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21st August 2018

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Kiwi Rail

New KiwiRail chair pops up on upper North Island port study group

New KiwiRail chair pops up on upper North Island port study group. Photo: Lynn Grieveson

Newly appointed KiwiRail chair Greg Miller has also been appointed to a five-member working group charged with writing a new upper North Island supply chain strategy to guide the government’s desire to integrate port, rail and road transport infrastructure planning for the country’s economic and population epicentre.

The Ministry of Transport is close to announcing the five person group, to be chaired by former Northland mayor and health board chairman Wayne Brown, which will advise on a range of major transport and infrastructure issues, including “the current and future drivers of freight and logistics demand, including the impact of technological change; a potential future location or locations for Ports of Auckland, with serious consideration to be given to Northport”; and “priorities for other transport infrastructure, across road, rail and other modes and corridors such as coastal shipping”.

A Northport redevelopment could include refurbishment and extension of rail freight services into Northland and to NorthPort, and could ultimately include moving the Royal New Zealand Navy’s Devonport base to Whangarei.

Miller’s appointment to the KiwiRail chairmanship was announced yesterday after he resigned as chief executive at Toll Holdings on Monday and was heavily backed by State-Owned Enterprises Minister Winston Peters against initial objections from the Treasury and Finance Minister Grant Robertson.

The state-owned rail company is therefore changing both its chair and deputy, with both Trevor Janes and Paula Rebstock respectively stepping down, and its chief executive following the announcement last month by current KiwiRail CEO Peter Reidy that he was taking up a senior role at Fletcher Building. That decision is understood to have been prompted by the planned appointment of Miller, who was CEO at KiwiRail’s predecessor, TranzRail, at the time it was sold back to the government by Toll in 2008.

Also on the working group is a former TranzRail group general manager, Noel Coom, in another sign of NZ First ministers Peters and Shane Jones’ determination to inject deeper knowledge of transport and logistics into government thinking on transport and infrastructure.

Susan Krumdieck, a professor in mechanical engineering at Canterbury University with long experience consulting for local government, government departments and community groups on transport, energy and future demand projects will also join the supply chain working group, along with Sarah Sinclair, a construction and infrastructure specialist for law firm MinterEllisonRuddWatts.

Its fifth member is Shane Vuletich, who has represented the Society for the Protection of Auckland Harbours lobby group in public debate on the future of the Auckland central city port, and is managing director of the Fresh Information Company, a strategy and forecasting analysis business, with tourism, major events and infrastructure planning experience,

“A system wide review of the Upper North Island supply chain is important because about 55 percent of New Zealand’s freight originates in or is destined for, the Northland, Auckland, Waikato and Bay of Plenty regions,” the MoT’s explanation of the working group says, noting its recommendations could include “investment in the regions, and that the government might need to invest”.

No timetable has yet been set for outcomes from the study, the terms of reference for which were agreed last December.

New KiwiRail Chair appointed

Wednesday, 8 August 2018, 4:04 pm
Press Release: New Zealand Government

 

Greg Miller has been appointed to chair the KiwiRail board, Minister for State Owned Enterprises Winston Peters and Minister of Finance Grant Robertson announced today.

Mr Miller replaces Trevor Janes, who resigned effective 30 June 2018. Acting Chair Brian Corban will continue in the role until Mr Miller takes up his position on the board. Mr Corban will resume the Deputy Chair role when Mr Miller joins the board.

Mr Miller is currently the Managing Director/Chief Executive of Toll New Zealand, a position he has held since 2008. He began his career as a cadet in transport operations at Mainfreight Group, rising through the ranks to become a key Group Senior Executive. He has since held roles at Tranz Rail and Tranz Link International as Managing Director across New Zealand, Australia and Asia and was Toll Tranzlink Director and Group General Manager from 2003-2008, where he chaired the Toll Tranzlink NZ Fonterra Strategy Committee.

“The Coalition Government has made rail a priority in our plan to boost the productivity of our regions after years of central government neglect for this crucial part of our economic apparatus,” Winston Peters said.

“Greg Miller’s leadership in the transport industry in New Zealand, in rail, road and sea transport, gives him a strong base for chairing KiwiRail and to help it meet the high expectations that the Coalition Government has for rail in New Zealand,” Winston Peters said.

“The 2018 Government Policy Statement on Land Transport highlighted how critical rail is for improving transport connections to the rest of the world for our exporters. KiwiRail is an important partner in this, and we look forward as shareholding Ministers to engaging with Mr Miller as we roll out our plans,” Grant Robertson said.

The appointment means Mr Miller will also join and chair the New Zealand Railways Corporation NZRC board.

“I look forward to working with the KiwiRail team, from the railway workers at the coal face to the new chief executive of KiwiRail, to keep building this company and delivering a rail operation that performs for our customers in all cities and regions, with a competitive commercial strategy,” Greg Miller said.

“I’m particularly keen to prioritise KiwiRail’s high-performance, high-engagement model where workers and executives collaborate to harness opportunities and improve productivity for the benefit of the whole company,” Greg Miller said.

Mr Miller has been appointed for a term of three years.

Fletcher nabs KiwiRail CEO Peter Reidy

Fletcher construction project Commercial Bay, Britomart, Auckland. Photo by Lynn Grieveson

Fletcher Building has picked up KiwiRail chief executive Peter Reidy to head the company’s construction division, which oversees the problematic Buildings + Interiors unit.

The Auckland-based company will move current construction head Michele Kernahan to lead its building products unit as part of the move, with Reidy joining in early November. Fletcher’s acting head of building products, David Thomas, will shift back to general manager of Winston Wallboards.

“We remain focused on stabilising our construction division, and in particular, increasing our focus on lower-risk, more profitable sectors such as infrastructure and roading,” group chief executive Ross Taylor said in a statement. “Peter has a strong track record of leading infrastructure businesses, including in his current role at KiwiRail and previously as chief operating officer infrastructure services with Downer Group in Australia.”

Fletcher is restructuring its businesses under new CEO Taylor, which includes getting the construction unit on an even footing after it took on a number of unprofitable projects in its B+I business. From this month, Fletcher restructured into seven divisions from its previous five, including a standalone Australia unit which could grow over the next five years to equal or exceed the size of Fletcher’s New Zealand operations. Fletcher is also selling its Formica and Roof Tile businesses.

Reidy will end a four-year term in charge of the state-owned enterprise and has been working closely with the new administration on how to best fund the company in an environment where rail has been included in the national land transport plan for the first time and is seen as an integral part of a countrywide strategy.

KiwiRail’s board said it has immediately started a search for a new CEO.

Fletcher shares last traded at $7.01 and have climbed 27 percent from a trough in early April.

KiwiRail: We can’t be complacent on climate change

OPINION: KiwiRail chief executive Peter Reidy was one of 14 New Zealand chief executives who came together last year to look at what they could do about climate change. Along with 59 others, he has signed the CEO Climate Change Statement, aimed at reducing carbon emissions in New Zealand. Here, he explains why:

One of the KiwiRail values that you’ll hear our people talk about around our yards, track and in lunchrooms up and down the country, is “care and protect”.

When you’re a 155-year-old business protecting not only our people in some of the most difficult workplaces in the country, but also the public who travel with us, living up to that value is critical.

But we also see ourselves as caring for and protecting one of New Zealand’s most valuable assets – our land and environment.

It is for this reason that this week I joined with 59 other New Zealand’s major business leaders to sign up to the Climate Leaders Coalition.

We are in a race to protect New Zealand from the harshest effects of climate change and committing to a low-emissions economy is a big step that business can take to help us win this race.

While transport accounts for 17 per cent of New Zealand’s carbon emissions, rail generates just 1 per cent of that total.

Peter Reidy

While transport accounts for 17 per cent of New Zealand’s carbon emissions, rail generates just 1 per cent of that total.

For KiwiRail that means doing all we can to move as much freight and as many people possible on to rail. Every tonne of freight carried by KiwiRail means a 66 per cent carbon emissions saving over heavy road freight.

When New Zealanders use rail they help reduce emissions by taking trucks and cars off the road, easing congestion and saving taxpayers money on road maintenance while making our roads safer.

While transport accounts for 17 per cent of New Zealand’s carbon emissions, rail generates just 1 per cent of that total.

Even so, when you move 25 per cent of the country’s exports, you are still using a lot of fuel.

KiwiRail takes that responsibility seriously – we have already cut our fuel consumption, and we are committed to cutting it further. We are serious about solutions and we are already dedicating very real resources, expertise and money to planning and projects that will allow us to further reduce our energy consumption and emissions.

The Locomotive Fuel Savings project has already shown significant success, delivering fuel savings of 16 million litres, or $11 million, since 2015 through the ground-breaking Driver Advisory System (DAS) and other energy initiatives on our rail freight services. DAS is our new in-cab technology system that advises drivers when to brake, coast and accelerate depending on terrain and freight loads, achieving significant fuel savings.

Now, with the help of the Energy Efficiency and Conservation Authority (EECA), we are looking to make savings on our ferry operations through a similar approach, monitoring fuel usage and sailing performance.

There will be  those who say KiwiRail has no right to lead a  discussion on climate change given we are replacing nine ageing electric locomotives on a  section of the central North Island Main Trunk line. This tiny, orphan fleet is not helping us to get more freight onto rail through simplifying our operations and standardising our assets.

But there is a bigger, longer-term picture that we are working on for our busiest routes between Auckland, Hamilton and Tauranga. The energy for that may come from electricity, if we invest in the infrastructure required, or it may come from a whole new fuel source for rail – hydrogen.

 Signing today’s statement cements KiwiRail’s commitment to a low emissions economy and to exploring all ways to get there. It is urgent that New Zealand increases the pace of its transition and today shows that our business leaders believe that.

This is our time to make the best difference we can for the New Zealand of the future.

Peter Reidy is KiwiRail’s chief executive.

Auckland’s $6 billion plan for modern trams could extend to Kumeu

Dave’s comment – When so much money has been or is being spent on development of the Auckland heavy rail network, why do Auckland council and the Government continue to ignore the expert’s calls for the proposed CBD – Dominion Rd – Mangere – Airport to be abandoned in favour of minor extensions to the heavy rail network?  At lower cost and with significantly less disruption than the proposed tram lines.

In an exclusive interview with the Herald, NZTA chief executive Fergus Gammie said the plan for trams from the CBD to Westgate will probably be extended to Kumeu.

Gammie also revealed that NZTA believes that the best route between the CBD and the airport is by train to Puhinui and transferring to buses or trams for the 6km leg to the airport.

What we are trying to achieve in the longer term is a system that enables people to spend a lot more of their life on public transport.

The transport agency still intends to build a $3.7b line for modern trams, referred to as light rail, from the CBD to the airport but sees the line as combining transport and development opportunities along the corridor, Gammie said.

For this reason, the project has been renamed the CBD to Māngere project, which will still serve the airport and allow workers to travel to the airport, a major employment centre.

The changes have been made after Labour handed over responsibility for light rail from Auckland Transport to the transport agency, which is going from being a road builder to looking at all forms of transport to benefit people and communities.

New homes like this one in Westgate are adding to congestion in the northwest
New homes like this one in Westgate are adding to congestion in the northwest

“What we are trying to achieve in the longer term is a system that enables people to spend a lot more of their life on public transport,” Gammie said.

Labour has promised to build light rail from the CBD to the airport and West Auckland within a decade, described as a “game changer” by Prime Minister Jacinda Ardern.

Labour’s plans for fast public transport separated from vehicles, known as rapid transit, also include a busway running from Botany to Puhinui train station, and on to the airport.

A spokeswoman for Transport Minister Phil Twyford issued a brief statement, saying the minister was on the same page as Gammie and there was nothing more he could add.

Extending modern trams to Kumeu is being driven by already congested roads from a housing boom and projections of 25,000 more homes in the northwest by 2032.

However, the idea is not supported by the Public Transport Users Association (PTUA), which favours extending rail from Swanson to Kumeu and running rail directly from the CBD to the airport via Puhinui.

PTUA co-ordinator Jon Reeves said trams are slow and very expensive, whereas trains can provide fast, frequent and reliable service at less cost. What’s more, rail can carry freight to the airport and reduce congestion on the roads, he said.

Reeves said there had been no official study comparing the cost of rail, modern trams or a busway from Puhinui to the airport.

He said running trains directly from Britomart to the airport via Puhinui would take 33 minutes. Auckland Transport has estimated it will take 42 minutes for light rail via the Māngere route.

Jon Reeves, co-ordinator of the Public Transport Users Association.
Jon Reeves, co-ordinator of the Public Transport Users Association.

Gammie said the transport agency was undertaking detailed business cases for the two light rail lines, which would be completed by early next year, and would soon begin public consultation.

“These projects are not easy because they do make a big difference to the local community,” said Gammie, who as the former director-general for transport services in New South Wales was involved in light rail projects in Newcastle and Sydney.

“Every light rail project around the world has been disruptive, but everyone loves light rail when it is finished,” he said.

Trams or rail ‘as long as it’s faster’

Yelena Khalevina was excited to hear Auckland Transport's plans for a possible tram line to Kumeu. Photo / Greg Bowke
Yelena Khalevina was excited to hear Auckland Transport’s plans for a possible tram line to Kumeu. Photo / Greg Bowke

When quality time with your three-year-old son consists of being stuck in a car for three hours a day, the prospect of modern trams is very enticing.

Every workday, Yelena Khalevina, her husband and son leave home in Huapai at 6.30am for the long 30km crawl into the city. With jobs and daycare over, they get back in the car at 5pm and don’t get home until 6.30pm.

There’s a stash of books and toys for the “quality time” they spend with their toddler, who’s tucked up in bed soon after they get home and feed him.

“I would gladly take the bus,” says Yelena, except it takes longer than the drive to and from her job as a digital analyst in the city.

The family recently moved into a new subdivision in the rural community of Huapai, part of a housing boom in the northwest causing congestion with more than 18,000 vehicles driving on State Highway 16 per day and causing a bottleneck through Kumeu.

Yelena says the family made the decision to move to Huapai for the lifestyle, knowing that being stuck in traffic is something that goes with living in a big city.

They plan to live in the area long-term, says Yelena, who is very excited that one day, perhaps 10 years away, they will be able to go into the city on trams or rail.

As well as plans by the New Zealand Transport Agency for modern trams, locals are campaigning for trains to Kumeu/Huapai with billboards erected on the roadside encouraging people to sign up.

It wouldn’t make any difference, trams or rail, says Yelena, “so long as it is faster than being stuck in traffic”.

Safety shares top spot in new transport priorities

A vastly increased commitment to road safety, public transport and competitive freight efficiency were promised by the Government yesterday when it released the Government Policy Statement (GPS) on Transport.

To achieve all three goals, there will be a renewed focus on both Auckland and the regions.

Meanwhile, there were queues at some petrol stations around the city as drivers looked to beat impending price rises.

Those price rises will come from new taxes announced by both the Government and the Auckland Council.

Yesterday morning the council adopted its 10-year budget, which includes a regional fuel tax of 10 cents per litre (11.5 cents with GST). It will come into force on Sunday.

In the afternoon the Government’s GPS announcement included a nationwide rise in the excise levy, or fuel tax, of 3.5 cents per litre (4.025 cents with GST) for each of the next three years. The first rise will be imposed on October 1.

From that date, the average Auckland household will pay $3.80 more per week for petrol.

Those with the lowest 30 per cent of incomes will pay an average $2.26 more per week. Households with the highest 30 per cent of incomes will pay more than twice that: an average $4.79 more per week.

Both the Government and the council say the extra taxes will allow them to undertake what Finance Minister Grant Robertson has called “New Zealand’s largest ever 10-year plan for transport investment”.

Standing in the giant KiwiRail freight yards at Onehunga today, Robertson promised “a long-term pipeline of transport projects that are fully funded”.

“The GPS prioritises linking production with distribution,” he said, “and that means a focus on freight.”

Transport minister Phil Twyford said that “for the first time” rail would be fully considered alongside roads when the Land Transport Fund was allocated by the NZ Transport Agency. “They will consider the merits of road and rail on a case by case basis and allocate the funds to whichever will do the job best.”

The Government would also “lift the standard of roads right across the country”, he said, adding that “the vast majority of serious crashes are on local roads”.

Associate transport minister Julie Anne Genter spelled out some of the detail of the increased commitment to road safety. She said $2 billion more would be spent on state highways with a focus on safety, and $800 million on local roads, also with a safety focus.

More median barriers and roadside barriers will be introduced for open roads, and some stretches may have lower speed limits too. There will be more roundabouts and other measures to make roads safer in built-up areas.

The Government has also made a 99 per cent boost to funds for promoting road safety and the use of public transport, cycling and walking.

Government spending on transport will rise from $3.6 billion in 2017/18 to $4 billion in 2018/19. By 2027/28 it will be $4.7 billion.

The way funds are allocated to local regions will change. Currently, the Government tends to match the funds of local councils, dollar for dollar.

“We pay 50:50 now,” said Twyford. “That will rise in many cases to government paying 75 or even 80 per cent.”

For example, funding for high priority projects around Tauranga will rise to 75 per cent, and in Gisborne it will be 84 per cent. That takes pressure off ratepayers and gives councils significantly more bang for every buck they commit themselves.

The Government Policy Statement (GPS) contains four “strategic priorities”: safety, value for money, access and the environment. It sets out spending priorities for the whole country and complements the Auckland Transport Alignment Plan agreed between the Government and the Auckland Council.

Changes to transport spending

• $4 billion over 10 years to “establish rapid transit investment”.
• 116 per cent increase in funding for walking and cycling infrastructure.
• 99 per cent increase on road safety promotions, alcohol interlocks and promotion of cycling and walking.
• 96 per cent increase in regional transport projects that improve safety, resilience and access.
• 68 per cent increase for public transport, to be spent on operational subsidies and new projects.
• 42 per cent increase on local road improvements.
• 11 per cent less on state highway improvements.

KiwiRail faces future with its hand out

With its fleet of ageing ferries, age-expired locomotives and the need for replacement wagons, KiwiRail is building its case for a large taxpayer investment. David Williams reports.

It was in 2008, an election year, that Helen Clark’s Labour-led government bought back the country’s rail assets under the KiwiRail banner.

Finance Minister Michael Cullen said at the time that during negotiations with the previous owner, Toll, it become clear that buying the rail operating business, including the inter-island ferries, was the best way to increase investment in the industry. Running a commercially viable business would prove extremely difficult without government support, he said, adding: “In the months ahead, I will explore options for significant investments in new, modern rolling stock.”

Instead, Labour lost that election and the global financial crisis kicked in, leading to years of public sector belt-tightening under Prime Minister John Key. Yet, despite all the rhetoric about roads – especially those of national importance – the National government pumped billions into rail. According to The Listener, the previous government spent about $2.1 billion on network maintenance and upgrades, and $1.4 billion for commuter rail upgrades in Auckland and Wellington.

But it’s never been enough. While its freight and tourism businesses manage to make a small operating profit, the company traditionally needs more than $200 million a year to maintain its network. That network includes 3500 kilometres of track, 1322 bridges and 98 tunnels, as well as maintaining its “above-rail” assets.

KiwiRail’s latest half-year report said more than half of the company’s active locomotives in the South Island were bought before 1975. That reflects, KiwiRail chairman Trevor Janes wrote, “decades of underinvestment which has contributed to recent challenges” – including the 2016 Kaikoura earthquakes.

“A rail company cannot live from pay cheque to pay cheque, you need a longer-term focus.” – David Gordon

It’s in this context that KiwiRail started a review. In last year’s Budget, the National-led Government pledged $450 million over two years, on the proviso there was a probe into its operating structure and longer-term capital requirements. “The Government wants to put the rail network on a longer-term sustainable footing,” then Transport Minister Simon Bridges said, in the hope National could suddenly achieve what it had failed to do for years.

The focus of that review changed when Labour, New Zealand First and the Greens formed a Government. (Pre-election, Labour promised to build light rail from Auckland’s CBD to the airport and a passenger service between Auckland, Hamilton and Tauranga.)

KiwiRail’s group general manager of investment, planning and risk David Gordon tells Newsroom there’s now a greater focus on “What do you want rail to do?”, as opposed to simply how much will it cost. “A rail company cannot live from pay cheque to pay cheque, you need a longer-term focus. I think everyone understands that. The question is, what is the mechanism by which that’s done and then, obviously, what is the amount.”

One mechanism, announced in April, was a surprise petrol tax hike, something Newsroom Pro’s Bernard Hickey called the Government’s “politically riskiest move since its formation”.

In its policy statement on land transport, which sets transport priorities, the new Government sent a message by adding rail to the list of transport classes that can bid for money from a pot called the national land transport fund. (Auckland is set to get a $2.8 billion increase from the fund, to help pay for a $28 billion transport wishlist over the next decade.)

However, the policy statement said scope for rail funding is “very tight”, and limited to improving struggling urban rail services and contributing to new and existing “interregional” commuter services.

‘Rust never sleeps’

KiwiRail’s review is scheduled to run through the rest of this year. But Gordon says for the biggest-ticket items, which will cost the largest dollops of money, it wants to bring these to the Government’s attention earlier. Those include its locomotives and ferries, which are at “end of life”, and money spent in its freight business “just to remain relevant”. KiwiRail would also like to standardise its equipment and link its IT systems more closely to that of its customers.

The problem is, and always has been, how much money KiwiRail needs just to maintain its network. Two weekends ago, a big chunk of the Auckland network and almost all of Wellington’s network was closed for replacement works. In greater Wellington, five bridges are in various stages of replacement involving 70,000 railway sleepers.

“It goes on all the time,” Gordon says. “Rust never sleeps.”

KiwiRail has also become very good at sweating its big ticket items like locomotives and ferries. But you can only sweat them so much.

Off the back of a record summer season, KiwiRail’s general manager of strategic projects Walter Rushbrook says its existing ferries are at capacity at peak periods. It is considering whether it should buy or lease bigger ships to cope. That’s triggered wider conversations about transport links with the likes including port companies, regional councils and NZ Transport Agency, especially about the future of existing ferry terminals in Wellington and Picton. As Rushbrook says: “Bigger ships mean you need bigger wharves.”

 
Kaitaki is the largest vessel on Cook Strait with a capacity of more than 1300 people. Photo: KiwiRail

KiwiRail’s Interislander ferries – Kaitaki and Aratere, which it owns, and the leased Kaiarahi – are not expected to have cataclysmic failures as they age, he says. But they might become more unreliable. “The team works really hard to keep it going but it’s like an old car – it’s going to need increased amounts of love as it gets into its twilight years.”

Meanwhile, Gordon says about half of KiwiRail’s 100 locomotives are “age-expired”. New locos cost about $5 million. “You could do the maths there.” Wagons also need replacing – he didn’t hint at how many – standard flat-top wagons cost about $150,000-a-pop.

“So, yes, it’s in the hundreds of millions, absolutely.”

Surely that number could reach $1 billion, over time? Gordon says that as a stand-alone commercial proposition, rail in New Zealand has never been in a position to fund its underlying capital, of about $200-odd-million a year.

“On an ongoing basis, rail will require capital. You do the years long enough it’ll get to be a very big number.”

Asked when big chunks of Crown investment might be needed in KiwiRail’s ageing infrastructure, Gordon and Rushbrook both arrive on a rough timeframe of five years.

Turnaround comes to a screeching halt

Labour would do well to focus on the non-financial benefits of rail – such as carbon emission savings and easing congestion – if National’s record is anything to go by.

In 2010, it enacted a $750 million “turnaround plan” in the hope of making KiwiRail self-sustaining by 2021. The plan was shelved in 2013. A Treasury review found KiwiRail had made substantial progress but the plan had been based on overly optimistic revenue assumptions, inadequate progress in some areas and unexpected factors, like the global recession.

Hundreds of millions of Crown dollars continued to flow into the rail company. A commercial review started in 2014 found that New Zealand’s freight business would never be big enough for KiwiRail to be self-sustaining. By 2016, six years after the turnaround plan started, freight volumes had increased 14 percent, and KiwiRail’s share of import and export volumes had leaped 69 percent. Another 48 locomotives and 1300 wagons were bought.

So much was achieved. And then the Kaikoura quakes hit in November 2016.

In latest KiwiRail accounts, for the half-year, the company notes its insurance only covers loss and damage up to $350 million. The previous Government promised to meet any shortfall, including, in that last six-month period, a $40 million injection, while the company’s accounts took a charge of $134.1 million on its assets “for the capital cost of reinstatement incurred”.

Gordon says if Crown money is invested properly it can deliver on Government policy objectives. He points to Government investment in Auckland’s commuter rail network. In 2003, when Britomart station opened, patronage was about two-and-a-half million trips a year. Last August, the rail network celebrated recording 20 million trips in a single year.

Gordon: “I can’t see any reason to suspect that, post the City Rail Link and other things, that could be up in the 50s.”

Peters versus English

A question which seems more relevant in the last 24 hours is, what are the Government’s objectives? Yesterday Labour’s Justice Minister Andrew Little announced he was backing off repealing the controversial Three Strikes law because New Zealand First wouldn’t support it.

In terms of KiwiRail’s future, it’s worth repeating an exchange in Parliament in February 2015.

Bill English, the Finance Minister at the time, found himself defending his Government’s investment in KiwiRail – more than $1 billion over four or five years – under questioning from Finance and Expenditure Committee member Winston Peters.

Plugging capital investment gaps of between $150 million to $350 million a year was a concern, English agreed.

Peters asked English if he’d had any discussions about privatising the ferry service or putting in foreign ships or crews. No, English replied, adding: “This is a business where it’s a real challenge to get it to a sustainable basis, and we are now, I think, on about our third round of having a harder, deeper look at what drives KiwiRail costs and revenue.”

Peters, unsatisfied, pressed further, asking if any Treasury boffins had ever asked about the financial “disaster” happening at KiwiRail, the “almost daily stoppages” and whether it needed to go through the business with a fine-tooth comb. “Surely somebody said: ‘Look, alarm bells should be ringing here. What are we going to do about it?’”

Newsroom asked Peters, the Minister of State Owned Enterprises and soon to be acting prime minister, for his current view of KiwiRail’s operations and the likelihood of further Crown investment. His office didn’t respond.

KiwiRail welcomes Northland rail pledge

There is local support for rail improvements.
DANICA MACLEAN/FAIRFAX NZ

KiwiRail is welcoming the Government decision to investigate upgrading and expanding rail north of Auckland.

The initiative was announced by the Ministers of Transport and Regional Development as part of a package of Provincial Growth Fund improvements to help Northland’s economic and social growth.

They pledged $500,000 to examining the potential for rail improvements.

The coalition agreement between Labour and NZ First said the new Government would commission a feasibility study on the options for moving the Ports of Auckland, including giving Northport serious consideration.

Friday’s announcement did not mention the port specifically.

“We are looking forward to participating in the business case process. As the Government has indicated, KiwiRail has the ability to drive economic growth in the regions through our freight network, world-class tourism services and the passenger services we enable,” said KiwiRail chief executive Peter Reidy.

“Using rail also delivers a range of significant benefits including reducing carbon emissions and road congestion, making our roads safer, lowering spending on road maintenance and upgrades, and reducing fatalities.

“Every tonne of freight carried by rail is a 66 per cent emissions saving over heavy road freight.

“Northland’s rail lines are under-used and much of the rail infrastructure is old, reducing the speed at which trains can travel. The tunnels are not fit for purpose when it comes to container freight and considerable investment is needed to bring the rail line up to modern standards.

“If it proceeds, this work will allow for faster trains, larger modern sized containers and tourism services.”

KiwiRail currently runs one weekday return service to Auckland on the line predominantly carrying dairy and forestry.

– Stuff

Trains back on Wairoa – Napier line

Trains will be moving again on the Napier to Wairoa line for the first time in six years next Wednesday.

“The project to re-open the line will pass a significant milestone when a work train travels up to Eskdale from Napier delivering ballast,” KiwiRail Chief Executive Peter Reidy says.

“Having work trains running is an important part of getting the line open to shift logs by rail and take trucks off the road.

“The line is expected to be ready for logging trains by the end of the year.

“This is also a good time to remind people of the need to take care around the rail line. Because it has not been in use by trains, people need to be aware that trains will now be on the line, and that they need to be looking out for them,” Mr Reidy says.

There will be a ceremony to mark the return of trains at KiwiRail’s operations depot in Ahuriri.

There are good vantage points for members of the public who are keen to see the train as it passes at Meeanee Quay and Domain Rd at around 11.30am.

The line is being re-opened by KiwiRail using $5 million of funding from the Government’s Provincial Growth Fund, and will be used to transport logs to Napier. The work is expected to take two years to fully complete.

“This is an important project for the region, for New Zealand and for KiwiRail. It lifts the regional economy. It makes the roads safer by taking logging trucks off roads that were not designed to cope with growing volumes. It helps the environment by cutting carbon emissions,” Mr Reidy says.

KiwiRail has estimated that using the Wairoa-Napier line to move the logs could take up to 5,714 trucks a year off the road, and cut carbon emissions by 1292 tonnes.

Don’t lose track of rail freight limitations – David Aitken

Rail freight has its place but . . .

Rail freight has its place but . . .

OPINION: The Government has been talking about getting freight off the country’s roads and on to alternative sea freight and particularly rail freight.

Rail freight has its place and already its biggest customer is the road freight transport industry.

But it also has its limitations.

If Europe is any example, nothing much will change, despite the Government and KiwiRail’s best efforts. Trucks will always be required to deliver a large portion of the country’s freight demand.

While bulk freight can be transported by rail or sea, market demand in the freight industry will dictate how customers want their goods moved.

Since 2000 the European Union has provided policies and incentives to shift freight off the road to rail, coastal shipping and Europe’s extensive canal system.

They haven’t worked.

Road still carries about 75 percent of all Europe’s freight.

The total tonnage carried by rail and other modes has gone up but so has road freight, so the proportion each carries has remained about the same.

The market has continued to decide which form of freight to use, rather than incentives and tax breaks.

Improvements to rail infrastructure in Europe have only resulted in small increases in rail freight carried, so rail has been reluctant to make large capital expenditure, because the returns aren’t there.

The same is likely to apply to New Zealand.

Road freight will always be preferred for any perishable goods because it can carry out the task faster – apart from much more expensive air freight.

Road freight has greater service quality – quicker door to door delivery times and greater safety with less chance of damaged goods, which usually occurs when the freight is changed from one mode to another.

Even when rail or sea is used, trucks are often needed to get goods to the rail hub or sea port to start the journey and then pick them up to make the final delivery.

Highly competitive costs within the road freight sector make it more appealing to customers than the alternatives.

Road freight has flexible route choices. Rail and sea do not with only a few fixed routes.

Road freight will nearly always be used for the “last miles” as customers want door to door delivery.

Rail is only generally better when the type of goods (very large or non-urgent) can be shipped by train instead of road.

This occurs when a customer places all their business with a road freight operator who then decides the best way to ship it to meet deadlines or budget.

Improving New Zealand’s rail services and infrastructure will be taxpayer funded and subsidised. Improvements in road freight transport – newer fleet with cleaner emissions, less noise – are paid for by the trucking companies and their customers.

Rail will only ever handle a small proportion of the country’s total freight as 90 percent of road freight is done within metropolitan/urban areas where rail and sea are not an option.

With the increased investment in the rail sector, KiwiRail remain a commercial operating arm of the government, this is likely to require rail price increases to cover the investment costs, closing the gap between road and rail pricing, making the later less attractive to freight customers.

National Road Carriers is the leading nationwide organisation representing companies involved in the road transport industry. It has 1700 members, who collectively operate 15,000 trucks throughout New Zealand.

David Aitken is the chief executive of the  National Road Carriers Association

 – Stuff

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