KiwiRail


KiwiRail Holdings Limited is a New Zealand state-owned enterprise responsible for rail operations in New Zealand, and operates inter-island ferries. Trading as KiwiRail and headquartered in Wellington, New Zealand, KiwiRail is the largest rail transport operator in New Zealand. KiwiRail has business units of KiwiRail Freight, The Great Journeys of New Zealand and Interislander. KiwiRail released a 10-Year Turn-around Plan in 2010 and has received significant government investment in support of this in an effort to make KiwiRail a viable long-term transport operator.

History

Background

Prior to the establishment of KiwiRail, rail transport in New Zealand has been under both public and private ownership. Government operators included the Public Works Department, New Zealand Railways Department, and the New Zealand Railways Corporation. New Zealand Rail Limited was split off from the Railways Corporation in 1990, privatised in 1993 and then renamed in 1995 to Tranz Rail. In 2004 Tranz Rail's rail, ferry and trucking operations were acquired by Toll Holdings and renamed Toll NZ, with the central government buying back the rail network under the New Zealand Railways Corporation. As part of this acquisition, Toll agreed to pay ONTRACK Track Access Charges in exchange for exclusive network access for 66 years, subject to a "use it or lose it clause": if freight and passenger volumes fell below their 2002-2004 average for three or more years, Toll would lose its exclusive access. The agreement set a base track access fee but left future track access fees open to negotiation between ONTRACK and Toll. After several years of negotiations, the two parties could not come to an agreement on the amount that Toll should pay.

Establishment of KiwiRail

On 1 July 2008, the government announced the purchase for $690 million of Toll Rail, the rail and ferry assets of Toll NZ, but not its trucking operation. The new company was named KiwiRail and launched on 1 October 2008 at a ceremony at Wellington railway station. The New Zealand Railways Corporation then owned both KiwiRail and ONTRACK, with both companies merging to create one company that controls both rail and ferry operations and rail infrastructure.
Jim Bolger became the first chair of the KiwiRail board, a position he held until 1 July 2010. A number of commentators, including Winston Peters, view this as ironic. In response, Bolger acknowledged his involvement in privatising New Zealand Rail, remarking that "my life is full of ironies," and added that "the world has changed."

Further restructuring: splitting of land and operations

In 2011, KiwiRail proposed splitting its land and rail corridor assets from its rail operation assets. On 27 June 2012 it was announced by the company that the value of the land and rail operations would be written down from NZ$7.8 billion to $1.3 billion, and KiwiRail would continue as the rail and ferry operator, while the New Zealand Railways Corporation would manage KiwiRail's land. The de-merger took effect on 31 December 2012.

10-year Turnaround plan

In 2010 KiwiRail released a 10-year turnaround plan and significant government investment in support of this in the years following. In support of the turn-around plan, from July 2008 to December 2016 KiwiRail received over $2.1 billion of Crown investment, which was mostly spent on infrastructure and new rolling stock.

Aims of the 10 Year Turnaround Plan

The focus of the Plan is to increase rail traffic volumes, revenue and productivity, modernise assets and separate out the commercial elements of the business from the non-commercial.
The plan included the following points:
Two of KiwiRail's major customers, Mainfreight and Fonterra, invested heavily in rail-related infrastructure in line with the Turnaround Plan. Mainfreight has allocated $60 million for investment in new railhead depots, while Fonterra has invested $130 million in a new rail hub complex in Hamilton and another in Mosgiel.

Progress on the Turnaround Plan by June 2016

The plan has had mixed success, with company Chairman John Spencer stating in 2013 that for its first three years, rail freight revenue had increased by over 25%. Similar progress in attaining new customers and increasing freight volumes has been made over the life of the Plan to date.
Steady and at times rapid progress has been made on the enabling parts of the Turnaround Plan, such as new locomotives and wagons, lengthening of the rail ferry and track destressing, but not always effectively.
The 10 Year Turnaround Plan was quickly undermined by a series of adverse events, including:
Partially as a response to the events outlined above, in the 2017 budget the government announced a further $450 million in capital funding for KiwiRail, and that the company's operations would be placed under another major review, believed to relate to future funding models. The $450 million was earmarked for repairs following the 2016 Kaikoura earthquake and for further locomotive and rolling stock purchases. As part of the Turnaround Plan's agenda to standardise locomotives and wagons, in 2016 KiwiRail announced it would effectively switch off the NIMT electrification in late 2017 and replace the electric locomotives with an additional eight DL locomotives. On 30 October 2018 that capital funding was made available to by the new Labour-led Coalition government to refurbish 15 of the surviving 20 EF locomotives at the Hutt Workshops extending the service life by 10 years for their continued use, in line with the Governments energy and emissions policies, and while the government is also actively considering extending the North Island electrification for the first time since the 1980s.
KiwiRail has made use of the Government's Provincial Growth Fund. In 2019 KiwiRail signed an agreement with the New Zealand Transport Agency, Palmerston North City Council to construct a road, rail and air distribution centre in Palmerston North, following a $40 million allocation to KiwiRail from the PGF.

New Zealand Rail Plan

In 2019, the government began a "Future of Rail" review, and in December 2019 released a draft New Zealand Rail Plan, outlining changes it proposed making to the rail transport industry and KiwiRail specifically. The draft plan proposes a number of major changes, the most significant being future funding of the rail network through the National Land Transport Fund. A number of other projects are proposed under the draft plan. They include a new train control centre in Auckland, replacing two Interislander ferries and rolling stock.

KiwiRail business units

Freight

KiwiRail Freight is the company's largest business unit, making up the majority of KiwiRail's revenue with $390 million in the financial year ended July 2016. In the same year, KiwiRail moved around 18 million tonnes of freight and carried about 16% of New Zealand's total freight task.
Freight types: Bulk commodities include coal, logs, milk, IMEX and domestic intermodal freight. Formerly large scale freight types such as petroleum products have entirely been withdrawn, and fertilizer has almost disappeared. The freight trading revenue by sector, as per the December 2016 Half Year Report is:
Rail freight depots: KiwiRail has a total of 16 rail freight depots. In the North Island, these are Whangarei, Auckland, Hamilton, Tauranga, New Plymouth, Napier, Whanganui, Palmerston North, and Masterton. In the South Island they are Blenheim, Christchurch, Ashburton, Timaru, Oamaru, Dunedin, and Invercargill.
Inland Ports: KiwiRail serves a number of Inland Port yards, although does not own the tracks. These include Conlinxx, Midland Port, Longburn International Freight Hub, Manawatu Inland Port, MetroPort and will include Ruakura when it opens in 2019, and Ports of Auckland's site at Horotiu in Hamilton.
Sea Ports: KiwiRail has major freight yards and sidings at Lyttelton port Company, Port Chalmers, Southport, Timaru, Port of Tauranga, Ports of Auckland, Centreport, Port of Napier and New Plymouth. KiwiRail also has a joint venture with the Northland Regional Council to build a branch line to connect to Northport at Marsden Point.
Anchor freight customers: Key anchor customers include Fonterra, Westland Dairy Products, Solid Energy and the various freight forwarders including Mainfreight and port companies including Port of Tauranga.
Freight wagons: KiwiRail operates 4,855 wagons. An additional 120 wagons were acquired in the year ending 2016, with over 1,000 new wagons added since 2008. One of KiwiRail's stated aims is to progressively move towards standardized wagons, with the container flat-top being overwhelmingly the dominant type. The Norwegian coupling is progressively being replaced with automatic Janney coupler on all wagons.
Key freight routes:
Re-branded along with KiwiRail Scenic Journeys as the single brand The Great Journeys of New Zealand in 2017, The Interislander is the company's second largest business unit. It operates ferry services across Cook Strait between Wellington in the North Island and Picton in the South Island. In the financial year 2012, $123.9M of KiwiRail's revenue came from the Interislander, with the majority of the Interislander's revenue coming from rail and road freight transport.

Current fleet

The Interislander operates three ferries. In 2011, the Aratere was extended by 30 m to add extra capacity.

Property and Corporate

KiwiRail is a major land owner in New Zealand, and manages over 18 thousand hectares of land, has in excess of 1,500 property assets with a combined value of over $965 million. Increasingly, KiwiRail is pursuing a commercial approach to asset management, and in the 2016 financial year received over $18 million from property sales.

Great Journeys of New Zealand

Re-branded along with Interislander as the single brand The Great Journeys of New Zealand in 2017, KiwiRail Scenic Journeys is the long-distance passenger transport subsidiary of KiwiRail, operating the Capital Connection, Northern Explorer, TranzAlpine and Coastal Pacific. The passenger trains are predominantly patronized by tourists to NZ, with the exception of the Capital Connection, which is a commuter train.
In 2012 KiwiRail attempted to sell Tranz Scenic, but was unsuccessful, and KiwiRail continues to run these services. The division is now experiencing rapid double-digit annual growth, due to the growth of Chinese tourism to New Zealand, so much so that Kiwirail in 2017 may purchase an additional eight carriages to the 17 AK carriages purchased in 2012.

Tranz Metro

Suburban rail passenger operations in Auckland and Wellington are contracted by their respective local governments and not operated by KiwiRail. In Auckland rolling stock is owned by Auckland Transport which has contracted operation to Transdev Auckland, while in Wellington rolling stock is owned by Greater Wellington Regional Council which has contracted operation to Transdev Wellington. Until 2016, KiwiRail division Tranz Metro had the contract to operate the Wellington services but lost a bid to renew this contract in 2015. KiwiRail, however, is sub-contracted by Transdev Wellington to provide and operate the diesel locomotives required to haul the Wairarapa Connection service.

Infrastructure and Asset Management

The KiwiRail Infrastructure and Engineering division, formerly known as ONTRACK, has three main areas of operation:
The network it is responsible for consists of:
The divisions current major project is refurbishment work in the Kaimai tunnel.

Engineering

The Engineering division provides mechanical assistance to the Freight and Passenger businesses, as well as to Auckland Transport. Engineering maintains, refurbishes and occasionally builds rolling stock for the network.
In 2012, KiwiRail announced it was putting its Hillside Engineering division on the market. and subsequently sold part of the division and transferred remaining work to Hutt workshops.
KiwiRail now operates the Hutt Workshops in the Hutt Valley of Wellington, along with a number of small wagon maintenance depots, for example, at Addington and Frankton.

Stabling yards

Most rail operations are a 'there and back' service with motive power being held in a few key strategic locations. Motive power stabling yards are as follows:
Some of the more prominent rail facilities used by KiwiRail include:
Locomotives
The table below lists only the current locomotives in service with KiwiRail.
ImageClassIntroducedNumber in classNumber in servicePower output Notes
DC1978–198385211230Mainline diesel-electric. Forty-four scrapped, fourteen stored, four preserved, and two sold overseas. Seventeen classed as DCP.
DF1979–198130281800Mainline diesel-electric. Sub-classes: DFB and DFT. One under overhaul to DFB.
DH1978-197966672Heavy shunting locomotive.
DL2010–201963632700Mainline diesel-electric.
DSC1959–19677027315Light shunting. Thirty-four scrapped, two preserved, three stored and three owned by industrial owners.
DSG1981-19832424700Heavy shunting. One under overhaul.
DSJ1984-198555350Light shunting.
DX1972–197649472240Mainline diesel-electric. One scrapped, one stored, and one under overhaul. Sub-classes: DXB, DXC, DXR.
EF1988–19892214300025 kV AC electric locomotives. Six stored, two scrapped and two under overhaul.
TR1936–19789017138Light shunting, positioned in smaller yards and leased to industrial customers. Forty-four scrapped, twenty-eight preserved and one stored.
Carriages

Corporate governance

KiwiRail subsidiaries