So Far Yet So Close
Gollin, Tony, New Zealand Management
The New Zealand, Institute's latest discussion paper' So far yet so close: connecting New Zealand to the global economy" provides a timely reality check of New Zealand's global competitive positioning and ability to lift our game in terms of participation in the global marketplace.
New Zealand's remoteness from its global markets and geographical shape have always been a challenge in terms of time and cost of transport to our overseas markets, and the adequacy of supporting domestic transport infrastructure. In the past, central government support has been needed to establish core infrastructure such as rail and roads, combined with supply chain innovation such as refrigerated shipping.
The authors suggest another paradigm shift is required for us to remain competitive in the global marketplace; involving new production and distribution models, and the development of virtual supply chains. They also propose that the use and efficiency of existing core transport infrastructure needs to be improved, in addition to the introduction of new supply chain innovation.
Air connectivity, in particular, should be an area of focus to support high-value, time-sensitive exports. But air freight in New Zealand represents only 16 percent by value of total cargo, compared with global averages of 35 to 40 percent. Strong and diversified tourism promotion will provide a platform for greater physical connectivity to global markets, both for business travel and air freight capacity.
The authors argue that New Zealand should invest in offshore production and distribution business models to overcome the tyranny of distance by directly accessing more advantaged supply chains.
Also, New Zealand should 'play to its strengths' of creativity and innovation by developing high value, low (economic) weight goods and services to exploit this competitive advantage. They see a move to virtual supply chains is potentially as transformational for New Zealand exports as refrigerated shipping was 125 years ago. Critical to achieving such a transformation, however, is the establishment of world-class communications infrastructure in New Zealand.
From a supply chain logistics and transport perspective such initiatives should be applauded. …