economic analysis of air freight · international air freight services across sydney, melbourne and...

ECONOMIC ANALYSIS OF DIRECT

INTERNATIONAL AIR-FREIGHT

OPERATIONS AT CANBERRA AIRPORT

REPORT FOR THE ACT GOVERNMENT, CHIEF MINISTER, TREASURY AND ECONOMIC

DEVELOPMENT DIRECTORATE

27 OCTOBER 2016

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Contents

Glossary ..........................................................................................................................................................................3

Executive summary .....................................................................................................................................................4

The Existing Opportunity ...................................................................................................................................... 5

The Reconfiguration Opportunity ...................................................................................................................... 6

The Catchment Exports Opportunity................................................................................................................. 7

Conclusions ............................................................................................................................................................... 8

Introduction................................................................................................................................................................ 10

The Canberra Airport catchment area ............................................................................................................... 12

The Catchment Economy ...................................................................................................................................13

Quantifying the freight opportunity .................................................................................................................... 15

Overview of international air freight ................................................................................................................15

The existing opportunity .....................................................................................................................................15

Determining the reconfiguration opportunity ..............................................................................................16

The latent export opportunity ...........................................................................................................................19

Enabling future transport network development .........................................................................................25

Estimating the economic impacts ........................................................................................................................ 27

The air freight scenarios ......................................................................................................................................27

The Existing Opportunity ....................................................................................................................................28

The Reconfiguration Opportunity ....................................................................................................................31

The Catchment Exports Opportunity...............................................................................................................33

Conclusion .................................................................................................................................................................. 37

General reliance restriction

This report is only for the use of the ACT Government (represented by the Chief Minister, Treasury and

Economic Development Directorate). It was prepared for the purpose of understanding the potential

economic opportunities of direct international freight access scenarios from Canberra Airport. You should

not use the advice for any other purpose. This report should not be used or relied upon by anyone else and

we accept no duty of care to any other person or entity. Due to the uncertain nature of economic data and

information available, Cadence Economics does not warrant the completeness or accuracy of the analysis or

estimates provided in this report.

© Cadence Economics Pty Limited 2016 www.cadenceeconomics.com.au

http://www.cadenceeconomics.com.au/

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Glossary

ABS Australian Bureau of Statistics

ACT Australian Capital Territory

ANZSIC Australian and New Zealand Standard Industrial Classification

BITRE Bureau of Infrastructure, Transport and Regional Economics

CBRJO Canberra Region Joint Organisation

CEGEM Cadence Economics General Equilibrium Model

CGE Computable General Equilibrium

GTAP Global Trade Analysis Project

GTEM Global Trade and Environment Model

FOB Free On Board

FTE Full Time Equivalent

GDP Gross Domestic Product

GIS Geographic Information System

GRP Gross Regional Product

HK Hong Kong

LGA Local Government Area

NPV Net Present Value

NSW New South Wales

SA2 Statistical area level 2

UAE United Arab Emirates

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Executive summary

Canberra Airport’s 2014 Master Plan clearly outlines a vision to develop the airport as a facility to

service the capital and surrounding region as a hub for passengers and freight. A key element of

this strategy is to move beyond domestic services and look to international markets. In terms of

developing international linkages for the region, flights commenced from Canberra Airport to

Wellington and Singapore in September 2016. In regards to freight, public statements made by

airport management have indicated that a $42 million investment is being considered to realise

the potential of Canberra Airport as a freight hub for the region.

Canberra Airport has a number of key advantages in relation to handling international freight.

Currently, international air freight services for New South Wales importers and exporters are

primarily provided by Kingsford Smith airport in Sydney. As Australia’s main international gateway,

Kingsford Smith is attractive in terms of its existing facilities and proximity to both the industry and

population in Sydney. However, as passenger demand through Kingsford Smith increases,

combined with the night-time curfew, that facility is nearing capacity.

By comparison, the Canberra Airport has no night-time curfew, significant runway capacity,

existing tarmac side warehousing facilities, land for development, and easy access to improved

road infrastructure. In addition, Canberra is close enough to both Sydney and Melbourne for

express goods to be delivered by road freight while still meeting the express delivery service

standards of major air freight operators. As well, Canberra Airport has great proximity to the

produce of South East New South Wales. These unique factors position Canberra Airport as a

viable alternative to the traditional international air freight gateways of Sydney and Melbourne to

provide international air freight services.

Against this background, this report presents an assessment of the international air freight

opportunity facing the ACT, the Canberra Region and the Catchment in relation to international air

freight operations at Canberra Airport. The findings of this report assist with the ACT Freight

Strategy, in particular through helping to develop a detailed understanding of the air f reight

opportunity.1 Similarly, the findings will inform future collaboration activities between the ACT,

NSW Government and the Canberra Region Joint Organisation (CBRJO) to capitalise on

prospective freight opportunities across the ACT/NSW region.

1 1 See, for example, https://www.transport.act.gov.au/about/policy/transport_planning_studies/act-freight-strategy/ACT-Freight-

Strategy-ACTGov-ACCESS.pdf (Accessed September 2016), Action 1.2.6 – “Investigate economic issues and opportunities associated

with the freight industry in the ACT and surrounding areas and develop a detailed understanding of the air freight opportunit y to

support direct international flights.”

https://www.transport.act.gov.au/about/policy/transport_planning_studies/act-freight-strategy/ACT-Freight-Strategy-ACTGov-ACCESS.pdf

https://www.transport.act.gov.au/about/policy/transport_planning_studies/act-freight-strategy/ACT-Freight-Strategy-ACTGov-ACCESS.pdf

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The analysis in this report is based on a detailed assessment of international air freight movements

undertaken by Auxiem Management Consultants (Auxiem). Auxiem are supply chain experts who

provide strategic advice to freight and logistics firms in relation to both domestic and international

markets (notably operating in Singapore) and have consulted with key market participants in the

context of this study. The analysis undertaken by Auxiem has been augmented by a detailed

consultation process of 19 trade representatives, industry participants and industry associations.

Economic modelling is then undertaken to quantify the potential benefits to the Canberra Airport

catchment region (the Catchment), the Australian Capital Territory (ACT) and New South Wales

(NSW) of different scenarios considering increased international air freight activity at Canberra

Airport.

Based on this analysis and industry consultation, three categories of international air freight

scenarios are considered in relation to the investment in capacity mooted by Canberra Airport

management:

The Existing Opportunity which is narrowly focussed on shifting international air freight

from the Catchment currently handled in Sydney and Melbourne to Canberra airport.

The Reconfiguration Opportunity which is based on consolidating international air freight

not only based on production in the Catchment but also to better balance international

trade lanes from Sydney and Melbourne to international freight hubs, resulting in

improved efficiency.

The Catchment Exports Opportunity builds on the reconfiguration opportunity as exporters

across the Catchment are assumed to take advantage of additional international air freight

capacity to increase export volumes.

The Existing Opportunity

It is estimated that 37,107 chargeable tonnes of international exports originating from the

Catchment leaves each year through Sydney and Melbourne Airport, valued at approximately

$226 million, as outlined in Appendix A. This equates to roughly one fully loaded 747 freighter of

international exports from the Catchment region per day.

Imports by international air freight into the Catchment, routed through Sydney Airport, are in

excess of these export tonnes based on consultation with freight and logistics firms. As such, under

this scenario a reasonable assumption is that the international air freight operation redirecting

flights to Canberra Airport will be able to balance exports and imports, in other words planes will

arrive full and leave full.

When considering the existing opportunity two scenarios are undertaken with different

assumptions made about the air freight displaced from Sydney airport. Under a conservative

assumption, there is no net increase in air freight services. In other words, the air freight services

reallocated to Canberra from Sydney are not replaced with additional exports (they are offset). The

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alternate assumption is that the international air freight relocated to Canberra allows for more

exports from NSW so that the aggregate freight task is unchanged in Sydney Airport (they are

additional).

The benefits accruing to the Catchment come in the form of lowering overall freight costs for

exporters and imports as well as additional activity from increased air and road transport activities

in the region, which yield benefits in terms of economic activity measured by Gross Regional

Product (GRP) and employment (shown in Figure 1).

Figure 1: Estimated benefits under the Existing Opportunity scenarios

Net Present Value (NPV) over the period 2016 to 2030 discounted using a 7 percent real discount rate.

The results show that the main benefits under the Existing Opportunity scenarios accrue to the

Canberra region. This is because the primary benefits under this scenario are driven by the

additional economic activity associated with the investment in international air freight services and

ongoing operations, which are located in the ACT. For example, employment is estimated to

increase on average by around 100 full time equivalent positions (FTEs) across the Catchment over

the period of the scenario (under both the offset and additional assumptions). Just over 90 percent

of this increase is in the ACT.

The Reconfiguration Opportunity

The Reconfiguration Opportunity scenario assumes a major transition in the structure of

international air freight services across Sydney, Melbourne and Canberra airports. The premise of

this reconfiguration is the current imbalances in international air freight that, through detailed

analysis by Auxiem, have been shown to exist and that can be ameliorated to a large extent

through a consolidation of activity through Canberra Airport with the appropriate road freight links

whilst meeting the current service level.

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Under this scenario, two configurations have been considered. The first considers a consolidation

of air freight from the three major international hubs of Singapore, Dubai and Hong Kong (3 lanes),

shifting 279 current Sydney and Melbourne flights to Canberra airport. The second considers

consolidation of air freight to and from Singapore, redistributing 113 flights that would otherwise

depart through Sydney and Melbourne.

The benefits under the Reconfiguration Opportunity scenarios (shown in Figure 2) are significantly

higher for the Catchment overall compared with the Existing Opportunity scenarios. This is directly

related to the volume of international air freight being reallocated to Canberra Airport, resulting in

lower transport costs. For example, employment across the Catchment is estimated to increase by

between 142 and 339 FTE on average under the Singapore and 3 lanes assumptions respectively.

This compares with an estimated increase in employment of around 100 FTE under the Existing

Opportunity scenario.

The bulk of the benefits across the Catchment are estimated to be in the ACT which, again,

accounts for around 90 percent of the employment benefits.

NSW is estimated to benefit from the Reconfiguration Opportunity due to efficiencies being

generated in international air freight operations. Employment in NSW is estimated to increase by

69 to 98 FTEs under the Singapore and 3 lanes assumptions respectively.

Figure 2: Estimated benefits under the Reconfiguration Opportunity scenario


The Catchment Exports Opportunity

The final scenarios consider the potential benefits the Reconfiguration Opportunity offers to

exporters in the Catchment area. Building on analysis by Auxiem, producers in the Catchment have

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available to them additional export capacity from Canberra Airport on the Singapore lane of over

5,600 tonnes after rebalancing has taken place.

This scenario is stylised in nature. During the consultation process we were unable to establish a

clear cut, latent demand for international air freight services from the Catchment area. In other

words, based on broad ranging discussions with relevant stakeholders across the Catchment, there

was no definitive evidence that the lack of international air freight services at Canberra Airport was

acting as significant barrier to producers in the region. Rather, it is assumed that the availability of

these services to a major international freight hub will result in entrepreneurs across the Catchment

looking to take advantage of export markets in markets where the region is well placed,

particularly agricultural production.

The benefits under the Catchment Exports Opportunity scenario (shown in Figure 3) are

significantly higher for the Catchment overall compared with the Reconfiguration Opportunity

scenario. This is directly related to the additional volume of exports. Notably, the benefits of this

scenario accrue mainly to the catchment outside of the ACT. For example, employment in the

Catchment excluding the ACT is estimated to increase by between 110 and 134 FTE on average

under the Singapore and 3 lanes assumptions respectively.

Figure 3: Estimated benefits under the Catchment Exports Opportunity scenario


Conclusions

The analysis undertaken in this report illustrates a significant opportunity exists for international air

freight services at Canberra Airport, but that magnitude and geographic spread of the benefits are

varied:

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Under the Existing Opportunity scenario, the most narrowly based scenario, the bulk of the

benefits are shown to accrue to the ACT region.

Under the Reconfiguration Opportunity scenario, based on a substantial consolidation of

international air freight, the estimated economic benefits are larger and accrue mainly to

the ACT and NSW regions.

Under the Catchment Exports Opportunity scenario, where exports are assumed to

increase from the Catchment area, the benefits are largest and accrue to the entire

Catchment, including the ACT, and NSW.

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Introduction

Air freight is critical in moving time sensitive and high value products into and out of Australia.

Goods such as pharmaceuticals, electronics and certain fresh, short shelf life agricultural products

depend on air freight. This has increased the emphasis on reliable, cost effective and efficient

international air freight services. In addition, air freight is an important contributor to the

underlying the viability of airline operators.

For New South Wales and the ACT, Kingsford Smith airport in Sydney is currently the port of

choice for the bulk of incoming and outgoing air freight, with smaller levels of trade through the

Brisbane and Melbourne airports. The co-location of Kingsford Smith to the state’s economic base

is the characteristic that has historically made it the port of choice. However, Kingsford Smith is

reaching capacity as passenger demand increases and other factors, such as the night-time curfew,

competition for landing slots, road traffic congestion and geographical constraints on expansion,

conspire to make that airport less attractive for international freight operations.

Indeed, air freight is a critical element of the proposed need for a second Sydney airport at the

Badgerys Creek site. This airport is unlikely to be operational until around 2025 if construction was

to commence next year. It is also not known whether this airport would also be constrained by

noise curfews in a similar manner to Kingsford Smith.

By comparison, the Canberra Airport has no night-time curfew, significant runway capacity, land

for development, and easy access to improved road infrastructure. In addition, Canberra is close

enough to both Sydney and Melbourne for goods to be delivered by road freight while still

meeting service standards demanded for express freight. Importantly, the ownership structure of

the airport allows for relatively easy and low cost reconfiguration to accept both international air

freight and passenger services. These unique factors position Canberra Airport as a logical

alternative to the traditional international air freight gateway of Sydney (and to a lesser extent

Melbourne and Brisbane) to service importers and exporters in New South Wales.

Canberra Airport’s 2014 Master Plan clearly outlines a vision to develop the airport as a facility to

service the capital and surrounding region as a hub for passengers and freight. A key element of

this strategy is to move beyond domestic services and look to international markets. In terms of

developing international linkages for the region, flights commenced from Canberra Airport to

Wellington and Singapore in September 2016. In regards to freight, public statements at the

recent Air Freight Symposium made by airport management have indicated that a $42 million

investment is being considered to realise the potential of Canberra Airport as a freight hub for the

region.

Against this background, this report presents an assessment of the international air freight

opportunity facing the ACT and the Catchment in relation to international air freight operations at

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Canberra Airport. The analysis presented in this report builds on a previous study conducted by

Cadence Economics titled ‘Economic Analysis of Direct International Air Freight Operations on the

ACT economy’, finalised in December 2015. With that as the starting point, this analysis has been

augmented by a detailed assessment of the international air freight movements undertaken by

Auxiem Management Consultants (Auxiem). Auxiem are supply chain experts who provide

strategic advice to freight and logistics firms in relation to both domestic and international markets

(notably operating in Australian and Singapore) and have consulted with key market participants in

the context of this study. This analysis has been enhanced by a detailed consultation process

undertaken by Cadence Economics and Auxiem of 19 trade representatives, industry participants

and industry associations. Economic modelling is also undertaken to quantify the potential benefits

to the Canberra Airport catchment region (the Catchment), the Australian Capital Territory (ACT)

and New South Wales (NSW) of different scenarios considering increased international air freight

activity at Canberra Airport.

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The Canberra Airport catchment area

Canberra Airport is the primary regional airport for the ACT and surrounding regions. Significant

recent investment through the ‘AirVolution’ project has seen the new terminal increase in size by

approximately five times. Apart from the significant increase in the terminal’s capacity, additional

flexibility has been introduced for the airport to service commercial international air traffic.

In addition to the core aviation activities the airport precinct is host to a number of other economic

activities, including retail operations hosted at the Majura Park Shopping Centre, commercial

activities hosted out of the Brindabella Business Park, and the recently constructed hotel

accommodation operated under the Vibe brand. Building ownership at the Canberra Airport

precinct is relatively unique compared to many other airports servicing major cities, with most

buildings on the site owned by the Canberra Airport.

As mentioned above, this report represents an update of a December 2015 study undertaken by

Cadence Economics and Auxiem titled ‘Economic Analysis of Direct International Air Freight

Operations on the ACT economy’. That previous report contained an area known as the ‘Canberra

Catchment’, an unofficial geography agreed between the ACT Government and Canberra Airport

and used (including outside these reports) when considering access to services including air travel.

The Canberra Region Joint Organisation (CBRJO) is the basis for much of the ACT Government’s

official regional engagements activities. This geography also aligns with the NSW Government

South East Strategic Planning Region.

Figure 4 shows the geographical boundaries of this original Catchment area, used in the previous

study, highlighted in light orange. This area encompasses the ACT and 61 NSW SA2 regions over

130,000 square kilometres. It ranges from the south coast of New South Wales to Nowra, and

extending west to capture towns including Temora, Wagga Wagga, Holbrook and Hay.

For this analysis, the defined area of the Canberra catchment has been expanded to consider a

wider range of regional areas that might take advantage of international air freight services at

Canberra Airport. Shown in brighter orange in Figure 4, the regional definition of the catchment

has been broadened to include 8 SA2 regions of Cowra, Cowra Region, Forbes, Grenfell, Blayney,

Orange, Orange – North and Orange Region, which together form the LGAs of Weddin, Cowra

and Orange.

In addition, this report also details the impacts for the Canberra Region – a region acknowledged

by the ACT and NSW Governments. LGAs in the Canberra Region include Yass Valley,

Queanbeyan-Palerang, Goulburn-Mulwaree, Hilltops, Upper Lachlan, Eurobodalla, Bega Valley,

Snowy-Monaro and Wingecarribee. This geography aligns with the NSW Government South East

Strategic Planning Region. The Canberra Region Joint Organisation (CBRJO) is the basis for much

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of the ACT Government’s official regional engagements activities. For clarity this region is shown in

Figure 4 encompassed by a dashed line.

Notably, while Kingsford Smith might be most frequently thought of as the natural alternative to

Canberra Airport, a great deal of the Catchment is closer to Melbourne than to Sydney – for

example, Hay is approximately 420km from Melbourne and 720km from Sydney.

Figure 4: The Canberra Catchment

Source: Cadence Economics

The Catchment Economy

The economic profile of the Catchment is summarised in Chart 1, which shows an estimate the

proportion of value added by industry2 as a measure of economic activity in the Canberra Region,

Catchment, in the combined NSW and ACT region and in Australia.

2 The estimate of value added determined using the value of wages paid by each industry in each geography as a proxy. In the absence

of any data source that allows decomposition of GOS and Taxes less Subsidies on Production we make the implicit simplifying

assumption that (for example) capital to labour ratios by region are constant. Data at this level is constructed from ABS Table Builder

queries of the 2011 Census.

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As expected, the presence of the federal government in Canberra sees a relatively high proportion

of economic activity in the Public Administration and Safety sector. This is offset by a relatively low

proportion of activity in Mining, Manufacturing and Financial and Insurance Services.

Chart 1: Share of economic activity in the ACT, the Canberra Region, the Catchment and NSW,

2011

Source: ABS 2011 Census and Cadence Economics estimates

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Quantifying the freight opportunity

A key question when considering the feasibility of an international air freight facility at Canberra

Airport revolves around potential demand for services. This includes the potential demand for

outbound services by exporters in the Catchment, as well as importers.

In assessing the magnitude of the opportunity, three questions have been asked:

1. What are the potential benefits from reallocating existing trade flows to and from the

Catchment area?

2. Is there a potential for Canberra Airport to become an international freight hub based on

existing international air freight movements to and from Sydney and Melbourne Airports?

3. Is there a latent export opportunity from the Catchment that is not being realised through

the lack of access to international air freight services at Canberra Airport?

Two approaches were taken to consider potential demand for international air freight services at

Canberra Airport. The first was to review international air freight data from the Catchment as well

as broadly from Sydney and Melbourne Airport. The second was a detailed consultation process of

a range of trade representatives, industry participants and industry associations in the Catchment.

Overview of international air freight

The Canberra Airport and the Catchment is conveniently located within major sources of air freight

importing and exporting activities and road freight flows on the eastern seaboard. Australian

international trade is dominated by imports, which is reflected in the most recent3 ABS estimate of

the balance of goods and services trade suggesting trend estimate exports of $26,045 million and

imports of $28,403 million in June 2016 for a deficit of $2,358 million. Over the twelve months to

June 2016, exports of goods and services totalled $311 billion with imports of $347 billion for a

deficit of approximately $36 billion. Significantly, metal ores made up nearly one quarter of the

value of Australian exports in this period, the bulk of which are exported from Western Australia.

The existing opportunity

Key to measuring the existing freight opportunity is developing an estimate of the level of exports

from the Catchment area that currently departs via Kingsford Smith and Melbourne airports. As

there is no off-the-shelf data product that provides this information, we undertook a

decomposition based on a combination of international trade statistics from MariTrade, ABS 2011

Census data, GIS analysis and specialised freight analysis by Auxiem.

3 ABS 5368.0 - International Trade in Goods and Services, Australia, Jun 2016

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The central assumption in this parameterisation process was that, owing to proximity, any exported

product that originates in the Catchment area would be exported via Canberra Airport rather than

Kingsford Smith or Melbourne if the service were available.

This rule is applied to existing exported product destined for China, Hong Kong, Singapore and

the United Arab Emirates. We include each of these end destinations based on the assumption

that rerouting is able to occur freely as required.

A detailed account of this process and the assumptions is provided in Appendix A.

Determining the reconfiguration opportunity

Utilising airport capacity for international freight in a city of similar size to Canberra is not without

precedent either locally or internationally. While having only been in operation for a year, the

Brisbane West Wellcamp airport in Toowoomba hosts direct international freight flights.

Internationally, the Glasgow Prestwick airport is located approximately 50 kilometres from the city

centre of Glasgow in the town of Prestwick, and from April 2014 to March 2015 hosted over

12,000 tonnes of freight.4

Similarly, the Bangor International Airport in Maine, USA, is located in a city of similar population to

Canberra and has historically been a joint military and civil facility. It is a comparable distance to

other major airports in Boston and Montreal.

Bangor International Airport has similar advantages to Canberra International Airport, with

uncongested, curfew free access. Leveraging these attributes this airport has developed into a

freight hub with over 500 cargo landings annually5 with major customers being UPS and FedEx.

The Canberra Airport has a number of attractive properties that make it an ideal geographical

location as an international freight hub, providing a centre of gravity to both the economic centres

of Sydney and Melbourne, the lack of a night time curfew and immediate access to high quality

road infrastructure.

When assessing the opportunity presented by reconfiguration of international freight services the

analysis is driven by the end goal of addressing existing trade imbalances for freight into and out

of Sydney and Melbourne on a lane by lane basis, with the ultimate aim of increasing the efficiency

of the overall freight task.

4 http://www.aircargoweek.com/glasgow-prestwick-appoints-cargo-director-aims-grow-freight/

5 See http://www.flybangor.com/assets/July2016StatisticsRpt081916.pdf , accessed October 2016

http://www.flybangor.com/assets/July2016StatisticsRpt081916.pdf

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For example, existing data indicates that on the Singapore trade lane imports dominate exports

from Sydney at 40,381 tonnes and 25,641 tonnes respectively, while from Melbourne imports are

less than exports at 31,327 tonnes and 40,330 tonnes respectively – yielding a total trade

imbalance of 23,743 tonnes on the trade lane. By reallocating 9,053 tonnes of freight to Canberra

Airport we are able to redistribute freight into underutilised international airfreight capacity by

road freight (reducing the cost of the domestic component), while achieving balanced trade flows

in Melbourne and Canberra, with a trade imbalance of only 5,647 tonnes in SydneFy as compared

to 14,740 tonnes currently.

This process is repeated separately for the Hong Kong and the United Arab Emirates trade lanes,

with a detailed account of this process and the assumptions provided in Appendix B.

Perhaps the most notable future competing investment when considering freight reconfiguration is

the development of a second Sydney airport at Badgerys Creek. The development of a second

airport for Sydney has been a topic of public discussion for many decades, including historical

proposal for Canberra Airport to be the second Sydney airport in conjunction with high speed rail.

More recently however the choice of development at the Badgerys Creek site has firmed

significantly, including associated infrastructure development such as the Western Sydney

Infrastructure Plan at a value of $3.6 billion over a period of 10 years.6

While any development at the Badgerys Creek site will undoubtedly add significantly to both

freight and passenger capacity in the Sydney region, there remains a number of key advantages

for international air freight reconfiguration to include Canberra Airport, in particular the advantage

of an existing curfew free operation, the geographical advantage, and the advantage of Canberra

airport being a facility already in operation.

The geographical advantage: In combination with the existing lack of night time curfew, Canberra

Airport has a strong geographical advantage over the Badgerys Creeks site. While Badgerys

Creeks is well located to service Sydney, Canberra Airport is some 200 kilometres closer to

Melbourne using present day road networks. The advantage of geography is the key differentiator

for Canberra airport – and without it the modal switch in the freight balancing strategy from air

transport to road transport that drives the productivity uplift could not occur.

6 See http://www.rms.nsw.gov.au/projects/sydney-west/infrastructure-plan/, accessed September 2016

http://www.rms.nsw.gov.au/projects/sydney-west/infrastructure-plan/

18

Additionally, with the population of Western Sydney slated to increase by a million people by the

early 2030’s7 the existing issues of traffic congestion faced by freight moving through Kingsford

Smith Airport have the potential to be replicated to some extent at the Badgerys Creek site.

For express freight in particular this geographical differentiator strengthens the case considerably

for Canberra Airport to be a key element of the east coast air freight network. While the future

development of a second Sydney airport at the Badgerys Creek site will be transformative for

freight and passenger movements in Sydney itself, the geographical reach of an express network

out of Sydney from this site is unlikely to be remarkably different to the existing Kingsford Smith

airport.

The curfew advantage: The current airport operations plan for the second Sydney airport is for

curfew free operations with associated NSW Government planning controls in the area. However,

there remains strong opposition to curfew free operations, for example from the Blacktown City

Council.8

With Western Sydney often a key battleground in State and Federal politics and the airport not

scheduled to be operational until at least 2025, there is no guarantee that the plan for curfew free

operation will remain intact over the coming decades.

By way of comparison, Canberra Airport currently operations without night time curfew. This is

particularly important for express freight networks, with night time curfews impacting the

geographical range over which service standards are able to be maintained. Importantly with the

proximity of Canberra Airport to the NSW/ACT border, the NSW Government’s Draft South East

and Tablelands Regional Plan notes that the NSW Government will “protect the current and future

operations of the airport by placing restrictions on the location of residential development in the

vicinity.”9

The timing advantage: Disregarding the curfew risk, the congestion risk and the geographical

issues identified, under current plans the second Sydney airport is not slated to be operational until

2025 at least, assuming development proceeds according to existing plans.

Given the likely levels of population growth to this time, and with the investment required for

handling of international air freight at Canberra Airport comparatively small and risk free, this gives

the Canberra Airport a full decade at least to contribute to international freight productivity on the

7 See http://westernsydneyairport.gov.au/resources/faq.aspx, accessed September 2016

8 See http://www.blacktown.nsw.gov.au/News_and_Events/News/2016/July/Blacktown_starts_curfew_petition, accessed September 2016

9 Draft South East and Tablelands Regional Plan, May 2016, P59

http://westernsydneyairport.gov.au/resources/faq.aspx

http://www.blacktown.nsw.gov.au/News_and_Events/News/2016/July/Blacktown_starts_curfew_petition

19

eastern seaboard. This period of time presents ample commercial opportunity for capital

investment in the Canberra region, for example in warehousing and handling facilities, in advance

of the future opening of the second Sydney airport.

The latent export opportunity

A key consideration in this analysis is whether the lack of access to international air freight services

at Canberra Airport is acting as a significant barrier to exporters in the Catchment region servicing

international markets. This ‘latent’ export opportunity is not possible to determine readily from

existing data sources. To counter this, a range of industry participants, peak bodies and

government representatives were consulted to ascertain the nature and scope of any export

response to the development of international air freight facilities at Canberra Airport.

Around 40 consultations were initiated in this process, with substantive feedback obtained from 19

individuals and organisations.

A key theme of the feedback received was either that the potential opportunities for local

international air freight had not been considered in detail, or that the participants were largely

unaware of the possibility and had not considered alteration of their business to take advantage of

possible export opportunities. In other words, the lack of international air freight services was not

considered a substantial barrier to exporters in the Catchment region.

Consultation Case Study: Freight and parcel handler

Discussions with a major handler of parcels expressed reserved support for Canberra

based international freight services. A key concern was whether there was the required

local demand to support such a services, especially in light of the existing infrastructure

used in both Sydney and Melbourne.

The concept of freight reconfiguration was met with some level of interest, however again

the existing capital investments in Sydney and Melbourne was seen as a barrier to

reconfiguration of existing operations. This feedback highlights the importance of the

degree of capital stickiness for different industries or companies when evaluating the

economic impacts of freight reconfiguration.

Consultation Cast Study: Bulk processed food producer and exporter

We consulted with a significant producer in the region, currently exporting to a large

number of foreign countries, and one of the two exporters of containers through Sydney’s

20

main port. The consultation quickly indicated that the price of air freight was a major

impediment to exporting by air across the range of commodities they produce, being

largely bulky in nature.

Notably, the exports include beef, lamb and goat meat products, which at present are

largely exported via sea freight. While meat products are often identified as being highly

suitable for air freight, the consultation indicated that only a small percentage of their meat

products would be suitable to be exported via air freight through Canberra Airport, with

the remainder to be exported via sea freight as per current practices.

Consultation Cast Study: The truffle industry

Truffles are a prime example of a product ideally suited to export via air freight. Truffles

have a very short product lifespan once harvested of approximately 21 days to a month,

and are an exceptionally high value product with values in the thousands of dollars per

kilogram depending on the variety. Australia currently produces approximately 8 tonnes of

truffles per annum, with approximately 75 to 80 percent originating in Western Australia.

Consultation indicates that the bulk of truffles currently exported is via the express post

network.

The status of Perth Airport as a curfew free airport with direct international freight access

was noted as a particular strength in Western Australia, with growers able to harvest during

the day and have their product delivered to international consumers within 24 hours. This

compares to European markets which (depending on the day of the week the truffle was

harvested) can take up to a week for products to reach the consumer.

At a high level, the potential for local, curfew free international air freight we met with

optimism by members of the truffle growing community consulted. It was noted in

particular that the speed of freight keeps you competitive on international markets, while

reliability of your freight network prevents costly mistakes. Reliability of the existing service

out of Kingsford Smith was noted as a particular deterrent to exporters in the area based

on historical lost or delayed deliveries. Brisbane Airport was noted as an example of an

airport that suffers less from product loss or delay.

In addition the importance of a local aggregator of product was highlighted. The industry

on the east coast was characterised as consisting of many small producers, many of which

may not have the scale to effectively market their product in foreign markets when

compared to their west coast counterparts.

21

Consultation Case Study: The Poachers Way

The Poachers Way is a group of producers in the Canberra region (including Canberra,

Bungendore, Lake George, Gundaroo, Hall, and the Murrumbateman), including vineyards

and boutique processed food manufacturers. Poachers Pantry is a notable business in the

group, with production including both processed foods (notably, smoked meats) and wine.

Consultation with a key member of the Poachers Way with products including cured meats

suggested that the presence of local direct international air was not anticipated to make a

significant difference to their operations. As a guide the business aims for freight to make

up no more than eight to ten percent of the cost base, which is difficult to achieve when

using air freight. As boutique producers it was also noted that aside from cost concerns

they were unlikely to be able to export in significant enough volumes in their own right,

with a consolidator likely to be required to reach the scale required for effective air

transport.

Historically there had been some attempts to reach export markets using air freight

through Sydney Airport, however difficulties ensuring that temperature control was

maintained had resulted in goods being rejected at the destination market, particularly as a

result of meat products being aggregated with cut flowers, which require temperature

control of only 10 degrees versus 2 to 4 of processed meat products.

Consultation Case Study: Wine wholesaler and distributor

Fine wines are a common anecdotal example of a high value commodity with potential for

international air freight. To test the likelihood of wine being exported by air we consulted

with a wine wholesaler and distributor owned by one of Australia’s largest beer, wine and

spirits companies.

While fine wines are certainly high value for their weight and volume, the speed of

transport is in general not a key concern, mitigating one of the key benefits of local

international air freight. The one example of the benefit of high speed delivery was built

around the example of release of a highly desirable wine. In this instance there is very high

initial demand from (for example) foreign restaurants, which is desirable to be met with a

small initial consignment over air freight, to be followed up by the traditional route of sea

freight. In this instance air freight serves as an initial enabler, rather than the long term

export route.

It was noted however that the details of the freight route itself were only a small part of the

set of barriers to international exports, with differences in language, cultural customs, and

22

legal structures (including copyright protections and restrictions around vertical integration)

being among the barriers for local business. Examples given included the recent difficulties

faced by Penfolds in the Chinese market as a result of trade mark squatting, resulting in

costly legal disputes and settlements, and of export negotiations being threatened by a

lack of awareness of the importance of an expensive purchase (for example, wine) during

business negotiations in parts of Asia to signal sincerity of intent.

Aside from low awareness of the potential for direct freight access out of Canberra airport, three

key themes emerged around goods handling, foreign market navigation, and the potential value

of local industry cooperatives.

The importance of associated infrastructure and handling practices

Many agricultural products require specialised handling facilities or must be handled in a specific

manner to avoid rejection at the destination port. In the case of shellfish, for example, there are

facilities in Australia that must be certified by the destination country, and many raw or processed

food products must be subject to temperature control.

A number of stakeholders noted that the presence of existing infrastructure at Melbourne and

Sydney meant they would need to see the development of comparable infrastructure at Canberra

before seriously considering altering their existing arrangements.

Against this, two participants reported having difficulty with goods handling at Sydney airport,

including processed meats that must be stored at 4 degrees ultimately being rejected after being

aggregated with cut flowers at 10 degrees, while truffles had been repeatedly lost or delayed when

being handled through Sydney airport resulting in lost or reduced value. In both instances these

experiences had provided a disincentive to pursuing future export opportunities, and so there is

potential opportunity simply through providing an enhanced product handling experience and

restoring confidence in local producers.

Difficulty navigating foreign markets

A number of respondents raised difficulty in understanding foreign business markets and practices

as a barrier for small to medium enterprises successfully engaging in export markets. In the wine

export market the example of “trademark squatting” in China was given, in particular a legal

dispute in 2014 involving Penfolds in which a local businessman had filed for trade mark protection

for the company’s Chinese brand, resulting in a costly litigation process.

A further example was given in the form of Australian businesses not being aware of cultural

norms when engaging in business negotiations in Asian markets, resulting in potentially missed

export opportunities.

23

It was noted in consultations that the TradeStart network already offers assistance to local

businesses to engage in foreign markets. Some of the issues raised in consultations may be able to

be mitigated by engaging with the TradeStart network, highlighting the value of increased

awareness of these services in export facing sectors.

The value of industry cooperatives

In local industry sectors that are characterised by multiple business operating at comparatively

small scale the costs of engaging in export markets can easily outweigh the benefits. Key examples

in the Canberra Catchment include boutique foods and beverages such as truffles, processed

meats and small scale wines.

In the case of the truffle producing sector approximately 750 kg are produced in the catchment,

with the local industry primarily composed of many small, boutique producers. By way of

comparison the West Australian market has larger producers who more actively engage in export

markets. In West Australia producers also have access to a curfew free airport with direct

international freight links in the form of Perth Airport.

Through consultation with the truffle sector the potential value in a local industry cooperative or

aggregator was stressed, which would allow smaller local producers to tie into international

markets while spreading the market access costs across a larger group of businesses.

The learnings from direct consultations

Through the course of the consultations we were unable to uncover substantive evidence of any

straight forward, off-the-shelf opportunities - that is, instances where businesses identified access

to international freight services at the Canberra Airport as their primary obstacle to accessing

international freight opportunities.

It is important to note that while this doesn’t immediately support some of the informal or

anecdotal evidence of strong local demand for international air freight access, it also does not

establish that growth opportunities do not exist. There are two immediate reasons why growth

opportunities from international freight access are likely to still exist.

In the first instance, no consultation process will be able to cover all companies for whom local

access to international freight would fundamentally change their decision to pursue international

markets. There are likely to be businesses in the area who either were not approached or who

chose not to speak to us who would value local international freight access very highly.

On an ongoing basis there is scope for continued data collection and consultation by the public

sector in this regard. Regular consultation with the (current or potential) exporting business

community through (for example) economic development officers and Trade Start officers has the

potential to highlight opportunities missed in the current process.

24

Secondly, there is an element of what is known as ‘path dependency’ to business development in

any region. In this case, the lack of international air freight services in close proximity to businesses

in the Catchment area means that opportunities to export may not have been ‘front of mind’

during their development. It is not implausible that, as Canberra Airport develops international air

freight services, businesses across the Catchment expand their view in relation to growth

opportunities beyond the domestic market.

Areas of future growth potenti al

As noted above, the consultations undertaken in this study were unable to uncover substantive

evidence of any straight forward, off-the-shelf export opportunities. Again, this does not preclude

existing demand that was simply not found, nor future demand for freight services that does not

exist at present due to (for example) path dependency.

Looking forward it will be valuable for governments in the region to identify future potential

sources of demand as they materialise. One notable source of future demand for international air

freight services is in protein exports to Asia – in particular Australian meats - and a key mechanism

for this export path to develop in significant quantities is through direct foreign investment in

Australian agricultural land.

The 2016 Register of Foreign Ownership of Agricultural Land10 notes that foreign ownership in

NSW/ACT is the lowest in the country at 4.1 percent, against a national average of 13.6 percent,

with the bulk of foreign ownership being either from the United Kingdom or the United States. In

comparison the report Demystifying Chinese Investment in Australia11 indicates that a total of

$USD11.1 billion was invested in Australia from China, with $AUD375.2 million in agribusiness.

Further, “NSW is the top destination for Chinese direct investment in 2015, attracting 49.3% of the

total”.

While agribusiness investment from China made up only 6 percent of investment in 2015, and in

absolute terms the current stock of Australian agricultural lands held by Asian interests is low,

Australia is (for example) the second largest destination of Chinese foreign investment. With the

increased wealth of the ever expanding Asian middle class and the associated demand for high

quality protein this trend is likely to continue. Positive identification of and interaction with

international companies actively investing in Australian agribusiness could prove a valuable

strategy for local governments.

10 See https://firb.gov.au/files/2016/08/Register_of_foreign_ownership_of_agricultural_land.pdf, accessed September 2016

11 See http://demystifyingchina.com.au/reports/demystifying-chinese-investment-in-australia-april-2016.pdf, accessed September 2016

https://firb.gov.au/files/2016/08/Register_of_foreign_ownership_of_agricultural_land.pdf

http://demystifyingchina.com.au/reports/demystifying-chinese-investment-in-australia-april-2016.pdf

25

A further avenue for development is strengthening the awareness of existing export assistance

programs in local industry. The TradeStart network (for example) offers services that may assist

with some of the difficulties with international trade identified during the consultation process – for

example, cultural tips for doing business overseas, foreign commercial practices, and market entry

and strategy advice. Indeed, during consultation with the TradeStart network it was noted that

engagement with the TradeStart network may have helped to avoid issues such as the trademark

squatting experienced by Penfolds.

Enabling future transport network development

The development of international air freight in Canberra, whether through capturing the existing

opportunity for air freight currently carried through Sydney or Melbourne or reconfiguration of the

existing east coast freight network and balancing of international air freight lanes, relies not only

on the physical presence of the airport but also on the continued development of suitable

surrounding industry and infrastructure.

For international air freight leaving the country the typical mode of transport from the consigner to

the port of destination for aggregating and staging is via road freight. Road freight networks in

particular are highly competitive and commoditised, and the associated capital is relatively

standard and mobile.

Consignees have a range of freight forwarders to choose from, and many businesses will

benchmark multiple freight forwarders to ensure they have access to the most competitive rates

possible. As is to be expected, there is already a well-functioning road freight network in the

Canberra region ranging from small scale couriers to line-haul operators.

With the land side capital requirements (excluding customs and AQIS facilities) relatively modest,

one important factor for the development of international air freight at Canberra Airport will be

the availability of competitively priced tarmac side infrastructure to attract international freight

operators such as couriers and freight forwarders. Currently, the nearest sites suitable for

warehousing and transport depot activities lie in Fyshwick and Queanbeyan, at approximately 5km

and 10km driving distance respectively.

Much of the land immediately adjacent to the Canberra Airport however is relatively undeveloped

and currently zoned as NUZ1, which specifically disallows12 many of the uses associated with

transport networks, including car parks, freight transport facilities and warehouses. Access to the

land is straightforward via Pialligo Avenue and Majura Road.

12 See http://www.legislation.act.gov.au/ni/2008-27/copy/110372/pdf/2008-27.pdf, accessed October 2016

http://www.legislation.act.gov.au/ni/2008-27/copy/110372/pdf/2008-27.pdf

26

While elements of the logistics chain, in particular the staging areas, are ideally situated directly on

tarmac side infrastructure, there is scope for local government to assist in the development of local

international air freight operations through appropriate rezoning. This has the key benefits of

being a relatively costless operation, both in upfront investment and ongoing liability.

27

Estimating the economic impacts

Infrastructure investments, such as a potential upgrade to Canberra Airport to facilitate

international air freight, have broader economic impacts than simply the revenue and costs

associated with the specific asset. An appropriate tool for considering these broader economic

impacts is an economy-wide, computable general equilibrium (CGE) model.

Accordingly, we have applied the Cadence Economics General Equilibrium Model (CEGEM) for this

analysis to consider the range of economic impacts associated with the potential development.

These impacts range from the direct investment and operation of the facility, the reduction in road

freight costs in the Catchment for exporters and importers on key economic variables such as

aggregate economic output (gross regional product, or GRP), investment and employment.

Computable General Equilibrium models are the framework of choice for measuring the impact of

development scenarios such as that discussed here. The CEGEM model is Cadence Economics’ in-

house Computable General Equilibrium model, and is a multi-region, multi-sector representation

of both the international and the Australian economies at the aggregate and sub national levels.

The model has significant flexibility in its sectoral and regional specification, and as such is ideally

suited to analysis of this type. For additional detail on the CEGEM model see Appendix B.

The timeframe for the analysis extends from the current day to 2030, and assumptions in the

baseline of the CEGEM model such as GRP, population and employment growth have been

harmonised to ACT Government projections where possible, and revert to trend estimates in the

long run. The funding of any capital expansion required in this development is assumed to occur

privately.

The air freight scenarios

In undertaking the scenario, two economic development paths for the ACT and the Catchment are

considered. The first scenario is a reference case, or ‘business-as-usual’, scenario under which

Canberra Airport does not develop an international air freight facility. Under this scenario,

Kingsford Smith remains the main freight hub for the ACT and the Catchment.

Based on this analysis and industry consultation, three international air freight scenarios are

considered in relation to the investment in capacity mooted by Canberra Airport management:

The Existing Opportunity which is narrowly focussed on shifting international air freight

from the Catchment currently handled in Sydney to Canberra airport.

The Reconfiguration Opportunity which is based on consolidating international air freight

from not only the Catchment but also Sydney and Melbourne to better balance import

and export volumes resulting in improved efficiency.

28

The Catchment Exports Opportunity builds on the reconfiguration opportunity as exporters

across the Catchment are assumed to take advantage of additional international air freight

capacity to increase export volumes.

The Existing Opportunity

It is estimated that 37,107 chargeable tonnes of exports leaves the Catchment each year through

Kingsford Smith and Melbourne Airports, valued at approximately $226 million. This equates to

roughly one 747 freighter landing at Canberra airport per day. A detailed overview of the

estimation process applied is presented in Appendix A.

Imports by international air freight into the Catchment, routed through Sydney Airport, are in

excess of these export tonnes based on consultation with freight and logistics firms. As such, under

this scenario a reasonable assumption is that the international air freight operation will be able to

balance exports and imports, in other words plane will arrive full and leave full.

The core assumptions for this scenario are:

1. A capital investment at the Canberra Airport of $42m.

2. A reduction in the price of road freight required to transport goods to and from the airport

of $0.14 per kilo for those goods previously routed through Kingsford Smith Airport, and a

reduction of $0.38 per kilo for those previously routed through Melbourne.

3. A total of 37,107 chargeable tonnes per annum for exports from the Catchment are re-

routed from Kingsford Smith Airport to Canberra Airport. A similar volume of imports is

also re-routed from Kingsford Smith Airport to Canberra Airport.

The reduction in the road freight task as a result of international air freight through Canberra

Airport is calculated through a two-step process:

First, a benchmarking exercise has been undertaken by Auxiem, calculating a median road

freight rate per route (that is, to Melbourne, Sydney and Canberra) based on an up to date

28 carrier portfolio.

Second, an average distance reduction is calculated for freight previously departing

through each of the Melbourne and Sydney ports and now departing through Canberra.

The $0.14 and the $0.38 per kilogram charge for freight previously departing Sydney and

Melbourne respectively is then a direct consequence of the reduced freight distance and the cost

of the route change.

Under this scenario, two assumptions are made about the air freight displaced from Sydney airport.

Under conservative assumptions, there is no net increase in air freight services. In other words, the

air freight services reallocated to Canberra from Sydney are not replaced with additional exports

(they are offset). The other assumption is that the international air freight relocated to Canberra

29

allows for more exports from NSW so that the aggregate freight task is unchanged in Sydney

Airport (they are additional).

The offset scenario described in this section is included to present a “worst case” lower bound to

the economic impacts and in large part to test the sensitivity of results in the ACT and Catchment

to a pessimistic assumption on the air freight impacts at Kingsford Smith airport. The outcome that

air freight is completely offsetting is unlikely to materialise in reality.

The results are reported for three regions: the Catchment (which includes the ACT), the ACT only

and the ACT plus NSW (which includes the Catchment area and the rest of NSW).

The benefits of the Existing Opportunity scenarios are summarised in Table 1 and Table 2. The

results are presented as net present values (discounted over the period from 2016 to 2030 using a

7 percent real discount rate), averages over the period, peak results over the period and long run

outcomes (results at 2030).

The benefits of the Existing Opportunity scenario under the conservative offset assumptions are

summarised in Table 1. The results under this scenario indicate benefits to the ACT and Catchment

regions as a result of:

increased investment, production levels, employment and wages as economic activity

associated with international air freight services is redirected to the ACT;

having to pay less for road freight on exports from the region; and

having to pay less for road freight charges on imported consumption goods.

The results show that the main benefits under the Existing Opportunity scenario (offset) accrue to

the ACT region. This is because the primary benefits under this scenario are driven by lower freight

costs that are relatively higher in the ACT compared with the Catchment (notably on imports) and

the additional economic activity associated with the investment in international air freight services,

and ongoing operations, are located in the ACT. For example, employment is estimated to

increase on average by around 100 full time equivalents (FTEs) across the Catchment over the

period of the scenario (under both the offset and additional assumptions). Just over 90 percent of

this increase is in the ACT.

30

Table 1: Estimated benefits under the Existing Opportunity scenario (Offset scenario)

NPV (GRP)/Average

(FTE)

Peak Long

Run Canberra Region GRP $166 $21 $19

Employment (FTE) 97 118 92

Private expenditure1 3 $315 $41 $41

Catchment GRP $181 $22 $21


Private expenditure $320 $41 $41

ACT GRP $157 $20 $17



ACT + NSW GRP $56 $10 $4



Source: Cadence Economics modelling. Net Present Value (NPV) over the period 2016 to 2030 discounted using a 7 percent real

discount rate.

At a sectoral level, the employment impacts are heavily concentrated in the air transport sector in

the ACT, with an average increase of 221 full time equivalent employees in the sector in the

Additional scenario, with the combined wholesale and retail trade sector increasing employment

by 12 full time equivalent positions. This is partially offset by crowding out in other economic

sectors, most notably in business services (excluding finance and insurance) where employment is

reduced by 61 full time equivalent positions.

While outside the ACT the employment impacts are comparatively muted, wholesale and retail

trade and the public services sector in the catchment outside the ACT each increase employment

by 26 full time equivalent positions each.

13 Private Expenditure represents the increase in consumption of goods and services by households in each region.

31

Table 2: Estimated benefits under the Existing Opportunity scenario (Additional scenario)

NPV (GRP)/Average (FTE) Peak Long Run

Canberra Region GRP $164 $21 $18






ACT GRP $157 $20 $17



ACT + NSW GRP $225 $28 $27




discount rate.

The Reconfiguration Opportunity

The Reconfiguration Opportunity scenario assumes a major transition in international air freight

across Sydney, Melbourne and Canberra airports. The premise of this reconfiguration is the current

imbalances in international air freight that, through detailed analysis by Auxiem, have been shown

to exist and that can be ameliorated to a large extent through a consolidation of activity through

Canberra Airport with the appropriate road freight links.

Under this scenario, two configurations have been considered. The first considers consolidation of

air freight to and from Singapore, resulting in a total of 113 flights being reallocated to Canberra

Airport. The second considers a consolidation of 279 air freight flights from the three major

international hubs of Singapore, Dubai and Hong Kong (3 lanes). With four B-double trucks worth

of road freight required for a single average air freighter this translates to an additional 452 to

1,116 B-doubles on local roads per annum

The benefits under the Reconfiguration Opportunity scenario are summarised in Table 3 and Table

4 and are significantly higher for the Catchment overall compared with the Existing Opportunity

scenarios. These benefits are directly related to the volume of international air freight being

reallocated to Canberra Airport, resulting in lower transport costs. For example, employment

across the Catchment is estimated to increase by between 142 and 339 FTE on average under the

32

Singapore and 3 lanes assumptions respectively. This compares with an estimated increase in

employment of around 100 FTE under the Existing Opportunity scenario.

The bulk of the benefits across the Catchment are estimated to be in the ACT which, again,

accounts for around 90 percent of the employment benefits.

NSW is estimated to benefit from the Reconfiguration Opportunity due to efficiencies being

generated in international air freight operations. Employment in NSW is estimated to increase by

69 to 98 FTEs under the Singapore and 3 lanes assumptions respectively.

Table 3: Estimated benefits under the Reconfiguration Opportunity scenario (Singapore only)








ACT GRP $198 $25 $21



ACT + NSW GRP $450 $59 $59




discount rate.

33

Table 4: Estimated benefits under the Reconfiguration Opportunity scenario (3 lanes)








ACT GRP $394 $50 $38



ACT + NSW GRP $933 $119 $119


Private expenditure $1,138 $149 $149


discount rate.

As in the Existing Opportunity scenario, the increase in employment in the ACT is largely driven by

the air transport sector, with an average increase of 307 full time equivalent positions over the

modelling period in the case of Singapore only, and 657 full time equivalent positions in the 3 lane

scenario.

In NSW the sectoral results are significantly higher than in the Existing Opportunity scenario.

Construction, wholesale and retail trade, business services, and the public services sector increases

employment on average over the period by 48, 35, 37 and 102 full time equivalent positions

respectively in the 3 lane scenario, and 21, 22, 13 and 53 positions in the Singapore only scenario.

The Catchment Exports Opportunity

The final scenarios consider the potential benefits the Reconfiguration Opportunity offers to

exporters in the Catchment area.

These scenarios are stylised in nature. This is because the consultation process did not result in a

clear cut, latent demand for international air freight services from the Catchment area. In other

words, based on broad ranging discussions with relevant stakeholders across the Catchment, there

was no definitive evidence that the lack of international air freight services at Canberra Airport was

acting as significant barrier to producers in the region. Rather, it is assumed that the availability of

these services to a major international freight hub will result in entrepreneurs across the Catchment

34

looking to take advantage of export markets in markets where the region is well placed,

particularly agricultural production.

The scenarios considered in this section are based on the reconfiguration scenarios, with the only

difference being the level of exports from the Catchment outside the ACT. When considering the

export levels we assume that Catchment producers are able to utilise the 5,647 tonnes of capacity

imbalance remaining on the Singapore export lane in both scenarios. As might be expected the

key difference in the economic outcomes in turn accrue to the Catchment outside the ACT.

As a consequence of using the 5,647 tonnes of imbalance on the Singapore lane for the basis of

the Catchment Exports Opportunity scenarios there is no increase in the number of truck

movements between Sydney and Canberra. Rather, the empty road freight capacity from

Canberra to Sydney that exists in the Reconfiguration Opportunity scenarios is utilised, completely

removing any international air freight imbalance on the Singapore lane out of Sydney, Canberra

and Melbourne airports.

The additional 5,647 tonnes of production in the area assumed in this scenario would increase

local road traffic to some extent, however this is anticipated to be modest. For example, if the

increased production were carried by 8 tonne non-articulated vehicles operating at 50% capacity

an increase of approximately 11 vehicle movements per weekday in the Canberra Catchment

would service the local freight requirements.

The benefits under the Catchment Exports Opportunity scenario are significantly higher for the

Catchment overall compared with the Reconfiguration Opportunity scenario. This is directly related

to the additional volume of exports. Notably, the benefits of this scenario accrue mainly to the

catchment outside of the ACT. For example, employment in the Catchment excluding the ACT is

estimated to increase by between 110 and 134 FTE on average under the Singapore and 3 lanes

assumptions respectively.

Notably in both the Singapore only and the three lanes growth scenarios the economic outcomes

are very slightly reduced as compared to the reconfiguration scenarios. This reflects the balance

between the “crowding in” (for example, increased purchases of business services in the ACT by

exporters in the remainder of the catchment) and “crowding out” (for example, increased

commodity prices resulting from international export competition) impacts of increased exports

from the remainder of the catchment resulting in a slight net reduction in activity. This very small

percentage reduction is heavily offset by the large increase in economic activity outside the ACT.

35

Table 5: Estimated benefits under the Catchment Exports Opportunity scenario (Singapore only)








ACT GRP $193 $25 $20



ACT + NSW GRP $726 $97 $97


Private expenditure $811 $106 $106 Source: Cadence Economics modelling. Net Present Value (NPV) over the period 2016 to 2030 discounted us ing a 7 percent real discount rate.

Table 6: Estimated benefits under the Catchment Exports Opportunity scenario (3 lanes)








ACT GRP $388 $50 $37



ACT + NSW GRP $1,197 $155 $155


Private expenditure $1,416 $185 $185 Source: Cadence Economics modelling. Net Present Value (NPV) over the period 2016 to 2030 discounted us ing a 7 percent real discount rate.

36

Again the employment impacts in the ACT are largely concentrated in the air transport sector, with

an average employment increase of 307 and 656 FTE positions in the Singapore only and the 3

lanes scenarios respectively, matching the reconfiguration opportunity scenario closely.

In NSW the employment in the manufacturing sector (which incorporates processed foods)

increases significantly, at an average of 184 and 199 FTE positions in the Singapore only and the 3

lane scenarios. Increased capital investment in NSW stimulates the construction sector, with

employment increasing by 32 and 61 FTEs respectively.

37

Conclusion

This report presented an assessment of the international air freight opportunity facing the ACT and

the Catchment in relation to international air freight operations at Canberra Airport.

The analysis was based on a combination of a detailed quantitative analysis of air freight

movements augmented by a consultation process of trade representatives, industry participants

and industry associations.

Economic modelling was also undertaken to quantify the potential benefits to the Canberra Airport

catchment region (the Catchment), the Australian Capital Territory (ACT) and New South Wales

(NSW) of different scenarios considering increased international air freight activity at Canberra

Airport.

Three scenarios were considered.

Under the Existing Opportunity scenario, which narrowly considered shifting international air

freight from the Catchment currently handled in Sydney to Canberra airport, the analysis showed

that economic benefits in terms of activity (measured by GRP) and employment. The bulk of these

benefits accrued to the ACT region.

Under the Reconfiguration Opportunity scenario, which was based on a substantial consolidation

of international air freight from not only the Catchment but also Sydney and Melbourne to better

balance import and export volumes resulting in improved efficiency, the estimated economic

benefits were larger. The benefit were directly related to the volume of international air freight

being reallocated to Canberra Airport. The bulk of the estimated benefits in the Catchment region

accrued to the ACT which, with associated benefits to NSW due to efficiencies being generated in

international air freight operations.

Under the Catchment Exports Opportunity scenario, the Reconfiguration Opportunity scenario was

augmented with illustrative assumptions about increased exports from the Catchment area to take

advantage of additional international air freight capacity to increase export volumes. The

illustrative nature of this scenario reflected the information gathered from the consultation process

that did not result in a clear cut, latent demand for international air freight services from the

Catchment area. That said, the estimated benefits from this scenario were significantly higher for

the Catchment overall compared with the Reconfiguration Opportunity scenario. This is directly

related to the additional volume of exports. Notably, the benefits of this scenario accrue mainly to

the catchment outside of the ACT.

38

Appendix A – Determining the existing opportunity

Given the specific regional definition of the Catchment area there is no detailed export or import

data available from typical sources such as the Australian Bureau of Statistics (ABS). As such, the

first stage of the analysis was to estimate export and import data for the Catchment area. The

main data source available was provided by MariTrade, a commercial data provider who estimates

international trade data and identifies export goods produced in New South Wales departing

Brisbane, Sydney and Melbourne airports for selected destinations based on ABS data.

Based on MariTrade data, the bulk of the goods produced in New South Wales exported via air

freight leaves through the Kingsford Smith airport. Exports to Australia’s five main destinations,

China, Hong Kong, New Zealand, Singapore and the United Arab Emirates, in 2015 were

approximately 59,400 deadweight tonnes valued at $2,957 million FOB, up from 33,800 tonnes

valued at $1,441 million FOB in 2014.14 This represents around 93% of air freight related exports

from New South Wales by weight and 97% by value. Some goods from New South Wales are

exported through Melbourne and Brisbane airports, although in much lower quantities, at 2,375

tonnes via Melbourne and 2,185 tonnes via Brisbane. An analysis of calendar year 2014, 2015 and

2016 (January to July) data confirms that demand for air freight export services are highly elastic

with respect to exchange rates – with a demand elasticity of between -6 and -8.

Determining the existing opportunity

Given the relative imbalance of trade in favour of imports versus exports, it is important to consider

the potential level of exports that could be reasonable expected from the Catchment. A

conservative approach has been adopted in this context in that the basis for the export analysis are

international air freight services currently required by the Catchment, using Kingsford Smith airport.

No consideration is made of any potential supply side responses from the Catchment from having

access to lower cost transport links to overseas.

Establishing the potential base of export activity from the Catchment relies on a disaggregation of

existing freight movement data in the MariTrade data set for goods produced in New South Wales

and exported through the airports of Brisbane, Sydney and Melbourne.

For goods that are currently exported through Brisbane, we assume this is the port of choice either

because they are either produced too far north of Sydney, or that there is a particular feature of

Brisbane airport or the surrounding industry or infrastructure that would make them unsuitable for

14 Free On Board – the value of goods including all charges up to and including loading of the goods onto the aircraft.

39

export via Canberra Airport. As such, these exports are excluded from the potential base of export

activity15.

Of the remaining goods currently exported through Sydney and Melbourne, it was necessary to

assign the export data from the MariTrade commodity classification to each region across New

South Wales at the SA2 level of regional detail. This was done by prorating the MariTrade

commodity level data across industries and regions based on industry employment figures from

the 2011 ABS Census at the 2, 3 or 4 digit ANZSIC level as appropriate. For major agricultural

commodities16 produced in the region, the agricultural census is used to ensure that the volume

and geographical distribution of agricultural production is correctly calibrated.

To ensure that the correct potential export base that might be captured by Canberra Airport, we

separately consider the proportion of freight that currently leaves via Melbourne and Kingsford

Smith, and the proximity of the associated economic activity to each airport as well as Canberra

Airport.

To convert from physical mass to chargeable tonnage, industry standard cubic conversion factors

are applied to both air and road freight, with 167kg per chargeable tonne for the air freight

component and 250kg for the road freight component. Each commodity sub group in the

MariTrade data is assigned to one of seven specific gravity ranges with individualised chargeable

weight by cubic metre for air and road separately.

Additionally, when allocating chargeable tonnage to the Canberra Airport, we do not reallocate

live animal exports, acids, and explosives owing to the specialised facilities required.

Finally, to calculate the total FOB cost impact we utilise the volume of freight redirected, the per

commodity weight classifications, separate treatment of the reduced road freight component, the

differentials in landing costs by airport, and the anticipated warehouse and handling costs of an

ACT facility as compared to market rates for Sydney and Melbourne.

The analysis suggests that there is the potential based on existing production levels for a total of

7,853 tonnes of freight to be exported through the Canberra Airport, at a total chargeable weight

of 37,107 tonnes and equivalent to 101.7 chargeable tonnes daily, with approximately three

quarters of the freight by weight being agricultural commodities.

15 There are known examples of goods produced in the Catchment area that are in fact exported through Brisbane airport for

scheduling reasons, however without significantly more detailed analysis it is impossible to isolate these examples.

16 ABS Cat 7121.0

Appendix B – Determining the reconfiguration opportunity

Current Freight Flows In total flows, there is a significant imbalance in trade flows in both Sydney and Melbourne. The study will investigate in detail how leveraging Canberra as a freight hub can reduce the total cost of freight into Australia whilst:a) Meeting and or improving the current service levelsb) Increase the utilization of airfreight assets used to service the marketc) Improve freight transfer rates utilizing cheaper more efficient freight

modes (domestic road versus air).

129K Tonnes

Current Flows

178k Tonnes

265k Tonnes

158k Tonnes In 2015, Exports exceeded Imports 29k tonnes by Air

In 2015, Imports exceeded Exports by 87k tonnes by Air

Total Sum of 2015 Inbound Total Sum of 2015 Outbound TOTAL MEL & SYD

Destination Country Outbound vs Inbound %

CAN 2,698 1,025 38%

CHINA 27,214 44,338 163%

INDI 1,370 651 48%

INDO 10,722 6,040 56%

JP 10,969 4,800 44%

KR 3,476 4,552 131%

MY 32,881 19,779 60%

NZ 46,864 47,765 102%

OTHER 10,845 11,792 109%

PH 4,096 3,814 93%

SG 71,708 65,972 92%

TH 16,944 15,669 92%

TW 1,824 1,587 87%

UAE 43,700 44,959 103%

UK 9,955 2,765 28%

US 57,909 19,413 34%

VTM 5,405 3,134 58%

HK 35,728 38,230 107%

Grand Total 394,306 336,284 58,022

Source: The Bureau of Infrastructure, Transport and Regional Economics

The detail The following pages will identify the key trade lanes and the cost impact of leveraging Canberra to balance trade lane movements and therefore reducing total cost of freight in the Australian market.

42

Leveraging Canberra to balance the trade flows By rerouting freighters into Canberra (113 Flights per annum) the trade lane can be brought into balance

ORIGN DESTINATION FLOW Tonnes

Singapore Sydney IN 40,381

Sydney Singapore OUT 25,641

Utilisation 63%


Singapore Melbourne IN 31,327

Melbourne Singapore OUT 40,330

Utilisation 129%

Conclusion: Total imbalance of 23.7k Tonnes per annum in trade flow.

NEW


Singapore Sydney IN 31,327

Sydney Singapore OUT 25,680

Utilisation 82%

NEW




Utilisation 100%

NEW


Singapore Canberra IN 9,053

Canberra Singapore OUT 9,053

Utilisation 100%

Capacity 113 Flights pa

9k tonnes freight9k tonnes freight

Current trade flows – Imbalance By rerouting freighters into Canberra (113 Flights per annum) the trade lane can be brought into balance

43

Leveraging Canberra to balance the trade flows By rerouting freighters into Canberra (52Flights per annum) the trade lane can be brought into balance



4k tonnes freight4k tonnes freight


NEW


Hong Kong Sydney IN 19,931

Sydney Hong Kong OUT 20,263

Utilisation 102%

NEW


Hong Kong Melbourne IN 11,600

Melbourne Hong Kong OUT 13,807

Utilisation 119%


Hong Kong Sydney IN 24,091

Sydney Hong Kong OUT 20,263

Utilisation 84%


Hong Kong Melbourne IN 11,637

Melbourne Hong Kong OUT 17,967

Utilisation 154%

NEW


Hong Kong Canberra IN 3,828

Canberra Hong Kong OUT 3,828

Utilisation 100%

44

Leveraging Canberra to balance the trade flows By rerouting freighters into Canberra (114 Flights per annum) the trade lane can be brought into balance




Utilisation 129%




UAE Sydney IN 23,780

Sydney UAE OUT 14,650

Utilisation 62%


UAE Melbourne IN 19,920

Melbourne UAE OUT 30,309

Utilisation 152%

NEW




Utilisation 100%


9.1k tonnes freight9.1k tonnes freight

NEW


UAE Sydney IN 14,660

Sydney UAE OUT 14,650

Utilisation 100%

NEW


UAE Melbourne IN 19,920

Melbourne UAE OUT 21,189

Utilisation 106%

NEW


UAE Canberra IN 9,120

Canberra UAE OUT 9,120

Utilisation 100%

45

Summary of costs savings and assumptions

Aircraft

Vol for freight Capacity

Cost per Nautical

Mile

Cost per Nautical Mile Ton

Singapore Cost per KG

Hong Kong Cost per KG

UAE Cost per KG

McDonnell Douglas MD-11 543.1m3 82,000 32.26 $ 0.39 $ 1.41 $ 1.68 $ 2.71

Boeing 747F (Freighter) 601.4m3 95,000 77.43 $ 0.82 $ 2.75 $ 3.28 $ 5.28

Boeing 777 (Freighter) 550m3 103,000 58.64 $ 0.57 $ 1.92 $ 2.29 $ 3.69

Boeing 767 (Freighter) 438.5m3 56,000 44.61 $ 0.80 $ 2.69 $ 3.21 $ 5.17

Average $ 53.24 $ 0.64 $ 2.19 $ 2.62 $ 4.21

AIR ROAD TOTAL

Excess Capacity Current (tonnes) New (tonnes) Reduction (tonnes) Cost per ton Cost reduction pa Cost reduction pa Cost reduction pa

SINGAPORE 23,742 5,730 18,012 $ 1,836 $ 43,192,667 $ 7,242,768 $ 50,435,435

HONG KONG 10,158 2,872 7,286 $ 2,190 $ 20,838,813 $ 4,138,862 $ 24,977,675

UAE 19,519 1,279 18,240 $ 3,525 $ 83,960,767 $ 4,679,751 $ 88,640,518

$ 147,992,247 $ 16,061,380 $ 164,053,627

Appendix C – Detail on data sources and methodology

The following appendix provides additional technical detail on the assumptions, parameters and

methodology employed to estimate the changes in freight costs and the capital requirements.

Preliminary additional analysis of the market viability and opportunity is also provided.

Freight: cubic conversion by freight mode

Calculated Freight

The base data used in the analysis provides the gross weight of freight by category. To determine

the economic impact of freight a cubic conversion was applied to determine the chargeable

weight for both road and air modes of transport.

For each commodity sub group, the data was classified into 8 categories for cubic conversion

depending on the density of the product category.

Specific gravity tables from http://www.simetric.co.uk/si_materials.htm were used as a reference for

the conversion. Increased cubing through packaging was also factored into the categor isation

based on quantitative basis.

Each commodity sub group was assigned a classification from Table A1 and the corresponding

conversions for road and air freight were applied.

Parameters

Air freight - A cubic ratio was applied to convert the gross weight into chargeable airfreight based

on the standard airfreight conversion practice. The cubic conversion used is 1 cbm = 167 kg

Road Freight - A cubic conversion was also applied to convert the gross weight into chargeable

road based on the standard road conversion practice. The cubic conversion used is 1 cbm = 250

kg

Removal of commodity sub groups - A classification of “X” was used to remove any commodity

sub group identified not to move through the ACT gateway, e.g. livestock due to specific AQIS

requirements.

Cubic Conversion Formulae

Air Freight: 1CBM = 167kg FORMULA: Air Cubic Factor X 167 = chargeable weight

Road Freight: 1 CBM = 250kg FORMULA: Road Cubic Factor X 250 = chargeable weight

47

Table A1: Cubic Conversion of Freight

Freight rates

Road Freight

Pricing comparison is based on Auxiem freight market benchmarking. Each rate used is the

median price per route based on a 2015 carrier portfolio which consists of 28 Australian road

freight providers.

Road Freight price input

Freight price differential was used to highlight the price variance of any freight diverted from

Sydney and / or Melbourne gateway to Canberra gateway.

Air Freight

A comparison of distances to key destinations (Table A2) was undertaken to determine price

variances in operational costs of the service

Parameters

Air freight rates - Pricing is assumed to be constant due to nominal variance in overall distance

flown.

Road freight rates - Pricing comparison is based on Auxiem freight market benchmarking. The

methodology is based on the median price per route based on a 28 carrier portfolio.

Factor

Cubic

Conversion (kg)

Calculated Weight by

CBM (kg) Road Factor

Cubic

Conversion (kg)

Calculated weight by

CBM (kg)

A 1 167 167 2 250 500

B 2 167 334 1 250 250

C 3 167 501 2 250 500

D 4 167 668 3 250 750

E 5 167 835 3 250 750

F 6 167 1002 4 250 1000

G 7 167 1169 5 250 1250

X 0 167 0 0 250 0

AIR FREIGHT ROAD FREIGHT

Classification

48

Table A2: Comparison of distances by destination

To Sydney (km) Canberra (km) Variance (km) Variance (%)

Dubai 12057 11934 -123 -1.02%

Singapore 6300 6217 -83 -1.32%

Hong Kong 7402 7415 13 0.18%

Guangzhou Baiyun 7537 7551 14 0.19%

Shanghai Pudong 7874 7933 59 0.75%

Auckland 2162 2302 140 6.48%

TOTAL 43332 43352 20 0.05%

49

Appendix D – The CEGEM model

CEGEM is a multi-commodity, multi-region, dynamic model of the world economy. Like all

economic models, CEGEM is a based on a range of assumptions, parameters and data that

constitute an approximation to the working structure of an economy. Its construction has drawn

on the key features of other economic models such as the global economic framework

underpinning models such as GTAP and GTEM, with state and regional modelling frameworks such

as Monash-MMRF and TERM.

Labour, capital, land and a natural resource comprise the four factors of production. On a year-by-

year basis, capital and labour are mobile between sectors, while land is mobile across agriculture.

The natural resource is specific to mining and is not mobile. A representative household in each

region owns all factors of production. This representative household receives all factor payments,

tax revenue and interregional transfers. The household also determines the allocation of income

between household consumption, government consumption and savings.

Capital in each region of the model accumulates by investment less depreciation in each period.

Capital is mobile internationally in CEGEM where global investment equals global savings. Global

savings are made available to invest across regions. Rates of return can differ to reflect region

specific differences in risk premiums.

The model assumes regional labour markets operate in a model where employment and wages

adjust in each year so that, for example, in the case of an increase in the demand for labour, the

real wage rate increases in proportion to the increase in employment from its base case forecast

level. The coefficient of adjustment is chosen so that the employment effects of a shock are largely

eliminated after about ten years. Labour supply is determined by demographic factors.

CEGEM determines regional supplies and demands of commodities through optimising behaviour

of agents in perfectly competitive markets using constant returns to scale technologies. Under

these assumptions, prices are set to cover costs and firms earn zero pure profits, with all returns

paid to primary factors. This implies that changes in output prices are determined by changes in

input prices of materials and primary factors.

The advantage of a global model such as CEGEM is that it accounts for bilateral trade flows of all

commodities between regions. Goods are imperfect substitutes, implemented through the

Armington assumption. The model does not require the regional current account to be in balance

as the capital account can adjust to maintain balance of payments equilibrium.

Base data

The starting point for the base data in CEGEM is the global database produced by the Global

Trade Analysis Project (GTAP). This database is comprised of 140 country and regional groups and

57 production sectors. The Australian component of this database was supplied by the Productivity

50

Commission, and is based on Australian input-output tables produced by the Australian Bureau of

Statistics (ABS).

For the purposed of this exercise, the database has been aggregated to the 19 sectors shown

Table D1. The Australian economy is split into the ACT, the Canberra Catchment region excluding

the ACT, NSW excluding the Canberra Catchment and the rest of Australia.

Table D1: Sectors and Regions in CEGEM

Number Sector Number Region

1 Agriculture 1 ACT

2 Coal 2 Canberra Catchment ex ACT

3 Oil 3 NSW ex Canberra Catchment

4 Gas 4 Rest of Australia

5 Other Mining 5 Rest of the world

6 Processed Foods

7 Rest of Manufacturing

8 Electricity

9 Water

10 Construction

11 Trade

12 Land transport

13 Water transport

14 Air transport

15 Communications

16 Finance and Insurance

17 Other Business Services

18 Recreational Services

19 Other Services and Government

Dynamics

CEGEM is a recursive dynamic model that solves year-on-year over a specified timeframe. The

model is then used to project the relationship between variables under different scenarios, or

states, over a predefined period. This is illustrated in Figure D1. This shows the reference case

scenario forms the basis of the analysis. The model is solved year-by-year from time 0, which

reflects the base year of the model, to a predetermined end year (in this case 2030).

The variable represented on the vertical axis of Figure D1 could be one of the hundreds of

thousands represented in the model ranging from macroeconomic indicators such as real GRP to

51

sectoral variables such as the exports of thermal coal. In the figure, the percentage changes in the

variables have been converted to an index (= 1.0 in 2005) and are projected to increase by 2030.

Set against the reference case scenario is a ‘scenario projection’. This scenario represents the

impacts of imposing a policy shock. That results in a new projection of the path of the variable

over the simulation time period. The impacts of the policy change are reflected in the differences

in the variable at time T. It is important to note that the differences between the reference case

and policy intervention scenario are tracked over the entire timeframe of the simulation.

Figure D1: Dynamic simulation using CEGEM

0

0.5

1

1.5

2

2.5

3

2016 2018 2020 2022 2024 2026 2028 2030

Cadence Economics – About Us

Cadence Economics is a boutique consulting firm specialising in applied economic analysis,

established in April 2015. The Directors of Cadence Economics have a combined 66 years of

experience as professional economists, with 42 years of those years with Deloitte Access

Economics (previously Access Economics). In that time we have developed a track record of

providing industry associations with a wide range of economic consulting services including

economic impact assessments of large scale investment projects and government procurement,

applied CGE modelling, economic contribution studies, policy and regulatory advice and economic

forecasting.

Steve Brown, Managing Director, Cadence Economics, BEc (ANU), MBA (Melbourne University),

has worked in the field of applied CGE modelling for 25 years. In the public sector, Steve

commenced worked on the ORANI model and SALTER world trade model at the Industry

Assistance Commission. He finished his public sector career as the Head of Global Modelling at the

Australian Bureau of Agriculture and Resource Economics where he oversaw the development of

GTEM and its application to global policies such as trade liberalisation and climate change

response policy.

Dr Bob Scealy, Director, B Math/Comp Sci (UOW), PhD (ANU), is a highly experienced quantitative

economist, specialising in the development and application of economic models to questions

including federal and state government policy, project investment, the impacts of technology and

the local consequences of foreign shocks. He specialises in particular in Computable General

Equilibrium modelling, with a background of model development and application at the Federal

Treasury, the CSIRO, and Deloitte Access Economics.

George Michalas, Director, Cadence Economics, BEc (ANU), BLaws (ANU), George has widespread

experience in economic modelling techniques including economic contribution and impact

modelling and cost benefits analysis. Prior to joining Cadence Economics, George spent eight

years at Deloitte Access Economics, and the Department of Industry and the ABS prior to that.

Steve Corcoran, Director and Company Secretary, BEc (First Class Hons, ANU), is a leading

economist and policy adviser, with 20 years of private sector economic consulting experience,

previously with Deloitte Access Economics. He assists governments, industry associations and

businesses to participate in, and influence, the public debate on economic issues, and to conduct

quantitative analysis of economic issues.

Auxiem Management Consultants – About us

Auxiem is a supply chain practice with experience in international supply chain, domestic

distribution and warehouse design and automation. A key area of our practice is in the new

economy where we have played an integral part in developing strategies and suppor ting the

growth of e-fulfilment from domestic and international markets. Our engagements by industry

53

players and users provides a competitive advantage of industry developments and changes in

consumer demands and market conditions.

Dino Pertsinidis - Principal

Dino Pertsinidis is a supply chain and logistics professional with over 20 years’ experience spanning

Australia and the Asia Pacific and EMEA regions. Dino has a Bachelor of Economics, and a Post

Graduate Diploma in Applied Finance and Investment. As a Principal of Auxiem, Dino has been

engaged by companies such as DHL Express, Singapore Post, Abraaj Private Equity and others to

assist in development of supply chain strategies. Prior to returning to Australia, Dino worked in

senior management roles with leading global third party logistics providers (DHL and Agility).

Based in Asia for 10 years, Dino has designed and delivered multimodal supply chain solutions to

many of the Forbes Global 100 companies to improve their performance in the highly competi tive

Asian market.

Bruce Whiting – Principal

Bruce has over 20 year’s global experience in Supply Chain and Finance Outsourcing with a

Masters of Management from the Macquarie Graduate School of Management. He has hands on

experience managing multiple warehouse and transport operations for Toll and designed and

managed major DC builds incorporating sophisticated MHE. Bruce has developed sophisticated

cost models to respond to various transport and warehousing requirements that incorporated full

labour planning, productivity assumptions, volume inputs and business case metrics. Bruce spent 4

years as a Senior Manager with Accenture’s Supply Chain Practice working on major Supply Chain

transformation projects. (e.g. Woolworths, Arnott’s & BHP) He also spent 4 years in the USA

working with Accenture’s Business Process Outsourcing business working with a major

Pharmaceutical client to outsource their back office accounting functions.

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