Views on fixing rail link sought
By JARED SMITH - Taranaki Last updated 05:00 27/11/2009
Kiwi Rail remains in no hurry to spend the "millions" it will cost to
repair and upgrade the Stratford-Okahukura railway line.
The track owner has called for public submissions before making a decision in the New Year on upgrading the line.
A Taranaki SOL (Stratford-Okahukura line) working group will convene in the coming weeks to put forward a strong submission for restoration of the
track, while also considering whether the region could front the funding.
Kiwi Rail central regional manager John Sargent faced the regional land
transport committee meeting at the Taranaki Regional Council yesterday to update progress since the SOL was closed following damage by a November 2 derailment.
Eight kilometres of track and 10,000 sleepers were damaged at the northern end near Tunnel 24, all needing replacement at $400,000 cost.
Mr Sargent said there has been no significant upgrades since the track
opened in 1932.
There have been seven derailments in the last 12 months, poor formations in 15 of the 24 tunnels, and currently 34 separate speeding restrictions on the line. Fixing Tunnel 24 alone would cost $750,000.
"The line runs through country best described as geographically
challenging," Mr Sargent said. He said the only regular use of the track is
by Fonterra product on an 8pm-5am run, and the company was comfortable being diverted via the Marton and North Island Main Trunk Line.
Kiwi Rail had lost only a "small proportion" of New Plymouth clients where
companies who received late deliveries could not load the Marton-bound train by 5.30pm departure time.
"Would spending millions of dollars upgrading the line be justified on the
basis of current and projected traffic?" But committee members argued the SOL remains crucial as an east-west corridor and permanent part of
An SOL working group will convene in the next three weeks to formulate a
strong submission to the Kiwi Rail board.
Stratford District Mayor Neil Volzke said he spoke with Ruapehu District
mayor Sue Morris, who is also very concerned about the closure at the that end of the line, and fully supported a submission.
Committee deputy chairman Brian Jeffares was adamant the SOL needed saving, pointing to its "orchestrated unfunded" nature over the years by each new owner who always said they did not currently have the money to fix it up.
"What we've got to do is maintain what we've had for a long time. This is
important to Stratford, important to New Plymouth, and important to
Taranaki. We should pull out the stops to fund as much as they can."
Passenger numbers on the Overlander, which was threatened with closure three years ago, have increased 47% to date this year, compared to last year.
KiwiRail says that amounts to 10,000 more people taking the service, which means more than 67,000 are now using it annually.
Passenger numbers have grown on all three KiwiRail long-distance journeys, which spokesperson Nigel Parry says is due in part to increased domestic tourism and competitive fares.
The TranzAlpine and TranzCoastal routes in the South Island have recorded passenger gains of 8% and 23% respectively
Lyttelton Port to increase size of rail siding
Thursday December 3 2009 - 07:28am
Lyttelton Port of Christchurch is spending $5.7 million to build a rail siding capable of handling 24 wagons as more containers arrive at the port via rail.
The port's two existing sidings hold eight wagons each. The new siding will extend into the existing Cashin Quay back road.
The port handles coal trains from the West Coast and is handling more freight from Fonterra.
Chief executive Peter Davie said the siding development was a response to increased demand.
"Increased business from Fonterra, with whom we recently signed a significant contract, and our recently completed short-haul container rail shuttle between CityDepot and the port, has contributed to the increase," he said.
The rail expansion plan is part of a three-stage process.The first stage, which is almost complete, involves the removal of a large storage shed to free up 1.62ha for container storage, increasing the port's capacity by 40,000 TEU, or standard-sized containers, to 300,000 TEUs.
The rail siding expansion is the second stage and should be completed in 12 months.
Stage three is still under investigation and involves relocating a workshop to free up operating land and increasing the number of straddle machines. This could increase container throughput capacity to 450,000 TEUs per annum.
New interest in mothballed Castlecliff line
9th December 2009
Freight traffic could be returning to the disused Castlecliff rail line in
the new year with a number of industries in the area interested in using the link.
The section of line, running from Taupo Quay to the port, was mothballed
three years ago but now some business in the city's industrial belt have
asked KiwiRail to look at reinstating the line.
And yesterday KiwiRail confirmed it had been approached although it would not reveal which industries had made contact.
Kevin Ramshaw, KiwiRail public affairs manager, told the Chronicle that his company had been looking at re-opening the 6km of track for the past few months "as a result of interest from customers".
Mr Ramshaw said no firm decision had yet been made because a number of key areas would have to be looked at closely before a final decision was made.
These included how the reinstatement would be funded, how best to service the line, and what level of resource would be required.
He said that would include reactivating level crossing warning signals,
replacing or repairing some sections of the track and providing the rolling
stock to handle the freight.
"We would hope to have these finalised early in the new year," Mr Ramshaw said.
One of the industries looking at the prospect of rail freight moving on the
branch line is Open Country, which has recently opened its milk powder plant on Heads Rd.
Currently bagged powder is being stored in a warehouse further along Heads Rd then trucked out of the city from there.
Steven Koekemoer, national operations manager for the dairy company, said reinstating the line - officially know as the Castlecliff industrial line -
"certainly will be of interest" to his company.
"We're just starting to look at the options or rail versus road. We're
analysing that now so it's probably a bit early to tell at this stage," Mr
Colin Fergus, manager of MARS Petcare in Castlecliff, said he was aware
KiwiRail was looking at reinstating the line.
Mr Fergus said while opening of the line would not benefit for his plant he
could see it being beneficial to other businesses on the suburb's industrial
"For Wanganui it would be great, no doubt about it, but for us as a business the line doesn't come out as far as our plant," Mr Fergus said.
"We still have to truck our containers down to the Taupo Quay yard and load them onto the rail wagons there and I'd expect that to continue."
He said having the line re-opened would not be a "huge advantage" for his
company "but for other businesses down the road it would be fantastic," Mr Fergus said.
Affco New Zealand, which operates the Imlay meat works on Heads Rd, is a potential rail user but a spokesperson at the company's head office said
they had no comment to make and referred inquiries to KiwiRail.
There has been a rail link from the central city to Castlecliff since 1885.
A private company built and operated the line until the Wanganui Harbour
Board convinced NZ Rail to take control of it in 1956.
The line has been mothballed since 2006.
Castlecliff Railway has one of the most delightful and intruiging histories of all private railways in NZ.
As can be read, this line was mainly a private affair as NZR really didn't want to have anything to do with servicing the port area of Wanganui.
This branch could easly become an 'offical' short line PPP company with the clients along it being held responsible for it's upkeep to a point where Kiwirail would absorb it.
I last saw this line in April, it's a little tatty as to be expected but no as run down as the Rotorua branch and a good going over by a weed train and some remedial work wouldn't be too expensive. Level crossings would have to be fully controlled though, as it is now the law, which would be the most expensive outlay.
West Coast Road-rail Bridge Opens Early
Friday, 11 December, 2009 - 07:44 The new $25 million Arahura road-rail Bridge on the West Coast officially opens this Friday 11 December 2009 - several months earlier than planned.
One of the largest bridge projects on the New Zealand rail network in recent times, the new structure replaces a wooden, single-lane road-rail bridge which for more than 120 years provided a crucial link over the Arahura River for both State Highway 6 and the Hokitika Branch Railway line.
KiwiRail Chief Executive Jim Quinn said the early completion was a testament to those involved as replacing the historic bridge had been complex.
"This hasn't been a typical rail bridge project - instead we've created a single-track railway, a two-lane road and a pedestrian / cycle way all on the same foundations," Jim Quinn said.
"The old bridge was nearing the end of its life so securing this vital transport link for the future was important for the West Coast. This supports KiwiRail's ongoing programme to remove timber from its rail bridges. It is all about improving the reliability and efficiency of the network to meet the demands of rail's customers."
NZ Transport Agency Regional Director Mark Yaxley said around 3,500 vehicles use the bridge each day which meant one of the main requirements of this project was to keep State Highway 6 operational while the new bridge was built.
"As well as keeping the road open while the bridge was built around it, construction was also staged to manage both the whitebait and dairy dry seasons," Mark Yaxley said.
Mr Yaxley added that having the bridge open ahead of plan is a sign of how successfully the different demands have been managed.
"Both NZTA and KiwiRail feel that the help and co-operation of the local community, including owners of the riverbed, Mawhera Incorporation has been central to the success of this project."
Physical work on the new bridge began in mid 2008 with the installation of foundations on either side of the original structure. Traffic was diverted onto one road lane of the new bridge early in 2009 before work began during the dairy dry season when trains do not use the line, to decommission the old bridge and replace the rail line.
New guide banks were formed as part of the bridge project to reduce flood risks. Further safety improvements were achieved by raising the bridge to allow bigger floods underneath.
A single span from the original bridge has been retained to be used in a small heritage park nearby, which will be completed and opened early in 2010.
Shunting causes long delays
By Sue Newman January 16 2010
Shunting trains have created havoc in central Ashburton this week with
blocked rail crossings causing lengthy traffic delays.
On more than one occasion in recent weeks, several crossings have been
blocked for up to 20 minutes while slow trains shunted back and forth
through the Ashburton rail yard.
Vehicles were backed up for several blocks and pedestrians, fed up with
waiting, were seen to climb between wagons.
Both the Ashburton Guardian and Ashburton District Council fielded a number of calls from irate locals and travellers who were affected by the delays.
The central Ashburton shunting yard has created on-going problems for
motorists for many years with long trains and shunting trains holding up
And for years solutions, such as moving the rail yard out of town have been discussed.
A new shunting yard is planned for the Ashburton business park currently
under development north of Ashburton.
This siding would see the central town yard moved and with it the problems of traffic snarl-ups due to blocked rail crossings.
However a change in Central Government funding policies for transport has put this move in jeopardy.
Ashburton District Council chief executive Brian Lester said the move was
included in the regional transport plan as an approved project, but the
policy change meant the government would not fund non-roading work included in the plan.
"While this hasn't stopped the project, it certainly means from the point
of view of council the funding barrier has suddenly become a lot higher," he said.
The policy change however, did not change the council's commitment to move the rail yard.
"We are still determined to make this happen, we are still in discussions
with KiwiRail and I don't believe they have a problem with the principle of
the idea. It's certainly a priority for us to have this happen."
Mr Lester said he had experience first-hand of this week's congestion and
of watching two children clambering over the carriages of the stationary
train because they were fed up waiting for it to move.
"This really highlighted the danger. It's not just about traffic
When the rail yard moves, all shunting activity will then take place on a
siding developed as part of the business park.
Thursday's extended shunting was out side normal operation procedure
KiwiRail spokesperson Ruth Larsen said. "We are acutely aware of the need to keep traffic disruption to a minimum in Ashburton."
This was a one-off event, she said.
Battling to convince companies to move freight on the little-used Gisborne-Napier railway line to save its life is a waste of time, Gisborne's Chamber of Commerce president says.
But Gisborne Mayor Meng Foon and Napier Mayor Barbara Arnott said it was imperative the rail line be kept open. The Hikurangi Forest Farms wood-processing plant was due to be completed by next year and would need to shift its product by rail, Mr Foon said.
"Otherwise our roads will become incredibly congested," he said.
Mrs Arnott said the Port of Napier needed the "wall of wood" expected in the next few decades as Gisborne's forests matured, and the rail line was the most efficient way of getting it there. "It's incredibly important to Hawke's Bay. [The line] needs to be kept open as long as absolutely possible."
KiwiRail signalled this week that under-used lines including the Gisborne-Napier, Northern Wairarapa, Taranaki and Northland lines could be closed.
KiwiRail spokesman Kevin Ramshaw said it was in discussions with companies that could put more freight on the lines.
The Gisborne-to-Napier line cost $2 million a year to run, with just one freight train a week, occasionally two, using it.
Mr Ramshaw would not provide details of potential customers in Gisborne, but confirmed that there had been discussions with Hikurangi Forest Farms.
Gisborne Chamber of Commerce president Fraser Brown labelled New Zealanders' desire to keep small uneconomic lines in service as nostalgic. He said the Gisborne-to- Napier line was not "economically viable" and he would be happy to see it closed.
"Money should be spent extending services at [Gisborne] port. Keep the lines from the port to the mills, and use them to get logs to our port."
Hawke's Bay Chamber of Commerce wanted the line kept in service, with chief executive Murray Douglas saying it would be needed as "timber processing ramps up over time".
He believed maintaining the Gisborne-to-Napier road under the weight of ever-increasing trucking would be more expensive than keeping the rail.
The lines biggest user, fertiliser manufacturer Ravensdown, had shipped 200,000 tonnes of product along the line in the past 10 years, manufacturing general manager Shane Harold said.
"Ravensdown is very supportive of the rail route. [It] is an easy-to-use transport option ... and reduces the number of trucks on the very busy Napier to Gisborne road."
Pahiatua Railcar Society president Don Selby said Northern Wairarapa would be isolated from the rail network if that line was closed and it would also kill plans to run restored vintage railcars as a tourist venture.
Stratford Mayor Neil Volzke said KiwiRail's announcement that the four lines had to be self-sufficient was ominous.
The Taranaki line between Stratford and Ohahukara in the King Country had been closed since November.
"I think we have to admit that the odds are stacked against it ever being used again.
"The trouble is that KiwiRail are not going to reopen the line unless there is a customer."
Strategic Napier to Gisborne rail line at risk of closure
Posted by Max Patmoy
Saturday, 22 May 2010
Closing the Gisborne - Napier rail line is another example of the Budget's
deficit of vision, said the Green Party today.
Transport Minister Steven Joyce announced the KiwiRail "Turn-around Plan" Tuesday before the Budget, which identified the line as one of four that could be closed or mothballed by 2012.
"It's great that the Government is committed to investing some money in the future of rail freight," said Green Party Transport spokesperson Gareth
Hughes, "but the overall approach to transport spending is very short-sighted and will ultimately make New Zealand even more dependent on costly road transport."
The Ministry of Transport states that rail is 6 times more fuel efficient
than trucks for moving bulk freight.
"The additional safety, congestion and environmental benefits are
substantial.Unfortunately, John Key's Government doesn't seem interested in analysing the costs and benefits of the transport system as a whole," said Mr Hughes.
"The narrow focus on rail lines that already achieve high revenues means
that some strategically important lines, like the North Wairarapa, may be
"Oil prices are rising. We need to invest in rail so that it is a viable
transportation for moving passengers and freight in the future."
Mr Hughes said that closing lines or mothballing lines now, instead of
investing in maintenance, could lead to higher costs in the future.
The Rotorua to Waikato line was mothballed in 2001 because it needed less than $2 million in repairs. In 2008 when a tourism operator investigated reopening the line they found so many sleepers and tracks had been stolen it would cost about $10million to repair and reopen the line.
"The Napier - Gisborne line is of strategic importance because of the future of forestry in the Gisborne region, which needs cost effective access to the Napier port. We want to support a growing industry without forcing heaps of heavy logging trucks onto already unsafe roads," said Mr Hughes.
"We should be investing in rail because it is a more efficient, effective
and cheaper way to move people and goods than costly motorways.
"If John Key's Government wasn't prioritising the Puhoi to Wellsford holiday highway, which currently carries less traffic a day than an arterial road carries in one hour in Auckland and Wellington, we would have plenty of money to bring the rail network up to speed.
"We need to invest more in rail to future-proof our economy and quality of
written by seerob, May 22, 2010
What with Napier's President of Chamber of commerce making the absurd and disgraceful comments of closing the Napier to Gisborne rail link because it is worthless and Minister Steven joyce hell bent on providing a smooth cruise for Aucklanders to drive up to Wellsford for the day, the line is indeed under severe criticism. What is it about New Zealander's in position of importance that they cannot understand the fundamental transport system in any developed country (including motorised USA)is rail and will continue to be rail. It consistently proves to be the most effective means of mass transport for both freight and passengers.
'Don't throw away our rail'
Retaining the Napier to Gisborne railway line is a long-term and sustainable transport solution of economic significance to the East Coast, say some politicians and Gisborne's steam train operators.
KiwiRail announced last week the line would be closed or mothballed if it could not attract substantial customers by 2012, despite a $750 million Government cash injection into the state-owned rail service.
Labour list MP Moana Mackey, from Gisborne, said she was "disappointed" that Gisborne Chamber of Commerce was against the line's retention.
"No one denies that the line will require significant investment to remain viable, especially after so many years of neglect under private foreign ownership.
"But it is not in our region's long-term interest to throw away our rail line.
"This much-lauded funding announcement for KiwiRail of $750 million should be seen in the context of the $11 billion this Government has committed to their so-called 'roads of national significance' - none of which are in our region.
"Imagine what that kind of money could do for our rail network."
The 2008 National Freight Demands Study predicts 75 percent growth in total freight movement by 2031.
Green Party transport spokesman Gareth Hughes said closing the Napier-Gisborne line showed the Government Budget's "deficit of vision".
"The overall approach to transport spending is very short-sighted and will ultimately make New Zealand even more dependent on costly road transport.
"The Napier-Gisborne line is of strategic importance because of the future of forestry in the Gisborne region," Mr Hughes said.
"We should be investing in rail because it is a more efficient, effective and cheaper way to move people and goods than costly motorways."
Gisborne City Vintage Rail Society treasurer Dale Smith said she was appalled at Gisborne Chamber of Commerce president Fraser Brown's comments that vintage rail was of little economic benefit.
"What planet was he coming from?
"What's the economic benefit of vintage rail? We have done 27 trips over a quite a short period - 16 up to Beach Loop.
"The tourists all eat, sleep and drink in Gisborne. Without them, cafes and bars would suffer.
"I think Mr Brown should come and have a ride and see what we have got instead of making these comments."
Governments in Australia and NZ seem obsessed with building highways! They all know that its an easy way of buying the votes of the ignorant and stupid
Dosn't Mr Brown have an interest in the Port at Gisborne?
Jim Quinn: Rail can deliver commercially if we invest to succeed
By Jim Quinn
4:00 AM Wednesday May 26, 2010
KiwiRail works with locomotives around 30 years old that run on winding, single-road lanes, a reason why rail transit times are now slower than road. Photo / Hawke's Bay Today
The support of customers ensures the plan unveiled last week for the revival of the rail business has every chance of proving that history doesn't have to repeat itself.
In dismissing rail as "not having paid its way for generations - if ever", the Herald (editorial May 20) invites readers to assume that our plan is a continuation of past approaches.
The Government, in announcing investment in KiwiRail, was effectively signalling it has heeded the lessons of the past. It has accepted that KiwiRail's long-term plan for rail's future is focused on achieving commercial success by meeting customer needs.
Rail's long and colourful history helps us to understand why it is currently struggling to provide customers with competitive services and why investment has been so necessary.
The business has barely had only enough capital for many years to hold it together. This has resulted in a decline in the asset and rail's ability to deliver reliable and competitive services.
Pulling trains with 30-year plus locomotives is like running a trucking company with HQ Holdens - cute and quirky but far from effective.
Put them on the equivalent of a winding, single-lane road with few passing lanes and a surface that is patched and potholed, and it is easy to see why rail transit times from Auckland to Wellington are now 4 hours slower than road. Fifteen or so years ago, they were on a par.
It has been a strategy of just enough capital to fail and it is very clearly why rail's market share has been eroded.
It's legitimate to ask, why not leave freight to road transport if it's that much faster? It is the customers who provide the answer. They have signalled strongly they would support rail if they are satisfied that it is relevant to their needs and their business.
Why? Mostly because for some types of freight, rail provides a cost-effective element in their overall transport solutions. For those worried about carbon footprints, it can offer significant environmental benefits, too.
Some argue rail's low share of overall freight movement makes it largely irrelevant. Try telling that to the producers of the third of New Zealand's export products we move.
And with freight traffic expected to almost double over the next 30 years, it will have to play its part in moving these goods around the country.
In deciding to invest, the Government has signalled very clearly that it expects KiwiRail to operate commercially. The vital logic behind this is that by investing in those parts of the business that are commercially viable, rail can stand on its own feet.
At its most simple, the plan focuses on unlocking potential revenue on the backbone of our network by improving the rail and ferry infrastructure of our main trunk route running the length of the two islands.
We will then have the opportunity to reclaim freight on many of the sectors between Auckland and Christchurch. Our share of the containerised freight that travels across Cook Straight has declined from 60 per cent in 1995 to 18 per cent today.
This focus on our backbone strengthens the whole network and ensures options for all our customers - passenger and freight today and as their needs change in future years.
Of course, there is wider investment required across the network. We must renew our locomotive and wagon fleets and invest in other parts of the network to ensure our capability is relevant to our customers in those areas. And we must invest in our processes, systems and tools to maximise the productivity of our team so we are as competitive as possible.
Implementing the plan will be a challenge. We have to buy more than anyone thought possible with the money we receive and we need the support of all the stakeholders. But the turnaround plan is more than just an infrastructure shopping list.
It focuses KiwiRail on the parts of its business that are truly commercial and separates out the parts that aren't.
Predictably, reaction to the investment announcement centred not on freight but on the possible closure of minor lines and the possibility that commuters in Auckland and Wellington could pay more for their journeys.
We've identified the minor lines that currently carry little or no traffic, but require significant investment just to maintain current operations - let alone improve transit times.
We've said that we'll consult with customers, communities and staff but if an anchor customer can't be found, and they remain unprofitable, we'll recommend mothballing and possible later closure.
That's being commercial.
In Auckland and Wellington, we are identifying the costs we incur in providing the infrastructure for commuter trains. We will then be making these more transparent so that they can be funded correctly through the various channels for these costs.
In both cities, the infrastructure has improved dramatically in recent years or is being improved, and in Auckland services have increased in response. The ongoing costs do not yet reflect this investment.
We all expect KiwiRail to be commercial and profitable - it is reasonable that these costs be understood and funded appropriately.
This step by Government is not about accepting that we are stuck with rail. It is a positive step to make sure there is enough investment for success, not just enough to fail.
Are there risks? Of course - any 10-year plan has risks. Can we deliver it? Absolutely!
* Jim Quinn is chief executive of KiwiRail.
By Jim Quinn
Rail tourism here is on the increase
Tourism is starting to gain momentum on the Napier to Gisborne railway.
In addition to the popular trips being run by Gisborne City Vintage Rail at the Gisborne end of the line, I am aware of five other organisations that either have recently or plan to run excursions along the full length of the line over the next few months.
These include Newspaper “Reader Tours” from Auckland and Wellington, a Tranz Scenic Silver Fern railcar tour, and tours and day trips promoted by other heritage rail operators. Plus trips over the southern portion of the line that are now well-established features of the Napier Art Deco events.
I represent Steam Incorporated, a Kapiti-based group that is beginning to run more regularly over the line.
Late last year we ran two day trips from Napier to Gisborne and were overwhelmed with the demand.
We carried 700 travellers to Gisborne that weekend and many had travelled from all over New Zealand just to ride the train. All of the tour trains seem to spend at least one night in Gisborne, which must benefit the local hospitality sector.
A new venture we are trying this October on behalf of a major Australian tour operator will see tourists being bused from Rotorua for an overnight stay in Gisborne before joining our train for the ride south.
As well as this tour train, we also have another day trip from Napier scheduled plus a more extensive programme next year using a heritage diesel locomotive that is nearing the completion of a major restoration project.
The North Island is missing out on rail tourism when you look at the success of the tourist rail routes in the South Island, namely the Taieri Gorge Railway (Dunedin) carrying 75,000 passengers a year and the Tranz Alpine that is now doing 500,000 passengers a year.
Dunedin is a major cruise ship port and a major incentive for the cruise ships to visit is the TGR!
KiwiRail, the state-owned railroad, has proposed writing down its assets by $6 billion, halving their current value which is too high given the commercial realities of the business.
Under the proposed balance sheet restructure, the business would be split into two entities - a statutory body, NZRC, will hold the rail corridor land currently valued at about $5 billion.
KiwiRail would be the commercial arm, owning the rolling stock, ferry assets, commercial properties and rail infrastructure, chairman John Spencer said in a presentation at the annual meeting in Wellington.
"While this process is still a proposal while we work through the technical details it is clear that the current valuation of $13 billion for our assets based on replacement cost is not an appropriate valuation for the business," Spencer said. "We have recommended to our shareholder that we change the company entity structure and value our assets according to their productive earning value," he said.
Under the proposal, the value of the railroad's commercial assets would be slashed to about $1 billion, a writedown of about $6 billion, Spencer said.
Both entities would have a common board though details of the commercial arrangement haven't been decided. The company has been "working constructively" with government officials over the past 12 months and hopes to have the restructure completed by the start of the 2012 financial year, depending on resolving the legal structure and tax issues.
The restructure means the business will be cash negative for its first five to seven years.
Profit fell 83 per cent to $34 million in the railroad's latest year as it recognised a loss on the transfer of assets to Greater Wellington Regional Council and recorded a decline in government grant income that reflected completion of projects. Operating revenue climbed 2.6 per cent to $667.4 million.
It was the first year the company hadn't received an annual $90 million operating grant from the government. Instead it receives funding for specific projects.
The annual results missed the targets in the KiwiRail's statement of corporate intent, with operating revenue 2.6 per cent below the projected $685 million, while ebitda short by about $20 million. The shortfall reflected disruptions from the Christchurch earthquakes and loss of Pike River Mine volumes.
Chief executive Jim Quinn said the company is working hard to make up the shortfall.
Spencer also defended the decision to buy rolling stock and locomotives from overseas manufacturers rather than use its own engineering workshops.
"We have had to make tough purchasing decisions, but we have a finite amount to spend in many areas to get this business functioning efficiently and safely," Spencer said.
KiwiRail has admitted it "stumbled" with the super-sizing of the Aratere ferry earlier this year, which returned late and cost $12 million over budget.
"We stumbled with the Aratere project with the over cost and [it] was late," chief executive Jim Quinn said today.
He spoke to the state owned enterprise's annual report at Te Papa and addressed the project which saw the Interislander ferry extended by nearly 30 metres at a Singapore shipping yard earlier this year.
"We're frustrated by that but we're learning how to get these projects right and we have to continue to do them because we've got a long way to go. Our customers want more and want it fast ... but we do need to take the time to get these bigger assets right."
Interislander general manager Thomas Davis said in the report the Aratere budget blow out was due to changes in the design of additional generators, transformers and power management systems plus the need for additional strengthening.
Though the ship did not return in time for the Rugby World Cup as planned, there was enough capacity to carry the 15 per cent increase in traffic, Mr Davis said.
The Aratere has been plagued with problems and delays since the $53.8 million refurbishment at the Sembawang Shipyard.
The five-month refit involved a new 30-metre mid-body being installed in the ship, as well as a new stern profile, a new bow, new generators, and a total interior refurbishment.
It is now capable of carrying 650 passengers - double its previous capacity - five more trucks and eight more rail wagons, increasing the total of each to 28.
He told The Dominion Post earlier this month, the problems with the extension were being dealt with under warranty - meaning the shipyard in Singapore covered the costs.
Despite the impact of the Christchurch earthquake on passenger numbers and the late return of the Aratere, Interislander increased its revenue by nearly $3 million to $122.9 million.
Each year, the three Interislander ferries make 5500 sailings carrying 785,000 passengers and 210,000 cars.
Overall Kiwirail recorded an operating revenue of $667m for the 2010-11 year, a 2.6 per cent increase on the previous year.
For the first time the state owned enterprise did not ask for an operating grant from the Government, which totalled $90 million the previous year, chairman John Spencer said today.
However, KiwiRail and the Government spent nearly $1.25 billion on major infrastructure improvement projects, suppliers, contractors and wages.
"The arrival of 20 new locomotives, 535 wagons and increasing the capacity and reliability of the network ensures that our business can grow and improve for our customers."
Freight continues to provide the lions share of revenue with an eight per cent increase to nearly $400 million, which makes up about 60 per cent of KiwiRail's overall revenue.
Passenger numbers on Wellington train services increased slightly by one per cent on the previous year.
However, long-distance train services in the South Island took a hit after the Christchurch earthquake in February forced services to be grounded until mid-August.
"Not surprisingly, the fall in passenger revenue affected TransScenic's revenue result, down 24 per cent on last year at $21.5m," passenger general manager Deborah Hume said in the report.
KiwiRail continues to build a stronger foundation for the future
KiwiRail is well on its way to a sustainable future, Chairman John Spencer said today at KiwiRail's Annual Public Meeting.
"In a year in which we, and the country, have had to meet momentous challenges, we have delivered an operating surplus increase of almost 29%, and an increase in operating revenue to $667 million."
"While this result was below our target, in the context of these challenges it was a positive result and an improvement on the previous year."
This was also the first year KiwiRail has not required an operating grant from Government, which in the previous year had been $90 million.
"The performance of the freight business during this time was particularly encouraging with an increase in revenue of eight per cent to almost $400 million, which is approximately 60 per cent of the company's overall revenue," said Mr Spencer.
During the 2010/2011 financial year KiwiRail and the NZ Government spent nearly $1.25 billion on major infrastructure improvement projects, suppliers, contractors and wages, of which over $1 billion was spent and sourced in New Zealand.
"This year new rolling stock arrived, we completed some major network improvements and extended the Aratere, to increase freight and passenger capacity," said Mr Spencer.
"The arrival of 20 new locomotives, 535 wagons and increasing the capacity and reliability of the network ensures that our business can continue to grow and improve for our customers."
"We have had to make tough purchasing decisions, but we have a finite amount to spend in many areas to get this business functioning efficiently and safely.
"We will continue making these hard calls to ensure our assets provide value for money and we deliver the sustainable railway that our customers need."
During this year KiwiRail has also been conducting a review of the company's asset valuation system and structure.
"While this process is still a proposal while we work through the technical details it is clear that the current valuation of $13 billion for our assets based on a replacement cost is not an appropriate valuation for the business," said Mr Spencer.
"We have recommended to our shareholder that we change the company entity structure and value our assets according to their productive earning value.
"This will mean an asset value write-down of approximately six billion dollars and will create a balance sheet more appropriate for our business as we continue to deliver on our plan."
According to Chief Executive, Jim Quinn, it is really in the last year there has been real and tangible progress and the business is starting to see the benefits.
"We are getting more customers, we are increasing the amount of freight moved, we are improving our on time performance and reliability, and we are getting better equipment," he said.
"All this work adds up to building a better business and being a major contributor to improving New Zealand's transport and supply chain infrastructure."
"The outlook for this financial year is promising as we head into our busiest season for the freight business.
"At this stage our operating revenue result is on budget and we are reasonably confident of achieving our target of $737 million if normal operating conditions continue," said Mr Quinn.
KiwiRail's financial results for the twelve months ended 30 June 2011 have been released in accordance with the company's continuous disclosure policy - consistent with the Government's Continuous Disclosure Rules for State Owned Enterprises which came into effect from 1 January 2010.
KiwiRail's full year accounts were tabled in Parliament on 11th October, 2011.
KiwRail’s first annual public
meeting a model for the future
KiwiRail’s first annual public meeting today
has been declared a success and a model for
The meeting at Te Papa, the National Museum
on the Wellington waterfront was attended by
more than 60 people.
“It went very well,” said Chief Executive Jim
Quinn. “We had a good attendance. It was great
to be able to brief people who have an interest
in what we are doing and give them information
that goes beyond what was in the Annual Report.”
Chairman John Spencer who has been involved in
similar meetings as a director of Solid Energy in the
past says the concept is great for communicating
SOEs are making to their stakeholders.
John Spencer told the meeting that at the end of
KiwiRail’s first year of implementing its plan to
make the business financially self-sufficient, the
results had been encouraging.
“Three years ago this business was in dire straits
and there were many who thought it couldn’t
survive,” he said. “The lack of investment over a
lengthy period had led to poor assets, inability to
maintain relevance for our customers in all areas
and declining revenue and earnings.
“We are a business that invests in New Zealand
every day and in communities across the country
by employing more than 4,100 people in many
“In the last financial year we have invested over
$1.2 billion in OPEX and CAPEX. Out of this
amount the total that was both sourced and
spent in New Zealand was over $1 billion.”
Excluding major projects and fuel, KiwiRail
spent $565 million in the North Island including
the Interislander and close to $150 million in
the South Island.
John Spencer noted that KiwiRail had
experienced considerable scrutiny about the
purchase of rolling stock from overseas.
These have been difficult decisions but they
are the right ones given the cost differences
when set against the overall challenge in front
of us, the huge amount of capital required to
put this business on its feet and the obvious
limit of that capital in these very tough times.
“Our workshop’s role has changed over time
and they are continuing to change. As we
manufacture less, their role will continue to
be maintenance and refurbishment.”
As well as providing information on the
annual result, Chief Executive Jim Quinn
said results for the first quarter of the new
financial year were also encouraging with
group revenue slightly ahead of budget
and the all important freight revenue up
The last Labour government bought the trains back and party leader Phil Goff was reaping the dividends during a tour of the Lower Hutt KiwiRail yards.
He talked job losses, apprenticeships and asset sales with management yesterday before stopping to talk to the workers.
"Change the government and rail's safe," he told Colin Kinsey.
Mr Kinsey happened to be fixing a traction engine as Mr Goff walked past, but it's unclear how much traction the Labour leader made on this undecided voter.
Mr Kinsey said it was good to see Mr Goff out among the people on the ground, but was not sure who he would vote for.
"If I get my face on TV, I might change my mind."
Mr Goff was accompanied by local MPs Trevor Mallard, Chris Hipkins and Rino Tirikatene-Sullivan.
The politicians, adorned in high-visibility vests and safety glasses, walked through the factory, where trains were being refurbished.
Mr Goff even had a turn in the driver's seat.
He also launched a petition against the proposed minimum youth wage in Porirua yesterday.
About two dozen young people stood under the white canopies in Hartham Place wearing red T-shirts and waving Labour placards yesterday afternoon as Mr Goff and supporters addressed the crowd.
National is proposing the introduction of a "starting out" wage that will be set at 80 per cent of the $13 per hour adult minimum wage.
Mr Goff said cutting wages was not the answer to youth unemployment.
"We've got 24,000 young people who are not in employment, education or training," he said.
"The answer is not to cut wages – the answer actually is to create jobs."
He said 100,000 Kiwis had fled to Australia, where they were paid "proper" wages.
Aotea College deputy head boy Morgan Evans, 18, said the proposed youth minimum wage was "degrading". "The minimum wage is already not enough to live on.
People in Porirua can't afford to eat. People are going to be looking at hiring young people and putting older people out of jobs because they can pay them less."
Freight growth continues but decrease in full year results forecast
29 February 2012
KiwiRail’s core business of rail freight has experienced an 11 percent increase in revenue to over $220 million contributing to an overall business revenue increase of over five percent for the half year. The stand-out performer for freight was the Import Export (IMEX) division which recorded an increase in volume of 16 percent and a revenue increase of over 12 percent to over $61 million.
According to Chairman John Spencer, while this outcome is encouraging, there has been a reduction in EBITDA due to lower results from other parts of the business.
“While the overall result is disappointing, the most important fact is we are still achieving solid and ongoing growth from our rail freight business,” said Mr Spencer.
“But we have a real challenge with other parts of the business, particularly passenger, Interislander and Workshops, bringing down our overall result. This is due to different factors including the sluggish economy and the ongoing effect of the Christchurch earthquakes, but we are focused on improving this performance by taking a hard look at our costs and investment priorities.”
KiwiRail has reported an increase in operating revenue of almost $17 million on the corresponding six months, up from $332 million in 2010 to almost $350 million. But the operating profit before depreciation and grant income of $43.6 million result (effectively EBITDA) was almost $6 million lower than the previous period.
"Direct comparison to the previous period is difficult as we did receive a revenue boost for freight and Interislander as a result of the September 2010 Christchurch earthquake," said Mr Spencer.
“But despite this the EBITDA result is still unsatisfactory, and while we expect our full year revenue result to be in line with our Statement of Corporate Intent (SCI) targets, we are forecasting our full year EBITDA result to be in the range of $105 to $115 million, compared to the $139.5 million target.”
Depreciation of over $155 million ($137.7m in 2010) reflects our increased recent investments and has had a significant effect, contributing to a net deficit after tax of $118.4 million.
"As announced last year we are reviewing our asset valuation methodology and structure to help alleviate this issue. We are still working through the final details and expect completion by the end of this financial year.”
Business unit results
Bulk, domestic and import-export freight, carried on the rail network and across Cook Strait represents more than sixty percent of KiwiRail’s revenue. The increase in freight revenue is due to both business growth and fuel price recoveries.
Revenue has continued to increase in the bulk and import-export sectors, but remained static for domestic. In the first six months of this financial year bulk freight revenue increased by almost 10% due to the highly productive dairy season and continued demand for forestry products.
“The import-export volume growth of 16 percent reflects a lift in volumes from a range of customers, but in particular export dairy. We expect the growth in this segment of the freight business to continue as we add more rolling stock capacity and customers,” said Mr Spencer.
“Domestic freight business is flat across the whole country, particularly the reduced demand from Christchurch.”
“We, like many others in the transport industry, hope this business increases once the Christchurch re-build gathers momentum.”
The other parts of the KiwiRail business have experienced different issues that have impacted on their expected revenue results.
“While Interislander did increase its revenue, the planned increase in costs associated with the Aratere stretch project has led to a reduction in the business’ EBITDA result,” said Mr Spencer.
“As we announced last year the original budget for this project is expected to be exceeded by at least $10 million. We are still finalising the total cost with the suppliers and we expect this will be concluded before the end of this financial year.”
“Now that the ship is in full service and performing well we expect to see the benefits of greater freight and passenger carrying capacity to flow into the business over the next few years.”
The KiwiRail passenger business consists of the Wellington TranzMetro passenger commuter service and the long distance TranzScenic business.
“The TranzMetro business, while recording an increase in passenger numbers, has had a reduction in EBITDA due to the transfer of a large number of assets to Greater Wellington Regional Council.”
“The tourism focused TranzScenic business continues to be impacted by the Christchurch earthquakes and the subsequent major downturn in the region’s tourism market.”
Mr Spencer said that while we are still pursuing partnership options for TranzScenic, we are taking a closer look at the individual services and how their performance can be improved.
“For example the Overlander business should not be impacted by the situation in Christchurch, but revenue year on year is still falling and we are investigating what changes could be made to reverse this trend,” he said.
Mr Spencer said that while the continued freight growth is encouraging and we expect that to continue, the performance of other parts of the business will need to be closely monitored.
"We have to implement tighter cost controls, particularly in those parts of the business being impacted by ongoing issues such as the soft economy and the fall in South Island tourism,” he said.
"We will also be making a final decision on the minor lines review and focusing on how we can address the future viability of the Workshops business by reducing costs and improving productivity.”
Media contact: Kimberley Brady, Communications Manager, 021 942 519 or 04 498 3219
Latest fact sheets
Two young sisters are in Christchurch Hospital after one was hit by a train and the other jumped from the rail bridge they were on.
The pair were playing unsupervised with three other children on the bridge south of Radcliffe Rd, in Christchurch's Northwood suburb, when the northbound train cam on to the bridge just before 4pm today. This was despite security fencing and warning signs in the area prohibiting access.
Police said the train driver saw the children on the tracks from a distance and repeatedly sounded warnings, while activating emergency braking systems.
An 11-year-old jumped six or seven metres to the ground below. Her 4-year-old sister remained on the tracks as the train approached, despite another child's efforts to get her clear.
She was struck by the front right of the train's cattle shunt and thrown from the tracks, landing close to her less severely injured sister. The younger girl suffered serious injuries, including to her head.
St John Ambulance staff administered first-aid to the sisters and spokesman Ian Henderson indicated both had been on the bridge.
The other children managed to get clear of the tracks and the bridge.
The Press understands the children were fishing when the incident happened.
The sisters were taken to Christchurch Hospital where the 4-year-old remained in a serious but stable condition last night.
Both were expected to make a full recovery.
Police said in a statement the girls were "incredibly lucky to have survived in the circumstances. The train driver's actions in braking clearly reduced the speed of the light locomotive, so that it came to rest only a matter of metres past where the children had been. That, and a significant amount of luck, were the primary reasons a tragedy appears to have been averted."
Inquiries were continuing.
A child's screams could be heard as a four-year-old girl was hit by a fast-braking train and her 11-year-old sister was seriously injured leaping clear of the locomotive.
The two girls - who were with two others aged 10 and nine - were fishing off the rail bridge, which crosses a small stream running through Grimseys Reserve in Christchurch.
The injured girls have multiple injuries and were last night in a serious but stable condition in hospital after the accident yesterday afternoon.
They were unsupervised on the bridge - which has security fencing and warning signs - when the incident happened about 3.50pm.
"The train driver observed them on the tracks some distance ahead and repeatedly sounded warnings, while activating emergency braking systems," said police in a statement last night. "Three of the children were able to get clear of the tracks - although a girl received injuries from her 6-7m leap to the ground below. Her 4-year-old sister remained on the tracks as the train approached, despite the efforts of another child to get her clear.
"The train driver's actions in braking clearly reduced the speed of the light locomotive, so that it came to rest only a matter of metres past where the children had been. That, and a significant amount of luck, were the primary reasons a tragedy appears to have been averted."
Nearby residents said it was "an accident waiting to happen" because there was no escape from the bridge once a train was coming.
Dawn Dorice was outside working in her garden when she heard the child's scream.
"It was the same time as the accident ... it was definitely a young girl's screech."
Mrs Dorice said that when she saw several police cars drive up her street towards the reserve, she knew something bad had happened.
Another woman who lives on Willowview Drive said police told her the girls had climbed a high fence to get to the train tracks.
The fence had been erected about four years ago after a man was killed on the same section of tracks and a couple were almost hit by a train.
"I've been told the girls were playing down there - there's a stream there and a playground - when they got on to the tracks."
The girls' distressed parents arrived at the scene and went with the girls in the ambulances that took them to hospital.
Glenis Everts said she was having a shower and heard the train stop - and she feared the worst.
"We usually know why [the train stops]. We used to live near a railway, and whenever it stops there was usually an accident. It just makes you feel sick especially when you hear it's kids."
A Rail and Maritime Transport Union official said the driver would be traumatised.
"This is every locomotive engineer's nightmare," said South Island organiser John Kerr.
"A train can weigh up to 2000 to 3000 tonnes and be moving up to 100km/h, so you've got absolutely no chance of stopping if something goes out on the track."
This is not the first time trains have encountered kids on bridges. And yes my thoughts are with the LE, a true nighmare.
From what has come from the news reports so far today, Police and government agencies are now investigating the children and parents...And the LE is on indefinate leave.
Child, Youth and Family (CYF) is investigating how four children came to be fishing off a railway bridge, resulting in a 4-year-old girl being hit by a train.
CYF staff have been called in to speak to the parents of two sisters, aged 4 and 11, who were nearly killed in the train incident in Christchurch yesterday.
The girls and two friends, aged 9 and 10, were fishing unsupervised off the bridge, which crosses a small stream running through popular beauty spot Grimseys Reserve in Northwood, about 3.50pm.
Two girls managed to scramble down a grass bank to safety, but the two sisters were left behind.
The elder had to leap 7m to avoid the train and her sister was hit by the right front of its cattle shunt and thrown from the tracks.
Both sisters suffered multiple injuries and were rushed to Christchurch Hospital. This morning, they were in serious but stable condition and were expected to make a full recovery.
Police said only the quick actions of the train driver and "a significant amount of luck" prevented a tragedy.
A spokesman for Christchurch police said: "Police staff who attended the scene spoke to the parents on the day. They have not been formally interviewed at this stage, but the file will be reviewed later in the week, to see if any investigations will follow."
In the meantime, CYF is speaking to police and all of the families involved.
CYF southern regional director Kelly Anderson said: "Child, Youth and Family has begun an investigation into this case and is assessing the safety of the children involved.
"We need to establish why these children were left unsupervised in such a dangerous place.
"It is clearly extremely unsafe for any child to be fishing off a rail bridge.
"It is very early days and we are working with the police and the families to establish all the facts.
"CYF's decision to investigate cases where children or young people are left unsupervised will depend on the circumstances of each case.
"In New Zealand it is against the law to leave children under 14 without making reasonable provision for their care and supervision. What is considered `reasonable' also takes into account the circumstances under which children are left alone and the length of time they are alone.
"Parents are required to assess all the circumstances and make sure that any child left alone is safe and in no danger."
KiwiRail said company services were helping the driver of the train.
A spokeswoman for KiwiRail confirmed that they would be carrying out an investigation of the site.
KiwiRail chief executive Jim Quinn said: "Our thoughts are with the children, their families and our driver. We are pleading with the public to stay off the rail corridor. Our trains cannot swerve or stop quickly and they can appear at any time of the day or night. Don't take a chance, please just stay away from the rail lines."
Former All Black Bill Bush said he wanted "prison wire" fencing around the railway bridge.
Bush, also a former city councillor, lived next door to the bridge until he moved two streets away last month.
He said he "froze" when his wife texted him as he was watching a pre-season rugby match at Tai Tapu to say four girls had been struck by a train.
"I feared the worst. I lived beside that bridge for eight years and was forever screaming at kids to get off the track. They used to go up there and muck around, throw stones at trains.
"If I had been there yesterday I would've been able to yell at them and get them down.
Bush, who has campaigned to deny public access to the tracks and the bridge, said people used it as a shortcut to the nearby Northwood Supa Centre shopping area.
"Taking a shortcut across the bridge takes five minutes _ if you take the long way, it takes 45 minutes. Kids will be kids and they just walk up the bank, around the fence, and onto the tracks," said Bush.
When Bush moved in beside the bridge in 2004, he was on the city council and campaigned successfully to get a fence put up.
"It wasn't enough. A neighbour of mine tried to cross shortly after that and got killed. He got badly mutilated _ cut in half _ and after that they put up the big fence that is there now."
But he said that wasn't enough: "They need barbed wire like prisons have otherwise someone will be killed."
My thoughts are also with the LE.
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