply Chain Sector Management to the Manawatu Region Economy 9 Economic Multipliers 10 Distribution Sector 11 Overview of the Flow of Goods 11 Toyota New Zealand National Customer Centre 12 Regional Employment by Distribution Type 13 Brandlines 16 Key Regional Differences 17 Transport 21 Factors Contributing to Growth in Transport Capacity and Infrastructure 21 Regional Employment by Transport Mode 22 KiwiRail 26 New Zealand Post Group 29 Palmerston North International Airport 30 Advantages for Distribution Centre Location in the Manawatu Region 33 Central Location in New Zealand 33 Ease of Business for Logistics Operations 33 Images below are courtesy of KiwiRail and NZ Post 1 Manawatu Region Sector Profile: Logistics and Supply Chain Images courtesy of Brandlines, Foodstuffs, KiwiRail, NZ Post, Palmerston North Airport and Toyota. 2 Palmerston North Sector Profile: Logistics and Supply Chain Manawatu Region Logistics Sector Profile: and Supply Chain Executive Summary The logistics and supply chain sector comprises wholesale trade, transport, postal, warehousing and non-store retailing activities and is a significant employer in the Manawatu region, accounting for 5,870 jobs (10.6% of total employment the region in 2009) and a similar proportion of total employee earnings (the employee earnings total of $228 million in the year to June 2008 includes an estimate for earnings in non-store retailing). The logistics and supply chain sector in the Manawatu region grew strongly over the last decade, with the 45% growth in employee numbers significantly higher than the 21% increase in total employment in the region. The 1,860 jobs created in the sector between 2000 and 2009 accounts for nearly one fifth of the total employment increase in the region during this period but the sector currently “The logistics and accounts for just over one in ten jobs in the region. The region’s employment growth is even more remarkable when compared with national employment supply chain sector in growth in the logistics and supply chain sector, which grew by just 8% between the Manawatu region February 2000 and February 2009. grew strongly over The key issues for logistics are land, labour and flow (i.e. that products can flow the last decade, with in and out easily at all hours). Part of the success of the Manawatu region as a the 45% growth in logistics hub is the ease of business for logistics operations in Palmerston North and Manawatu District – businesses can be located close to the city’s airport employee numbers which is rarely closed and is very efficient. Trucks can get in and out of the region significantly higher in any direction relatively quickly at any time of the day and there is good railway than the 21% increase access. The presence of a large student population assists with the supply of a in total employment in flexible workforce in the region. the region. The 1,860 Distribution centres and transport operators are essential elements of the supply jobs created in the sector network between farmers, manufacturers and importers and the final customer. A large retailer such as a supermarket may stock thousands of different products between 2000 and 2009...” from more than a thousand different producers and it is not feasible for each supplier to ship product to each individual supermarket in New Zealand. To manage the flow of goods from the producer to the customer some producers operate their own distribution networks to manage the supply of products to individual customers. Some retailers own and run their own distribution centres to consolidate shipments of product from thousands of suppliers while other distribution operations are run independently of either the producer or the supplier. Images below are courtesy of KiwiRail and NZ Post 3 Manawatu Region Sector Profile: Logistics and Supply Chain The development of distribution and warehousing facilities allows manufacturers to increase their efficiency through larger production runs of a single item. They are able to supply products on a quick response basis by storing surplus product while other items are being produced. Warehousing and improved storage technology has also been important for the steady supply of seasonal products to customers throughout the year. Increased automation of product handling in distribution centres is leading to the development of larger facilities where automated equipment is increasingly used to select products which have been previously brought into the distribution centre and to pack shipments for distribution to the final customer. The growth of large distribution centres in the region has been obvious as a result of the construction of large distribution facilities, particularly in Kelvin Grove and the North-East industrial area of Palmerston North City but there has also been strong growth in smaller distribution centre and wholesale employment in Manawatu District over the last nine years. There was a 55% increase in Manawatu District logistics and supply chain sector employment between 2000 and 2009, accounting for a third of total employment growth in Manawatu District during this period. 4 Manawatu Region Sector Profile: Logistics and Supply Chain Manawatu Region Logistics Sector Profile: and Supply Chain Introduction The development of the logistics and supply chain sector has been occurring as long as human settlements began trading outside their local community and moving beyond individual stores of key supplies, particularly perishable goods such as food. The goods that people wanted were not always produced where they wanted to consume them so means of transport and storage methods began to develop. Seasonal production of agricultural products meant that people had the choice of consuming goods when they were harvested or moving the produce to a preferred site and storing it for later use. The development of communal stores for produce is an early example of the developing logistics and supply chain sector. Traders travelled beyond the boundaries of their local community and local kingdom, looking for new resources to trade for a profit. This resulted in trade flourishing, even when the means of transport were still “The development very primitive. of communal stores As transport networks increased and the technology for preserving goods for for produce is an later consumption increased, the distance between consumers and producers early example of the began to widen. Regions were able to specialise in those commodities which developing logistics could be produced more efficiently than other regions and were able to supply commodities out of season to consumers located in another hemisphere. The and supply chain sector. concept of comparative advantage has been a founding principle of economics Traders travelled beyond which is used to explain the huge growth in international trade which has the boundaries of their occurred, particularly since the Second World War. The growth in international trade has also been supported by rapid gains in the cost effectiveness of transport local community and local and progress under the World Trade Organisation (WTO) and its predecessor the kingdom, looking for new General Agreement on Tariffs and Trade (GATT) to remove or reduce barriers to resources to trade for a trade between countries. profit. This resulted in Increasing global wealth levels have also significantly contributed to the range of trade flourishing...” commodities now expected by consumers while increased competition between producers on a global scale means typical grocery stores now offer a vast range of products compared with what was available even 50 and 20 years
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