Turning Northland Rail into a
Self-Sustaining Business
Strategies Available to the
Northland Regional Council
Public release version
Written by Kelvin Taylor
June 2012
Kelvin Taylor 2012 Page ii
1 Acknowledgments
I wish to acknowledge my tutors Lou van Es, John Cook and Peter Bruce
for their support and encouragement, the businesses that have completed
the survey, all the people who provided information and finally my family
for their support and extreme tolerance.
2 Disclaimers
Due to commercial sensitivity, some information has been removed for
this publically released document. In these situations publicly available
information or estimated figures have been used.
Kelvin Taylor 2012 Page iii
Contents
1 Acknowledgments .......................................................................... ii
2 Disclaimers ................................................................................... ii
3 Executive Summary ....................................................................... 1
4 Introduction .................................................................................. 2
5 Overview ...................................................................................... 4
5.1 New Zealand Rail ..................................................................... 4
5.2 Roads ................................................................................... 12
5.3 Northland Regional Council ...................................................... 14
6 Business Surveys ......................................................................... 16
6.1 Business Surveys: Results ....................................................... 16
6.2 Business Surveys: Analysis ...................................................... 27
6.2.1 Fonterra ......................................................................... 27
6.2.2 Imerys Tableware ............................................................ 28
6.2.3 Golden Bay Cement ......................................................... 29
6.2.4 Affco. ............................................................................. 30
6.2.5 Silver Fern Farms ............................................................ 30
6.2.6 CHH Whangarei ............................................................... 31
6.2.7 Kaihu Valley Sawmill ........................................................ 32
6.2.8 CHH Futurebuild .............................................................. 32
6.2.9 Juken ............................................................................. 33
6.2.10 Marusumi ....................................................................... 33
6.2.11 Forest Loaders ................................................................ 34
6.2.12 Ballance Fertiliser............................................................ 34
6.2.13 Ravensdown Fertiliser ...................................................... 35
6.2.13 Steel ............................................................................. 36
6.2.13.1 Fletcher Steel ........................................................... 36
6.2.13.2 Steel and Tube .......................................................... 37
6.2.13.3 Vulcan Steel ............................................................. 37
6.2.14 Delta Produce ................................................................. 38
6.2.15 Progressive Enterprises.................................................... 38
6.2.16 Foodstuffs ...................................................................... 39
Kelvin Taylor 2012 Page iv
6.2.17 The Warehouse ............................................................... 40
6.3 Business Surveys: Transferable Freight ..................................... 41
6.4 Business Surveys: Capital Expenditure ...................................... 43
6.4.1 Rail Costs ........................................................................ 43
6.4.2 Tunnels ........................................................................... 45
6.4.3 Weights ........................................................................... 46
6.4.4 Northport ........................................................................ 47
7 Conclusions and Recommendations ................................................ 48
8 References .................................................................................. 52
9 Appendix .................................................................................... 57
9.1 Appendix 1 ............................................................................ 57
9.2 Appendix 2 ............................................................................ 60
10 Researcher ................................................................................ 67
Kelvin Taylor 2012 Page 1
3 Executive Summary
This report is written to provide the Northland Regional Council (NRC)
with options to retain redevelop the Northland rail network.
The Northland rail network is restricted by insufficient rolling stock, an
inability to carry Hi-Cubed containers or to carry containers at their
maximum weight capacity. Current non rail users would like to see an
effective Door to Door service, not currently available.
With the proposed funding of Low Rider Wagons by the NRC, the issue of
the ability to carry Hi-Cubed containers is removed, freeing up flat deck
wagons for other Northland rail users. This will allow KiwiRail to
concentrate their resources on removing weight restrictions on the Kauri
to Auckland section of the Northland rail network.
It is beyond the scope of this report to calculate a breakeven point of
Northland rail being economically viable; this will be significantly
enhanced by the following measures:
A significant increase can be achieved by converting the remaining
135,000 tonnes per year of wood chip produced at Carter Holt
Harvey (CHH) Whangarei, currently trucked, onto rail for transport
to CHH Kinleith (Tokoroa).
Other small, but significant increases can be achieved by
containerising the Otiria and Dargaville rail yards. This has potential
to allow both Affco and Silver Fern Farms, to rail an estimated
15,000 and 20,000 tonnes per year respectively. Imerys have
indicated that they would consider increasing their rail freight from
Otiria to Whangarei.
It is feasible to obtain increased rail freight volumes with relatively low
cost. However, to dramatically increase the rail freight volumes there will
need to be significant funding from KiwiRail and support from NRC in
planning, development and funding to facilitate the transfer of freight
onto the Northland rail network.
The NRC can support the Northland rail network by instigate the following
policies:
Setting up of a regional logistic master strategy.
Financial aid for feasibility studies.
Provision of grants for rail sidings.
Investment in freight hubs
Investment in rail infrastructure.
Kelvin Taylor 2012 Page 2
4 Introduction
This report focuses on the investigation of the freight requirements of 19
businesses, the requirements of KiwiRail to be able to meet these
demands and the associated cost in road damage, should KiwiRail close
the Northland rail network. Also, what policies that NRC could adopt to aid
the retention and redevelopment of the rail network in Northland?
The social impact of closing the Northland rail network is not covered in
this report, but the Northland Intersectoral Forum has commissioned
Quigley and Watts Ltd to produce the report “North Auckland Rail Line
Closure Social Impact Assessment Scoping Report” which is expected to
be released in July 2012.
On the 18th March 2010, the New Zealand government announced an
investment package in KiwiRail. As part of the deal, KiwiRail developed
the KiwiRail „turn-around plan‟, a 10 year plan to create a sustainable rail
business. This plan suggests closing minor lines (including Northland) if
major clientele cannot be found.
The NRC is very concerned about the possible closure of the Northland rail
network. It is forecasted over the next 35 years, freight volumes to
increase by 75% (Paling, 2008). NRC has developed a 30 year transport
plan (NRC, 2010) where heavy reliance is placed on rail to cater for a
large portion of the expected increase in freight volumes.
As indicated in the report by McElwain (2009), Northland rail had
problems. In the United Kingdom it was indicated by Woodburn (2004)
that the same problems were experienced. Are these problems still a
factor in the decisions on the preferred freighting methods in Northland?
Nineteen Businesses were included in a written survey with data collected
regarding the use of rail in Northland. Thus providing data to determine
the following points:
What needs to be done to overcome the perceived limitations, of
rail, by the targeted businesses and the associated financial costs?
Formulation of different options that could be pursued by the
Northland Regional Council to facilitate the retention and
redevelopment of the Northland rail network.
Kelvin Taylor 2012 Page 3
The first businesses to convert to rail are likely to be those that currently
have a rail siding, followed by the businesses with a rail line in close
proximity. In the longer term it may be possible to build rail lines to other
larger businesses.
Businesses that either currently or historically have used rail are more
likely to consider increased use of rail if their requirements can be met.
KiwiRail (NRC, 2007) has indicated that they will only consider the
Northland rail network as viable if the Marsden Point rail is built. What is
the potential demand from the surveyed businesses and what other
services would they require?
Vaughan Cooper, a senior project manager at Northland Regional Council
has agreed to be the stakeholder. Vaughan has envisaged that this
project and the announcement of “The rail turn-around plan” by KiwiRail
will assist in providing direction to guide the thinking about the
redevelopment of rail in Northland, thus enabling rail to become a viable
and productive enterprise in the foreseeable future.
Kelvin Taylor 2012 Page 4
5 Overview
5.1 New Zealand Rail
On the 20th May 2010, the government and KiwiRail announced the
„turn-around plan‟ for KiwiRail (see Appendix 1). In the plan KiwiRail
stated that there would be a review of minor lines, which, if they could
not become profitable, they may be closed down. The current government
has indicated, in the „turn-around plan‟ that they want KiwiRail to be a
self-sustaining business within 10 years. The government has committed
$750 million over 3 years from July 2010 (Joyce, 2010) for infrastructure
redevelopments.
In 1980, New Zealand rail carried approximately 30% of all goods.
Deregulation of the long haul freight market lead to the loss of rail‟s
monopoly. This caused rail‟s market share to drop to 6% of all goods.
Currently less than 2% of Northland‟s freight is transported by rail. The
approximate volume of freight moved by all modes in Northland in
2006/07 was 12.36 million tonnes and of that 267,000 tonnes by rail
(NRC, 2010).
Compared with the Waikato region, the rail carries 17% of the in region
freight and 23% of the through region freight (Environment Waikato,
2010). This indicates the potential of rail.
In 2002, the Port of Whangarei (where there was rail access) started
moving to Marsden Point where there is no rail access. This resulted in
the volumes of goods travelling by rail in Northland falling significantly
from nearly 1 million tons in 2000 to less than 300,000 tons in 2008.
Currently there are typically 2 return trains per weekday between
Whangarei and Auckland, one for logs and one for general freight
(containers). There are 11 return trips per week. The average daily
volumes per weekday are (Sinclair Knight Merz, 2010):
General containers 55-60
Logs out of Northland 400 tonnes
Containers of woodchip 10
Logs to Marusumi 800 tonnes
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There are two major destinations for Northland rail freight. Logs and wood
chip goes to Tokoroa and containers go to the Ports of Auckland.
The containers go to the Ports of Auckland due to Northport being non-
containerized. In the UK, 75% of all containers pass through the ports in
the South East of England (Woodburn, 2007a). This indicates that the
Ports of Auckland and Tauranga could handle all the containerized freight
and Northport could to stay non-containerized in the foreseeable future.
KiwiRail has indicated that they only see Northland rail viable if the
Marsden Point line is built. With the current debate associated with the
future of the Ports of Auckland, this may potentially change in the future.
Since the deregulation of long distance freighting in the 1980‟s, rail has
been unable to compete in a non monopolist environment. To generate a
profit, rail has had to cut costs which have impacted on maintenance, the
upgrading of the rail network and rolling stock. This has resulted in
KiwiRail being unable to cope with the current market requirements.
Technology has also moved on. The Hi-Cubed containers that are being
used are 31cm higher than the previous standard containers. Five of the
13 tunnels on the Northland line are currently too low for the Hi-Cubed
containers. The weight capacity of the containers has also increased. This
means that the majority of the bridges in Northland need upgrading to
cope with the increased weights.
The Hi-Cubed container has the same width and length as the standard
40 foot container but is 312 mm (1 foot) higher. This results in the
volume of the container increasing from 67m3 in the standard 40 foot
container to 72m3 in the Hi-Cubed Containers.
Internationally, low floor or pocket wagons (see figure 1) have been used
to transport Hi-Cubed containers until the lines are capable of carrying
the Hi-Cubed containers on conventional flat deck wagons (tunnels made
bigger). This is achieved by setting the container closer to the rail. There
is a cost to this, in higher manufacturing costs, higher operating cost and
lower efficiencies. Consumers see low floor wagons as a short term
measure, but not as a suitable long term measure (Woodburn, 2004).
KiwiRail has some low floor wagons that have been operating on the
Gisborne to Napier line (Dick, 2010). The restricting tunnel has been
lowered which may mean the wagons are available.
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Low Rider or Pocket Wagon with Hi-Cubed container
Cut-away showing how the Hi-Cubed container sits lower to the rail
Figure 1 Low Rider or Pocket Wagon (source Smith, 2003)
In 2008, KiwiRail had around 4,400 wagons. Approximately half of the
fleet are container flat deck wagons. Around 70 percent of the container
fleet is made to a 1970 design and based on a 14 tonne axle load
capacity. Currently, an axle load of at least 18 tonne is needed. Due to a
shortage of wagons, old wagons, that should have been scrapped, are still
being used which makes them more prone to structural failure. KiwiRail is
aiming to purchase 300 new flat deck wagons, every year over the next
10 years (KiwiRail, 2008).
In 2008 the average locomotive age was 30 years; the youngest having
been built in 1988 (KiwiRail, 2008). One-third of the fleet was built in
1965 and is considered underpowered and obsolete by today‟s standards.
New locomotives are more efficient than the current locomotive stocks.
KiwiRail is in the process of upgrading the locomotives with the purchase
of 20 new 3600hp locomotives in 2010 with another 20 to arrive in 2012.
It is possible to remanufacture the locomotives in New Zealand using the
current rail workshop facilities. Remanufactured locomotives consist of a
new engine, upgraded electronics and new components at a lower cost
than a new locomotive.
In the 2008 year 40 km of rail was replaced (KiwiRail, 2008). Because
there is a total of 4000km in New Zealand it would take approximately
100 years to replace every sleeper. Softwood sleepers have a 25 year life.
More expensive concrete sleepers have a 40 year life
Of all the rail bridges in New Zealand, one third of the bridges (more than
550) are 80 plus years old and 23% are 90 plus years old (KiwiRail,
Kelvin Taylor 2012 Page 7
2008). Substantial bridge renewals will be required in the very near
future. Due to the bridges carrying heavier weights than they were
designed for, the trains need to travel slower over the bridges, this
increases travel time and operating costs.
Up until 2011, the West Auckland line had been a major limiting factor
restricting freight movements, from Northland, to a few hours at night.
This line was singled tracked which the passenger services having priory.
This line has now been double tracked which has resulted in more efficient
freight services.
Currently rail in New Zealand is split into 2 separate businesses. They are
KiwiRail and TranzLink. OnTrack has recently been merged back into
KiwiRail. KiwiRail is responsible for the maintenance, upgrading of the
railways and providing the transportation of goods on the lines. TranzLink
(which has been purchased by Toll) operates the trucking operations.
Internationally, many different business structures have been for tried
rail. The current trend is to separate the rail businesses into rail
operations, rail maintenance and the logistics. There appears to be no
other structure that delivers a better performance. The most limiting
factor appears to be the age of the business. In the UK the more
responsive logistics companies tend to be the newer entrants (Woodburn,
2001).
In the USA some short haul rail lines have been sold to local communities
which are responsible for all facets of the rail operations. The Indiana
Northeastern Railroad Company operates approximately 200 km of rail
and was formed by rail users to protect and preserve the rail in their area.
The line has similar characteristics, as the Northland line in being run
down, losing customers and end of the network. However a major
difference is that the topography in Indiana is flat.
Indiana Northeastern Railroad began operations, in 1992 with the
purchase of financially troubled railway operations that had a deferred
maintenance issue. It was difficult for trains to travel from one end of the
railroad to the other without experiencing minor derailments. Through
careful management of resources, the company has been transformed
into a profitable business that continues to grow, even, now, in this
economic climate (IN, 2012).
The efficiency of Northland rail is expected to improve if management is
given more autonomy in making strategic and operational decisions.
Higher degrees of managerial autonomy enable management to respond
quickly to new opportunities and circumstances, thus keeping the firm
Kelvin Taylor 2012 Page 8
competitive in an ever changing market (Oum, 1994). This indicates that
an autonomous Northland rail operation could be more productive and
efficient, resulting in a speedier growth in volumes than a national
business.
In September 2011, KiwiRail appointed a business development manager
to Northland. This may increase the responsiveness of the organisation.
The manager is located in Auckland.
According to KiwiRail, the Northland line broke even for the 2010/11 year
(Laird, 2001). Income generated from trains carrying logs and wood chip
from Auckland to Tokoroa is not included in the Northland income. But
information provided to the Auckland Regional Council‟s (ARC) Transport
Committee (ARC, 2012) KiwiRail states that the Northland line earns
revenue of $8 to $9 million per year. This covers the cost of train
operations but not the cost of infrastructure maintenance which ranges
from $3 to $5 million per year.
In the report by McElwain, (2009), several of the businesses interviewed
describe rail as having the following problems.
Unreliable
Load restrictions
Slow
Preferential treatment given to bigger businesses
Lack of suitable wagon
Poor logistics
Apathy
Golden Bay Cement has approached rail operators on different occasions
and note that every time the response was “apathetic” (McElwain, 2009).
Research by Jeffs (1990) indicated that businesses consider the following
attributes important. They are given here in descending order of
importance:
service level of customer
reliability of transport mode
ready availability of transport when required
avoidance of damage to goods when in transit
control over delivery time
control over despatch
security of goods in transit
transit time
minimum transport cost
length of haul
size of consignment
Kelvin Taylor 2012 Page 9
Generally speaking, speed of freight transport is less important than the
prompt despatch of goods at the required time and the guaranteed
predictability of the transit time. To ensure a good transport service to the
customer, the degree of control has been found to be a crucial parameter,
especially over delivery. Control over delivery is often the over-riding
criterion for choice of a particular mode. Persistently erratic delivery times
will prompt the decision-maker to look for alternatives (Jeffs, 1990).
Woodburn (2003) indicated that the strategy railways should adopt has,
three elements:
A focus on markets and customers, to ensure rail offers a
competitive edge in a context which is mainly one of growth
A technical strategy to tackle the cost base and system
performance.
Delivery processes that span the public sector specification/private
sector delivery modal which is mainly Door to Door delivery.
KiwiRail indicated to a hearing, in connection with NRC‟s 30 year transport
plan, that estimated cost of upgrading the North Auckland line would be
$200 million and approximately cost $100 million to build the Marsden
Point rail line. Northport extension would cost another $280 million (Laird,
2011. Roberts, 2011). KiwiRail has indicated to NRC it may be more
feasible to develop the Marsden Point line first and get a significant
volume of Northland freight back onto rail. KiwiRail indicated to NRC that
if this occurred, it would then be economically viable to operate and
maintain the rail line within Northland, then upgrade the Northland line.
There is no indication of the time frame for the upgrading, however in the
KiwiRail „turn-around plan‟ it is envisaged that the infrastructure
redevelopment will be completed within 10 years. KiwiRail intends to grow
revenues through targeting investments to achieve “quick wins”, so that
early investment decisions result in tangible returns by way of increased
revenue. It is likely that emphasis will be placed on the main trunk
routes. However because the Northland line is so run down, it is very
unlikely that any early major expenditure would generate a return.
In Northland there are 13 rail tunnels. Tunnels 1 to 11 are located on the
line between Auckland and Waiotira (Junction where the Dargaville line
starts). The other 2 tunnels are on the Dargaville line. It has been
indicated that 5 tunnels need lowering between Auckland and Whangarei.
It is unknown which ones need lowering or if any on the Dargaville line
need lowering.
Kelvin Taylor 2012 Page 10
Number Length Name Number Length Name
1 250 Waitakere 7 343 Topuni
2 573 Makarau 8 171 Tunnel 8
3 447 Tahekaroa 9 481 Bickerstaffe
4 388 Ahuroa 10 343 Huarau
5 503 Hoteo 11 604 Golden Stairs
6 335 Ross Hill 12 334 Mareretu
13 240 Waikiekie
Table 1 Northland tunnels and lengths
Throughout New Zealand, other projects completed by KiwiRail that have
resulted in Hi-Cubed containers being able to travel through tunnels have
included:
$3.1 million for day lighting 60 metres of the Manawatu Gorge (De
Lacy, 2008).
$200,000 for lowering one tunnel north of Napier (Dick, 2010).
$5 million for by passing 200 metre long Kia iwi tunnel north of
Wanganui (De Lacy, 2009).
$1 million for day lighting 90 metre on Midlands line (Christchurch
to Westport) (KiwiRail, 2009).
The current estimate by KiwiRail to allow Hi-Cubed containers through the
Northland tunnels is approximately $100 million (Roberts, 2011),
however, KiwiRail General Manager of Freight, Iain Hill told a public
meeting in Whangarei in October 2011, that it is estimated to cost $40
million to improve tunnel clearances (KiwiRail, 2011). The reason for the
differences between the two figures is unknown, but it is probably related
to the $100 million being the “wish list” of KiwiRail and the $40 million the
bare minimum requirements to allow Hi-Cubed containers through the
tunnels.
There are currently 5 tunnels that need lowering. This is an average of
$20 million for each tunnel, 4 times the cost of the next most expensive
project in New Zealand, the Kia Iwi tunnel by pass (De Lacy, 2009).
Kelvin Taylor 2012 Page 11
The Northland rail network is restricted, due to the weight restrictions on
the bridges. For the purpose of this analysis, Northland rail has been split
into 5 distinctive sections. The number of bridges is indicated in Table 2.
Number of
Bridges Route
16 Dargaville to Waiotira
32 Otiria to Kauri
9 Kauri to Whangarei
8 Whangarei to Waiotira
41 Waiotira to Auckland
106 Total
Table 2 The number of bridges on different Northland sections
Kauri (which is 13 km north of Whangarei) is the key point in the line.
From North of Kauri, only logs are freighted by rail. The current Northland
rail container freight is restricted to the route from Kauri to Whangarei,
then to Auckland. This line would benefit from being able to carry heavier
weights. There are 58 bridges on this route that would need to be capable
of carrying 18 tonnes axle weight (or heavier). The other 48 bridges (32
from Kauri to Otiria and 16 on the Dargaville line) in Northland would not
need to be capable of carrying the heavier weights and could be left until
normal replacement time. When this occurs, the bridges can be upgraded
for the 18 tonne axle weights. This would have the effect of reducing the
capital requirement for the network upgrade.
Number of
Bridges Specific Routes
58 Kauri to Auckland
32 Kauri to Otiria
90 Otiria to Auckland
Table 3 The number of bridges on different sections
of the Auckland to Otiria line
No information was provided by KiwiRail related to this topic. The lengths
of the bridges are unknown. Information provided by a consultant (name
unavailable) estimated that a new bridge would cost between $30,000
and $40,000 per metre. For double tracked bridges the figure will double
Kelvin Taylor 2012 Page 12
and the cost for shorter bridges is more than the cost per metre for
longer bridge.
There is a weight restriction on the Northland rail network that is 16.3
tonne per axle allowing container weighting 32.6 tonne to be carried. The
requirement is for an 18 tonne per axle allowing containers weighing 36
tonne to be carried. A truck is limited carrying 26 tonne.
5.2 Roads
In 2007, between 1000 and 1200 trucks were travelling on State Highway
1 between Auckland and Whangarei, daily day. There are a further 86
trucks of freight carried by rail (NRC, 2007). If rail freight was to be
transferred to road, the impact could be an increase in deaths, injuries,
road wear and congestion, reduced productivity would also be a factor.
Road planners use the “Fourth-power” rule of road wear. According to the
rule, if you double the load on an axle, the road damage is increased by a
factor of 16. This implies that a standard 44 tonne 8 axle truck does
20,000 times more damage than a car.
If the Northland rail network was closed then the increased truck volumes
would be directly proportional to the increase in road damage sustained.
Currently Northland rail carries about 2% of the freight. This means that
the distance of truck travel would increase by 4% and therefore 4% more
damage would be done to the roads. This would imply that a proportional
increase in maintenance funding is needed. In 2006/2007 (NZTA, 2010)
financial year there was $28,356,000 spent on replacing and repairing
Northland Highways. Transit NZ would need to provide an extra
$1,130,000 ($28,356,000x4%) in funding per year (based on 2006/2007
figures) to achieve the same level of services. This does not include the
damage caused by trucks that travel outside Northland. Trucks currently
pay for approximately 65% (Booz, 2005) of the damage done to the road
when they actually do close to 100% of the damage.
In New Zealand for every 100 million kilometres driven by trucks there
are 2 deaths and 30 injuries (NZTA, 2011) so if the Northland rail network
was closed then there would be an extra 5.7 million kilometres driven by
trucks. This may result in an extra 0.114 deaths and 1.71 injuries per
year in Northland.
Kelvin Taylor 2012 Page 13
Large trucks have a much bigger effect on congestion than cars because
they are longer, less manoeuvrable, and underpowered, compared with
typical cars. They accelerate more slowly, need larger gaps, more lane
width, more time to make turns and slow down on long grades (TRB,
1990). On a level, multi-lane Highway, a large truck is equivalent to 1.7
passenger cars [i.e., a large truck equals 1.7 “passenger car equivalents
(PCEs)].” If there are steep grades or sustained grades, the trucks will
slow down and represent 8 PCEs on freeways or even more on 2-lane
Highways where passing opportunities are limited (TRB, 1990).
This indicates that the issues with the State Highways in Northland are on
the hilly sections of road with limited passing opportunities.
Photo 1 Slow travelling truck in Northland
Kelvin Taylor 2012 Page 14
5.3 Northland Regional Council
The current New Zealand Government has indicated that it no longer
wishes to fund KiwiRail, as a business, it will need to be self-supporting.
This is indicated in the KiwiRail „turn-around plan‟ announced jointly by
the Government and KiwiRail.
Internationally, central and local governments have been trying to find
ways to maintain or redevelop rail services. Dablanc (2009) identified
policies that have been instigated:
Investment in rail infrastructure.
Investment in freight terminals.
Part ownership of freight companies.
Provision of grants for rail sidings.
Provision of direct subsidies to freight operators.
Financial aid to feasibility studies.
Setting up of regional logistic master plans.
Act as intermediaries between local parties.
So what policies can NRC use to retain and redeveloped the Northland rail
network? It is likely that the majority of policies listed above will aid the
NRC to achieve this goal and more than one policy will be needed in each
situation.
It is very unlikely that NRC will ever fund the part ownership of freight
companies or provide direct grants to transport operators to remove
product from the rail. These options are generally undesirable to the
public. Direct subsidies lead to an inefficient rail system that becomes
more dependent on subsidies (Oum, 1994), Unfortunately this creates
little incentive to improve productivity.
There is an example of Transit NZ paying a trucking firm $3 per tonne of
logs to use rail instead of the road in the Wellington region. This was not
received very well by the public. The money used comes from the
potential savings resulting from the possiblel reduced road damage
(Churchouse, 2009).
Regional Logistics Master Plan
The first item required is a plan; a regional logistics master plan. This
would cover not only the outcomes, but also provides strategy for the
NRC to achieve these goals.
Kelvin Taylor 2012 Page 15
Financial Aid for Feasibility Studies
Initially, the potential freight needs to be scoped for suitability and
profitability to transfer by rail. This requires a feasibility study. If these
studies were funded (or partially funded) by NRC, then possibly
businesses that previously had not considered rail, may be persuaded to
convert to rail.
Provision of Grants for Rail Connections
Grant funding has been used in the UK to support and aid the
development of new or replacement assets that retain or attract freight
onto the rail network (Department for Transport, 2005). The main reason
for the grants was related to the high capital costs for new rail facilities,
which often cannot be justified by companies on a purely commercial
basis, certainly not in the short- to medium-term (Woodburn, 2007). By
the NRC fully (or partially) funding the development or redevelopment of
the rail sidings, the use of rail freight would become more economically
viable.
Investment in Freight Terminals
Currently the Northland rail network is restricted to bulk produces such as
logs, wood chip, and containers for export. To increase the usage of rail,
the rail needs to be able to cater for smaller volumes of product. The
development of freight hubs is the key to catering for this potential
demand. The preliminary work has been done in the report produced by
McElwain (2009) titled “Northland Inland Port/Distribution Hub. Pre-
Feasibility Study”.
Infrastructure Funding
The current estimate to redevelop the Northland rail network is $200
million which has a 10 year time frame. Can the NRC provide strategic
funding to facilitate the transfer of freight onto the rail network?
Currently, it is unlikely KiwiRail would have sufficient rolling stock to cater
for a large increase in freight. The NRC has proposed funding the
purchase of some Low Rider wagons.
Kelvin Taylor 2012 Page 16
6 Business Surveys
Two surveys were conducted.
The first survey in October 2010 concentrated on 10 businesses located in
Northland that shipped product out of Northland. Nine of the businesses
replied, but unfortunately only a summary of the results was retained.
For that reason it was decided to conduct a second survey in March 2012
and nineteen businesses were surveyed. The survey was a more refined
version of the first survey with the aim of collecting the same information
but using a shorter survey. Nine of the ten businesses surveyed in
October 2010 were resurveyed. The new businesses surveyed included
businesses carrying produce into Northland. Six surveys were returned
and two businesses completed both surveys.
6.1 Business Surveys: Results
Aim of the surveys was to find freight that can quickly and easily be
transferred onto rail and what policies the Northland Regional Council can
put in place to facilitate the transfer.
Surveys were tailored to identify the potential freight volumes. The
requirements and attitudes of the businesses were also identified.
Therefore, a different survey was sent to each business. The questions
were worded to suit the surveyed business to eliminate irrelevant
questions and to make the survey as short as possible. A return rate of
37% was achieved (7 /19 surveys).
Questions asked in the survey for Imerys Tableware have been included
as an example in the blue highlighted boxes. See appendix 2 for a copy of
the Imerys Tableware survey.
Kelvin Taylor 2012 Page 17
Question 1
Contact details of the participants.
The businesses that responded to the survey were:
Imerys
Fletcher Steel Silver Fern Farms
Ravensdown Ballance
Foodstuffs Auckland Progressive Enterprises
Questions 2 to 6
The questions in the section identify the current situation for the surveyed
businesses. Information is collected on materials, volumes, methods and
destinations as well as the closeness of rail to the business to allow direct
loading for potential rail users.
Q2 What volumes of major goods do you freight by all means from your site?
(tonnes/year)
Q3 Give a brief description of the processes once your final product leaves
your site. eg Loaded into container, transported to Whangarei by truck,
rail to export port.
Q4 Which ones from the following list, applies to your business?
a. We have a rail siding
b. Rail runs through or on the boundary of our property, but no siding
c. Rail is close to our property, but no siding
d. Rail is too far away to consider a siding
Q5 What distance is the Otiria rail siding from your business?
Q6 Do you currently freight any of your products by the Northland rail
network?
Kelvin Taylor 2012 Page 18
Q2 Q3
Volumes Direction of Flow Type
Imerys
Out of Northland General containers
Fletcher Steel
Into Northland Bulk flat deck
Silver Fern Farms
Out of Northland Refrigerated containers
Ravensdown
Into Northland Bulk specialised
Ballance
Into Northland Bulk specialised
Progressive Enterprises
Into Northland Pallets/Curtain sided Truck
Foodstuffs Auckland
Into Northland Pallets/Curtain sided Truck
Table 4 Volumes of freight from the responding businesses
Due to confidentially the volume figure from question 2 are unable to be
released.
Ballance has rail running through the site and the plant but no longer use
rail. Rail was used to transport bulk raw materials from Port of
Whangarei.
Imerys does not have a rail siding but uses rail to its maximum capacity.
Progressive Enterprises has had the rails removed at one of their
distribution centres in Auckland.
Fletcher Steel‟s distribution centre, in Auckland, appears to have had a
rail siding, but it is not currently present.
Question 7
This identifies businesses that have considered rail, but do not or cannot
use rail to their desired level of requirements. There are likely to be
limiting factors that apply to all businesses and can be prioritised by
Kiwirail and NRC for urgent attention.
Q7 Are there any limiting factors, related to rail that prevent your business
transporting larger volumes of product by rail in Northland?
There was no area in the questionnaire for businesses to write the limiting
factors. This may have resulted in little useful information gained from
this question.
Kelvin Taylor 2012 Page 19
Questions 8 & 9
Since the closure of Port of Whangarei in 2007, the volume of freight
carried by rail in Northland has dropped from 1,000,000 tonnes to
300,000 tonnes in 2008 (McElwain 2009). Has this been the key factor or
are there other factors involved in the decline?
Q8 Over the last 10 years, has the volume of products being freighted on rail,
in Northland by your business changed?
Q9 Over the last 10 years, what effect have the factors below had on your
Northland rail freighting patterns? (Scale 1 Minor to 5 Major)
a. Closure of Port Whangarei
b. Company policy is to use rail if possible
c. Rail better able to meet our requirements
d. Road better able to meet our requirements
e. Cost of rail vs. road
f. Production volume changes
g. New products/discontinued products
h. Removal of loading facilities at Otiria
i. Others (please state)
Balance was the only business that was influenced by the closure of the
Port of Whangarei.
One of four businesses indicated that rail was better able to meet their
requirements. Three of four businesses indicated road was better able to
meet their requirements. At the same time two of the three businesses
that indicated that road was better able to meet their requirements would
like to use rail in Northland, but are unable to. Three out of the four
businesses indicated that cost was a major factor. The other business
cannot use rail.
Kelvin Taylor 2012 Page 20
Question 10
There is likely to be a direct correlation between the perception of rail and
method of freighting. The businesses that perceive rail to be cheaper but
do not use rail should be targeted by KiwiRail. Differences between
businesses in similar situations can be identified and investigated further
to explain the irregularities.
Q10 How do you perceive the cost of freighting from door to door, using rail
compared to road?
a. Rail is more expensive
b. Rail is similar
c. Rail is cheaper
Rail Cheaper Rail Similar Rail More Expensive
Imerys Ravensdown Ballance
Silver Fern Farms Fletcher Steel
Progressive Enterprises Foodstuffs Auckland
Table 5 Perception of the cost of rail compared to road
Rail Is Cheaper
Imerys: Rail is used where possible. Imerys would use more rail freight if
there were container facilities at Otiria.
Silver Fern Farms: Does not use rail in Northland, but would consider rail
if container facilities were at Dargaville.
Progressive Enterprises: Rail is now being used, but not in Northland. The
model needs to be correct before rail is a viable option.
Rail Is Similar
Ravensdown: Rail is used when the distance between the rail and road is
similar lengths. Because the manufacturing plant is in Napier, with rail,
the produce has to travel to Palmerston North, then up to Northland.
Kelvin Taylor 2012 Page 21
Rail Is More Expensive
Ballance: Raw materials are delivered and stored at Northport which is
not serviced by rail. The manufactured produce is only used in Northland.
Fletcher Steel: Relatively small volumes, but may be feasible to use rail.
Foodstuffs Auckland: Because of the location of the distribution centres in
Auckland, road is more efficient.
Questions 11 to 13.
With the announcement of the „turn-around plan‟, have the surveyed
businesses noticed any change from KiwiRail? In September 2011 KiwiRail
appointed Keith Holdsworth as the Northland Business Development
Manager. He is located in Auckland. Have the businesses been contacted
by him? How wide has KiwiRail searched for potential customers?
Q11 Has any person from KiwiRail contacted your business in the last 2 years
attempting to procure more business for the Northland rail network?
Q12 Are you aware that KiwiRail has appointed Keith Holdsworth as Northland
freight development manager?
Q13 Has Keith Holdsworth, from KiwiRail, contacted your business?
Silver Fern Farms did not answer these questions.
Ravensdown have been contacted by Keith Holdsworth.
Imerys is a current user and has been contacted by Keith Holdsworth.
The other 4 businesses stated they had not been contacted, at the time of
the survey by KiwiRail or Keith Holdsworth regarding Northland rail.
Progressive Enterprises has been in contact with KiwiRail regarding other
routes and have changed to rail on these routes.
Kelvin Taylor 2012 Page 22
Questions 14 & 15
With the 2009 financial crisis, have the surveyed businesses examined
their freighting policies and how seriously was rail considered? What were
the major factors that lead to review? Factors listed covered a wide range
of potential variables. Decisions made about freighting by senior
management are not necessarily based purely on cost. Non commercial
factors may influence the decisions and how much influence non-
commercial factors have on decisions.
Q14 How seriously was using more rail freight considered by your business in
the last two years?
a. Not considered
b. Slight consideration
c. Considered
d. Seriously considered
e. Changed to rail (already us rail)
Q15 What has made your business review rail freight in the last two years?
a. Not considered
b. Regular review
c. Freight/fuel prices
d. Road congestion/travel time
e. Changing company ethics/values
f. Public opinion
g. Contact by KiwiRail
h. KiwiRail “turn-around plan”
i. Other (please state)
Four businesses, who are current rail users in New Zealand, indicated
they were influenced by The KiwiRail „turn-around plan‟, Freight/fuel
prices and as part of a regular review. Progressive Enterprises also added
changing company ethics and road congestion in Auckland.
Kelvin Taylor 2012 Page 23
Question 16
All the factors have been obtained from the literature as issues that have
been identified as limiting factors to rail growth in other countries and/or
New Zealand (McElwain 2009), (Jeffs 1990).
Further research will enable the responses be ranked in order of
importance. This will indicate what the surveyed businesses require from
the rail network. This will give KiwiRail and other interested parties an
indication of the priority areas for development.
Q16 For your business to initiate or increase the use of the Northland rail
network, how important is the following factors? (Scale 1 Minor to 5
Major)
a. A different train schedule
b. A more reliable service
c. The Marsden Point rail line
d. Quicker delivery to Whangarei
e. Quicker delivery to Auckland
f. Quicker delivery through Auckland
g. Able to handle Hi-Cubed containers
h. Able to carry heavier loads
i. Suitable rolling stock
j. Storage facilities at Otiria rail siding
k. Door to Door services
l. Freight hub at Otiria
m. Security at Otiria rail siding
n. Reduced damaged goods
o. Reduced misplaced products
p. Other(please state)
The 2 businesses that have not considered rail want the service to be
similar to trucking. They see the issues below as major:
A different train schedule
A more reliable service
Quicker delivery time
Door to Door service
Only 1 out of the other 5 businesses that do or are likely to use rail
ranked the same points as of some concern, but they had other areas of
higher concern.
Kelvin Taylor 2012 Page 24
Five out of the six businesses that do or are likely to use rail were
unconcerned about the train schedule, a more reliable service or quicker
delivery times. This indicated that they were prepared to work around
these limitations.
Almost all of businesses (6 out of 7) indicated the lack of door to door
delivery as a major issue. The same businesses also indicated a high level
of demand for freight hubs at Whangarei, Otiria and Dargaville.
The requirement for rail to be able to carry heavier loads is only relevant
to businesses that do not need to use road to move the product.
There does not appear to be any requirement for Hi-Cubed containers,
but this may be related to the businesses that replied not needing them.
Northport
Northport is the port of Whangarei which is located at the entrance of
Whangarei harbour. It was established in 2002 when it was realised that
the previous location was inappropriate for the potential freighting
demands. Unfortunately the rail was not included in the redevelopment.
The port is currently able to cater for the new generation, larger vessels
that the shippers wish to use.
The current production of logs in Northland is 1.6 million tonnes. By 2015
the volume is expected to be about 4 million tonnes (MAF, 2009). There
will some increase in processing demand, but most of the logs will be
exported out of Northport. The number of logging trucks on the road to
Northport could be up to 270 per day. It has been proposed to develop
log collection points at Otiria (North), Tangowahine (West) and to the
south, then freighting the logs by rail to Northport. This will remove a
significant amount of logging truck traffic of the roads.
As part of KiwiRail‟s submission to the Northland Regional Council,
regarding infrastructure, KiwiRail said that they would only consider the
Northland rail network viable if the line to Northport is built (McElwain,
2009).
It is estimated that the rail will cost about $100 million and take 4 years
to build (McElwain, 2009). Northport has indicated that it will cost $160
million to provide container services (McElwain, 2009).
Kelvin Taylor 2012 Page 25
Is there any demand from the surveyed businesses for rail and container
facilities at Northport to justify this level of capital development?
Q1 Do you currently import and/or export any product through Northport?
Q2 What volumes do you currently freight through Northport?
Q3 If Northport had rail access (non containerised), how likely is it that your
business would use rail to freight through Northport?
a. Very unlikely
b. Unlikely
c. Likely
d. Very likely
e. Extremely likely
Q4 If Northport had container facilities (assuming all other factors equal to
Ports of Auckland and Tauranga), how likely is it that your business would
freight containers, by road, through Northport?
a. Very unlikely
b. Unlikely
c. Likely
d. Very likely
e. Extremely likely
Q5 If Northport had rail and container facilities (assuming all other factors
equal to Ports of Auckland and Tauranga), how likely is it, that your
business would freight containers, by rail, through Northport?
a. Very unlikely
b. Unlikely
c. Likely
d. Very likely
e. Extremely likely
Ballance is the only business that currently uses Northport. They are
unlikely to use rail, but it may feasible to freight the bulk raw materials by
rail.
Fletcher steel is unlikely to use Northport at all.
The other 5 businesses would very likely use Northport if containerised.
Both Progressive and Foodstuffs would look at importing through
Kelvin Taylor 2012 Page 26
Northport, then transferring to the distribution centres in Auckland.
Ravensdown would import product directly for the Northland stores.
Imerys and Silver Fern Farms would look at exporting through Northport.
Rail would be considered on its merits. These businesses have all
considered the longer term in relation to transportation.
Progressive enterprises would unload the containers at Northport,
palletise and then back load to the distribution centres in Auckland in the
trucks that delivered the groceries to the store in Northland.
From 2010 survey
From the 2010 survey, the current usage of Northport is limited to some
non containerised wood products from CHH Futurebuild and export timber
from CHH Whangarei.
Seven out of eight respondents indicated that they would consider
Northport, more, for exporting, if able to meet all their requirements. The
two main provisos required were container facilities and a shipping
schedule that would meet their requirements. The regular shipping
schedule is totally under the control of the shipping companies who have
been reducing the number of ships coming to New Zealand.
There is only one business (CHH Woodproducts) that would only use road
to freight to Northport and only one business (Fonterra) that would only
use rail. The other five businesses would consider either option. CHH
Futurebuild would consider rail for freighting logs to their plant.
The businesses that freight export logs were not covered by either
survey, but these businesses would be a major consideration in
construction of the Marsden Point rail line.
Kelvin Taylor 2012 Page 27
6.2 Business Surveys: Analysis
Information has been included about businesses that did not return the
surveys. It was decided to provide as much information as possible to
allow for a better understanding of the current freighting patterns in
Northland.
6.2.1 Fonterra
(Fonterra did not respond to the 2012 survey but responded to a survey
conducted in October 2010).
Fonterra‟s major plant in Northland is located at Kauri about 13
kilometres north of Whangarei. There is a rail siding which is used. The
production is estimated at 110,000 tonnes per year which is all freighted
by rail. Fonterra is one of the major users of the Northland rail network.
Fonterra freights approximately 45,000 tonnes per year in general
containers. The product is packed into containers at the Kauri site, loaded
onto rail wagons and then transported to the port of export.
Fonterra freights approximately 65,000 tonnes per year as refrigerated
product to the Northport cool store at the end of Port road, Whangarei, by
truck. The product is then transported in refrigerated containers by rail to
the port of export.
The inability of the Northland line to cater for Hi-Cubed containers is an
annoyance for Fonterra. The refrigerated products would use the Hi-
Cubed containers.
Fonterra is very likely to use rail to Northport and the container facilities.
Fonterra‟s smaller plant is located at Maungaturoto approximately 70
kilometres South of Whangarei and within 1 kilometre of the rail line. Rail
is not used due to no rail connection, rail siding or onsite storage
facilities. It is unknown, if these issues were addressed, if rail would be
used.
Kelvin Taylor 2012 Page 28
6.2.2 Imerys Tableware
(Imerys responded to both surveys).
Imerys are located at Matauri Bay, 54 kilometres from the rail siding at
Otiria. Currently 12,500 tonnes per year (595 containers) of refined china
clay are freighted in containers by truck to Whangarei, then by rail to Port
of Auckland for export.
Imerys would like to use the rail from Otiria, but are currently unable to
because there is no container forklift available. They perceive rail to be
cheaper and better able to meet their requirements. They would like to
see a freight hub at Otiria.
As Imerys are part of an international organisation, they are very
conscious of their reputation. They regularly review their freighting
arrangements. The current freight and fuel prices along with the KiwiRail
„turn-around plan‟ have been factor in the past reviews.
Imerys would be extremely likely use container facilities at Northport, but
rail freight would need to be competitive compared to road freighting.
KiwiRail and/or Keith Holdsworth have contacted Imerys since the release
of the KiwiRail „turn-around plan‟.
Case Study: Imerys
Currently Imerys freight by road from Otiria to Whangarei due to no container
service being offered at Otiria.
The road section from Otiria to Whangarei is 61 kilometres. Imerys produces 595
truck trips per year. This section of road cost Imerys about $261,000 per year
(*see Note 1). If rail was used then the freight cost could reduce to $101,000
per year (*see Note 2). This could result in a saving of $160,000 per year.
For Imerys there would be not any changes to any of the systems currently used
and no capital investments required.
KiwiRail could generate $101,000 per year of extra revenue by providing
container facilities at Otiria. It is likely that once there was container handling
facilities available at Otiria, then other businesses would also want to freight by
rail. It may be possible to contract the loading to Forest Loaders as they
currently have staff at the Otiria rail yard.
Kelvin Taylor 2012 Page 29
Note 1.
The trip from Otiria to Whangarei is 61 kilometres or 122 kilometres return.
United Carriers change $3.60 per kilometre. There are 595 trips per year.
122 kilometres x 595 trips x $3.60 per kilometre
$261,324
Note 2.
The rail trip from Whangarei to Auckland is 185 kilometres and costs $518 per
container. For this example it is assumed that the Otiria to Whangarei will cost
33% of $518 at $170. There are 595 containers per year.
595 containers x $170 per container
$101,150
6.2.3 Golden Bay Cement
(Golden Bay Cement did not respond to the 2012 survey, but responded
to a survey conducted in October 2010. Volumes were obtained from the
report titled “Northland inland port/distribution hub, Pre-feasibility study.
McElwain, S. 2009.”).
Golden Bay Cement has their processing plant at Portland, Whangarei.
The quarry at Portland produces about 66% of the limestone and the
quarry at Hikurangi produces the other 33%. The total production is
850,000 tonnes per year. About 600,000 tonnes of the finished product is
bulk transported by ship to Auckland, Tauranga, Napier, Wellington and
Gisborne. About 150,000 tonnes are trucked to Auckland and 100,000
tonnes is bagged for either local market or export.
The inputs that are imported through Northport from Australia are 30,000
tonnes of gypsum and 90,000 tonnes of coal. The coal has in the past
come from Huntly.
From Huntly there are 25,000 to 50,000 tonnes per annum of fly ash and
35,000 tonnes of slag per annum.
Prior to the 1970‟s, the Hikurangi quarry was next to the rail line and the
limestone was moved by rail. When the quarry moved to the current
location the rail was not connected. The rail is still present in the Portland
processing plant. Currently there are 100 trucks of limestone rock per day
transported from Hikurangi to Portland, a distance of about 35 km. This is
300,000 tonnes per year.
In the past Golden Bay Cement has expressed an interest in using rail,
but have been met with an apathetic response from the railways
(McElwain, 2009).
Kelvin Taylor 2012 Page 30
6.2.4 Affco.
(Affco did not respond to the 2012 survey, but responded to a survey
conducted in October 2010).
Affco‟s Northland processing plant is located at Moerewa about 100
metres from State Highway 1 and about 2 kilometres from the Otiria rail
yard. The estimated production is 15,000 tonnes of meat per year. In the
past there have been rail facilities at Affco, but the line has been
removed. The line has now been converted into part of the national cycle
way.
Currently all meat products are stored on site. As the product is ordered it
is loaded into containers and trucked to the port of export. Local market
product is loaded into hard sided refrigerated trucks and trucked to the
purchaser.
Currently rail is not considered because there are no loading facilities at
Otiria and containers are not currently carried on the Otiria to Whangarei
line. The addressing of these two factors would allow Affco to reconsider
rail as the method of freighting.
The containerisation of Northport would lead Affco to investigate the
exporting of containers through Northport.
6.2.5 Silver Fern Farms
(Silver Fern Farms responded to both surveys. No information was
provided related to KiwiRail).
Silver Fern Farm‟s Northland processing plant is located on Tuna Street,
Dargaville about 100 metres from State Highway 14 and about 5
kilometres from the Dargaville rail yard. An estimated 20,000 tonnes of
meat is produced per year. There is also about 15,000 tonnes of
rendering and raw skin products
Currently all meat products are stored on site. As the product is ordered it
is loaded into containers and trucked to the port of export. Local market
product is loaded into hard sided refrigerated trucks and trucked to the
purchaser.
The raw skins and rendering products are loaded into bulk units or
specialised units and transported by truck for further processing. These
Kelvin Taylor 2012 Page 31
products are time sensitive and require further processing within 12 hours
of slaughter which would make rail too slow.
Silver Fern Farms consider rail to be cheaper. Freighting is regularly
reviewed. There has been weight and speed restriction on the Dargaville
rail line that has prevented Silver Fern Farms from considering rail. These
restrictions have only been lifted in 2012. Facilities to cater for containers
associated with the Dargaville rail yard would lead to Silver Fern Farms
reconsidering rail.
The containerisation of Northport would lead to Silver Fern Farms
investigating the exporting of containers through Northport. The service
would need to be comparable to that of the Ports in Auckland and
Tauranga. There is no preferred freighting method from Dargaville to
Northport.
6.2.6 CHH Whangarei
(CHH Whangarei did not respond to the 2012 survey, but responded to a
survey conducted in October 2010).
CHH Whangarei is located on Union East Street, Whangarei. The rail runs
past the site, but is not connected. CHH Whangarei is about 2 Kilometres
from the Whangarei rail yard. In 2010 CHH Whangarei produced 180,000
tonnes of timber and 200,000 tonnes of woodchip.
The majority of the timber is for the local market. Currently the timber is
dispatched from Whangarei by truck which then takes the timber directly
to the purchaser. This method is preferred and it is unlikely that rail will
ever be more efficient or convenient.
For the timber that is exported, about 85% is bulk loaded at Northport
and the other 15% is exported in containers. The timber is sent to
Auckland by truck and then loaded into containers. This is to allow the
containers to be filled up to their weight capacity.
There is 200,000 tonnes of wood chip produced per year. This is currently
purchased by the CHH Pulp and Paper Kinleith plant. The purchaser is
responsible for the freighting choices. Currently about 65,000 tonnes is
freighted by rail and the other 135,000 tonnes by truck. The reason for
the use of both road and rail is unknown.
Kelvin Taylor 2012 Page 32
The chip is loaded into open top 20 foot containers that are then
transported to the Whangarei rail yard by truck. The whole container is
then loaded on a flat decked rail wagon.
There is potential to use rail for some logs to CHH Whangarei. Some of
the processing machinery has been relocated to other parts of the site.
This has freed up areas next to the rail line. With the development of the
Marsden Point line, there is potential to use rail to freight the export
timber.
6.2.7 Kaihu Valley Sawmill
(Kaihu Valley did not respond to the 2012 survey).
Kaihu Valley Sawmill is about 15 kilometres North of Dargaville on State
Highway 12. They supply finished timber products directly to the
customer and green sawn timber to other businesses.
Currently all green sawn timber is transported by truck to the purchaser.
The main purchasers are Kiwi Timber Protection in Whangarei and
Lumbercorp in Huntly.
It may be feasible to use rail to transport timber to Huntly as the
receiving business is located within 100 metres of the rail. Loading
facilities are required in Dargaville and infrastructure at Lumbercorp,
Huntly.
6.2.8 CHH Futurebuild
(CHH Futurebuild did not respond to the 2012 survey, but responded to a
survey conducted in October 2010. Volumes obtained from NRC‟s Heavy
Traffic Volumes Report (NRC 2007a)).
CHH Futurebuild is located on Rama Road, Ruakaka. It is next to the
Marsden Point Oil Refinery. Production is 80,000 tonnes per year.
The majority of the product is shipped through Auckland in containers.
Some non containerised products are shipped through Northport.
CHH Futurebuild would consider using the Marsden rail for freighting logs
to their plant and freighting to Auckland. The containerisation of
Northport could lead to increased volume exported from Northport.
It is likely that the glue comes from Taranaki from the same source as
Juken.
Kelvin Taylor 2012 Page 33
6.2.9 Juken
(Juken did not respond to either survey).
Juken produces about 150,000 tonnes per year of wood products from
their Kaitaia mills (NRC 2007a). The product is freighted directly to
Northport.
Juken‟s plant is about 80km North of Otiria. The use of rail is not feasible
due to the need to use two truck trips to get the product to the Northport.
If the Marsden Point line is built, then using rail may be feasible. The rail
trip will be about 100 kilometres.
Currently Juken brings two trucks of glue up from Taranaki per day. The
back load is Tri Board that is then exported from Port at New Plymouth.
This method is used because of a bad experience with rail. A glue sack
was punctured and the glue ended up in the Otiria stream (MOE 2009).
Transporting glue by rail is very likely to be cost efficient but the previous
bad experience is likely to influence any future decisions.
6.2.10 Marusumi
(Marusumi did not respond to the 2012 survey, but responded to a survey
conducted in October 2010).
Marusumi produces 210,000 m3 per year of wood chip at their plant in
Portland, Whangarei. This is then exported through Northport to the
parent company in Japan. Marusumi consider rail to be an important part
of their operation.
Forest Loaders are contracted to supply the logs to Marusumi. Rail is used
from Otiria, Dargaville and South of Whangarei. The logs that are closer
to Portland are trucked.
Marusumi used rail to Port of Whangarei, but with the closure of Port of
Whangarei, had to start using trucks to freight to Northport, a distance of
25 kilometres. Rail would be reconsidered once the Marsden Point rail was
completed.
Kelvin Taylor 2012 Page 34
6.2.11 Forest Loaders
(Forest Loaders did not respond to the 2012 survey).
Forest Loaders are one of the major users of the Northland rail network
and are credited with preventing the Otiria line from closing.
Forest Loaders are contracted to freight logs to the Marusumi chip plant
at Portland. The logs are transported on rail from Otiria, Dargaville and
South of Whangarei. The logs that are closer to Portland are trucked.
6.2.12 Ballance Fertiliser
(Ballance Fertiliser responded to the 2012 survey).
The Whangarei plant is located of Lower Port road, Whangarei.
Ballance currently has rail in their plant, but is not connected to the rail
network. In the past rail was used from the Port of Whangarei. The
Whangarei plant produces some 130,000 tonnes of super-phosphate
fertiliser per year. All the raw materials come in through Northport.
Currently the materials are unloaded and stored at Northport. They are
transported by truck as required. If there was a Marsden rail, Ballance
would still be unlikely to use rail. The reasons given are costs and
timeliness. Timeliness should not be an issue with bulk goods that can be
stored until required.
Another product identified by Stewart McElwain (McElwain 2009) in the
Northland inland port/distribution hub. Pre-feasibility study was 20,000
tonnes of Sulphur pellets that was freighted from Whangarei to the Mt
Maunganui plant. Further studies are required to identify if this could be
carried by rail.
Ballance has a bulk fertiliser store on the rail line in Wellsford, but it is
uneconomic to use rail and the facility. It is easier and cheaper to freight
from Whangarei by truck directly to the customers.
KiwiRail and/or Keith Holdsworth have not yet contacted Ballance since
the release of the KiwiRail „turn-around plan‟.
Kelvin Taylor 2012 Page 35
6.2.13 Ravensdown Fertiliser
(Ravensdown responded to the 2012 survey).
There are two Ravensdown Fertiliser bulk stores in Northland and two
Lime plants. The Dargaville store is located 322 Day Street and the
Whangarei store is located on Dyer Street. The Whangarei store will be
relocating by mid 2012, to Mata Lime on Cotton Road, approximately 20
kilometres south of Whangarei and one kilometre off State Highway 1.
Approximately 70,000 tonnes is moved into Northland either by road or
coastal shipping. Whangarei receives approximately 63,000 tonnes and
Dargaville 7,000 tonnes.
The new Whangarei store at Mata will be too far away from the rail to
consider a siding. However the proposed Marsden Point line will run past
the site and Ravensdown would require a rail siding. Ravensdown is very
likely to reconsider rail for bulk fertiliser from Auckland but is unlikely to
use the rail to Northport as it is only 15 kilometres away and this distance
is too short to be cost efficient.
The Dargaville store is located within 200 metres of the Dargaville rail
yard. There appears to be land available for a rail connection. The land is
flat and clear of buildings. Ravensdown would require a rail siding, more
suitable rolling stock and the rail able to handle heavier loads before rail
would be reconsidered.
If Port of Northport was containerised, then Ravensdown would be likely
to directly import about 40 containers per year.
Ravensdown considers the cost of rail and road to be similar but currently
road is better able to meet the current requirements into Northland. Rail
is used extensively from the Napier manufacturing plant to New
Plymouth, Wanganui, Gisborne, Taihape and Feilding. The limiting factor
preventing more rail being used are a shortage of Bulk Hopper Wagons
and the turnaround time for wagons into Northland (hence low
utilisation).
KiwiRail and/or Keith Holdsworth have been in contact Ravensdown since
the release of the KiwiRail „turn-around plan‟.
Kelvin Taylor 2012 Page 36
6.2.13 Steel
The steel industry in Whangarei consists of four different distribution
centres for three different national businesses. They are Steel and Tube,
Steel and Tube Roofing, Fletcher Steel and Vulcan Steel. All are located in
the industrial area at the southern end of Whangarei. All businesses use
trucks to receive their steel.
Fletcher Steel is the only business that replied and due to the competitive
nature of the industry they were unable to disclose any volume figures. It
is estimated that the volume of steel imported by all businesses into
Northland is in the range of 10,000 to 20,000 tonnes per year.
6.2.13.1 Fletcher Steel
(Fletcher Steel responded to the 2012 survey. No information was
provided on volumes).
Fletcher Steel is located on Rewarewa Road, about 1 kilometre from State
Highway 1 and about 4 kilometres from the Whangarei rail yard. The
business is too far away from rail to consider a direct connection. It is
estimated that between 3,000 and 6,000 tonnes of steel are sold each
year from Whangarei.
Currently, the steel is freighted up from Auckland by truck. The trucks are
dispatched from Auckland and arrive in Whangarei at 11 pm. The current
system is efficient and cost effective mainly because backloads can easily
be found for the trucks. Trucking is the preferred freighting method.
The Auckland distribution warehouse is located on 575 Great South Road,
Penrose. This is located next to the railway lines and there does appear to
be land available for a rail siding. It appears that a building could be set
up for rail services.
The Whangarei branch owns a truck that could be used to collect the steel
from the Whangarei rail yard.
Kelvin Taylor 2012 Page 37
6.2.13.2 Steel and Tube
(Steel and Tube chose not to participate in the 2012 survey. Steel and
Tube Roofing did not respond to the 2012 survey).
Steel and Tube is located on the corner of Hewlett Street & Fraser
Crescent, Whangarei. The rail line is about 100 metres away from the site
but there is a major road between the two. This would make a direct
connection non viable. The rail yard is about 2 kilometres away.
Steel and Tube Roofing is located at 9 Southend Avenue, Whangarei. This
is about 200 metres from State Highway 1. The rail yard is about 5
kilometres away.
The Auckland distribution centres appear to be spread throughout
Auckland. There does not appear to be a manufacturing plant associated
with Steel and Tube.
The Whangarei branch owns a truck that could be used to collect the steel
from the Whangarei rail yard.
6.2.13.3 Vulcan Steel
(Vulcan Steel did not respond to the 2012 survey).
Vulcan steel is a relatively new business with the Whangarei branch
located on 110 Lower Port Road, Whangarei. The head office and
distribution centre is located on 29 Neales Road, East Tamaki, Auckland.
The Whangarei branch is next to the railway line but is not connected.
The Auckland distribution centre is about 5 kilometres from the Wiri rail
facilities.
It may be feasible to freight the steel directly to the Whangarei branch by
rail in the future. It is likely that the current trucking arrangements are
the preferred option.
The Whangarei branch owns a truck that could be used to collect the steel
from the Whangarei rail yard.
Kelvin Taylor 2012 Page 38
6.2.14 Delta Produce
(Delta was not surveyed in 2012, but replied to a survey conducted in
October 2010)
Delta produces 6,000 tonnes of Kumaras per year. They are located on
State Highway 14, about 5 kilometres from the Dargaville rail yard.
Production is mainly for the local market.
Product is sent by truck to various fresh produce auctions or directly to
the two supermarkets distribution centres. It may be feasible to send the
produce by rail if the receiving business has a rail siding.
6.2.15 Progressive Enterprises
(Progressive Enterprises responded to the 2012 survey).
Progressive Enterprises supplies the Countdown Supermarkets. There are
7 supermarkets in Northland, 3 in Whangarei, 3 north of Otiria and 1 in
Dargaville. There are about 50,000 pallets delivered per year by truck.
The volume is about 78,000 to 100,000 tonnes per year (McElwain 2009).
There are 5 distribution centres in Auckland that service Northland. They
are:
National distribution centre
Regional distribution centre
Chilled and frozen products
Fresh produce
Meat and fish
One of the distribution centres had a rail siding, but the rail has been
removed.
Progressive Enterprises is unable to use rail into Northland for the
following reasons:
Lack of suitable rolling stock
Tunnel size
Logistics and the freighting costs in Auckland
Poor Northland rail package
Progressive Enterprises consider rail cheaper if the model is right. Freight
has been reviewed and a change to rail has occurred for other routes. The
factors that have influenced the review are freight/fuel prices, road
Kelvin Taylor 2012 Page 39
congestion/travel time, changing company ethics/values and the KiwiRail
“turn-around plan”.
The containerisation of Northport would allow Progressive Enterprises to
backload their trucks to their distribution centres in Auckland. The
products would need to be palletised before freighting to Auckland. This
would also provide an empty container for a Northland user. This would
reduce the number of empty containers being unloaded in Auckland.
Progressive Enterprises would consider either road or rail from Northport
to Auckland.
Communication has occurred with KiwiRail regarding other routes but not
the Northland route.
6.2.16 Foodstuffs
(Foodstuffs Auckland Ltd responded to the 2012 survey).
Foodstuffs operate the Pak‟n‟Save, New World and Four Square
Supermarkets. They have four Supermarkets in Whangarei, three north of
Otiria as well as a large number of Four Square Supermarkets and
independents. About 160,000 pallets per year are delivered by truck. The
estimated volume is 240,000 tonnes per year.
The Auckland distribution centres are located on Roma Road, Mt Roskill. It
is not close to the railway. The Wiri rail freight hub is about 20 kilometres
South on the South Western Highway.
Due to the location of the distribution centre, rail freight is considered
more expensive and has not been used for distributing groceries. A
reliable and secure door to door service would also be required.
Foodstuffs consider the development of Northport for containers to be
important to their supply chain of imported goods. The Ports of Auckland
has been identified as an area of risk (even before the 2011/12 industrial
dispute) as well as the increasing size of the container vessels. For the
freighting of containers from the Northport to the Auckland Distribution
centre, Foodstuffs would consider either rail or road.
KiwiRail and/or Keith Holdsworth have not yet contacted Foodstuffs since
the release of the KiwiRail „turn-around plan‟.
Kelvin Taylor 2012 Page 40
6.2.17 The Warehouse
(The Warehouse did not respond to the 2012 survey. All information is
obtained from the report titled “Northland inland port/distribution hub,
Pre-feasibility study. McElwain, S. 2009.”).
There are five Warehouse stores in Northland. They are in Whangarei,
Dargaville, Kerikeri, Kaitaia and Kaikohe. The Whangarei store receives
approximately 20,000 tonnes per year. The other stores in Northland
receive approximately 30,000 tonnes per year. Rail is not used into
Northland.
There are two distribution centres that supply Northland which are both
located in South Auckland.
Photo 2 Dargaville rail yard
Kelvin Taylor 2012 Page 41
6.3 Business Surveys: Transferable Freight
From the data collected, there does not appear to be any freight that can
be quickly transferred onto rail. There are limiting factors, restricting
transfer of freight onto rail.
Imerys would like to use the rail more. To do this, they would
require container facilities at Otiria. This will transfer 12,500 tonnes
onto rail from Otiria to Whangarei.
Affco would reconsider rail if Otiria had container facilities. This
could result in an estimated 15,000 tonnes being freighted from
Otiria to the Ports of Auckland.
Silver Fern Farms is located 5 km from the Dargaville rail yard. If
there were container facilities available, Silver Fern Farms would
reconsider using rail. This could result in an estimated 20,000
tonnes being freighted from Dargaville to the Ports of Auckland.
CHH Kinleith (Tokoroa) mill currently freights an estimated 200,000
tonnes of wood chip from Whangarei to Kinleith. Currently about
65,000 tonnes is freighted by rail and the balance of 135,000
tonnes by road. The reason for this split is unknown. It is very likely
that there is insufficient rolling stock available to cater to the
demand. Rectifying this could result in an extra 135,000 tonnes
being freighted from Whangarei to Kinleith.
CHH Whangarei is located next to the rail lines. It may be possible
to transport a portion of the logs sent to the mill by rail.
Transferring all of Golden Bay Cement‟s business onto rail in the
long term is likely to make the Northland rail network a profitable
business. In the short term it is possible to freight a portion of the
inputs by rail. In the future, with the development of rail facilities to
the Hikurangi quarry and specialised wagons it is likely that 300,000
tonnes of limestone rock would be transferred by rail a distance of
35 km from Hikurangi to Portland. There is also potential to freight
cement to New Zealand destinations by rail.
Ravensdown uses rail from Napier to lower North Island stores.
Currently the train travels back to Palmerston North, then up to
Auckland. For Ravensdown to use the rail to Dargaville there would
need to be a rail connection to Ravensdown store at Dargaville and
more available wagons. The potential volume is estimated at 7,000
tonnes from Napier to Dargaville.
Progressive Enterprises are interested in using rail. For Northland it
is probably a long term proposition. The whole supply chain would
Kelvin Taylor 2012 Page 42
need to be redeveloped to cater for to Door to Door deliveries and
the use of swap bodies.
Fletcher Steel is a business that is happy with the current trucking
situation, but could be converted to rail if a rail siding was provided
in Auckland. The provision of a rail siding could also provide
opportunity to freight to other centres south of Auckland.
Kaihu Valley Sawmill has potential to freight green sawn timber
from Dargaville to Huntly if infrastructure was provided at both ends
of the journey.
Fonterra Maungaturoto has potential to use the rail. However, there
would need to be a rail siding into the plant or container facilities as
well as storage facilities at Fonterra. (This business was not covered
in the survey).
Kamo Scrap Metal is located within 100 metres of the rail line. They
supply scrap steel to South Pacific Steel, Auckland who have rail
facilities. (This business was not covered in the survey).
Businesses that have potential to convert some freight to rail within the
next year:
Imerys Affco
Silver Fern Farms CHH Kinleith
Businesses that have potential to convert some freight to rail in two to five years time:
Golden Bay Cement
Businesses that have potential to convert some freight to rail in the longer
term or have potential to use rail but have not considered rail freight:
Ravensdown
Progressive Enterprises CHH Whangarei
Kaihu Valley Sawmill Fonterra Maungaturoto
Fletcher Steel Kamo Scrap Metal
Kelvin Taylor 2012 Page 43
6.4 Business Surveys: Capital Expenditure
The following section indicates what is required to meet the demands of
the businesses to potentially transfer their freight onto rail. All solutions
will require capital expenditure.
As information requested has not been made available by KiwiRail so far,
the estimates below are based on publicly available information.
6.4.1 Rail Costs
Currently there are two return train trips per weekday from Auckland to
Whangarei (11 return trips per week). One of them is general freight to
Auckland and the other is logs and wood chip to Tokoroa. According to
KiwiRail the Northland line broke even for the 2010/11 year (Laird, 2001),
but the income generated from the trains carrying Northland freight
outside of Northland is not included in the Northland income.
However in the agenda for the Auckland Regional Council, Transport
Committee meeting on March 7th 2012, it was indicated from KiwiRail that
the Northland rail network earns revenue of $8 to $9 million per year.
This covers the cost of train operations but not the cost of infrastructure
maintenance. This ranges between $3 and $5 million per year, just to
keep the lines in their current state, and is not to the standard needed to
support growth.
Containerising of both the Otiria and Dargaville rail yards on the proviso
that Imerys and Affco use the Otiria container facilities or Silver Fern
Farms use the Dargaville container facilities will generate an immediate
increase in freight. It is possible that Forest Loaders could be contracted
to operate both yards since they currently have staff present for loading
logs onto the rail. Used container forklifts cost about $100,000 each.
One train per week day travels from Whangarei to CHH Kinleith
(Tokoroa), but only 65,000 tonnes out of 200,000 tonnes of wood chip
produced at CHH Whangarei is carried by rail. The reason for this split is
unknown. No information was obtained from either CHH Kinleith or CHH
Whangarei. If the total volume of wood chip produced at CHH Whangarei
could be converted to rail then the volume carried on rail would be an
increase of about 50% of the tkm carried in Northland. It is unknown how
many wagons are used but if we assume there are 20 flat deck wagons
currently being used, then there would need to be another 40 flat deck
wagons. These cost about $100,000 each. There would also need to be
Kelvin Taylor 2012 Page 44
another 80 twenty foot containers with the tops cut out at a cost from
$4,000 each. It is likely that KiwiRail could purchase these at a cheaper
wholesale rate.
Golden Bay Cement has expressed an interest in using rail again.
Converting 300,000 tonnes per year of limestone rock to rail from
Hikurangi to Portland would increase the Northland rail freight by an
estimated 20%. With this transfer there would be a greater public
expectation of other businesses to use rail freight. There are also other
inputs brought into the region and cement that could be transported by
rail. No information was provided by Golden Bay Cement. The transfer of
Golden Bay Cement products to rail is likely to be a long term project.
The price for a rail line into Golden Bay Cements Hikurangi quarry is likely
to be a similar price per kilometre as the estimated $500,000 per
kilometre for the Marsden Point. There would need to be about 2
kilometres. Wagons could cost an estimated $200,000 each and there
would need to be at least 10 capable of carrying 18 tonnes each. Golden
Bay Cement would need to invest in more machinery to crush and clean
the rock at Hikurangi. It can therefore be assumed that the rail could cost
about $1 million and the wagons $2 million. The line between the two
points would need to be upgraded to cater for the increased volumes.
There would also need to be a rail crossing, across State Highway 1.
Depending on the requirements of Transitnz this could either be a level
crossing or a bridge. This project will require resource consents which
make it a medium to long term proposition.
Requirement Estimated Cost
Otiria Rail Yard Container Forklift
Flat deck wagons(6)
$100,000
$600,000
Dargaville Rail Yard Container Forklift
Flat deck wagons(8)
$100,000
$800,000
CHH Wood Chip Flat deck wagons (40)
Containers (80)
$ 4,000,000
$ 320,000
Golden Bay Limestone Rock
Rail line (2 km)
Wagons (10)
Road crossing
$ 1,000,000
$ 2,000,000
Unknown
Table 6 Estimated cost to transfer identified freight onto rail
Kelvin Taylor 2012 Page 45
6.4.2 Tunnels
The current estimate, by KiwiRail, to allow Hi-Cubed containers through
the Northland tunnels (refer to table 1, page 10) is thought to be about
$100 million (Roberts, 2011). All the tunnels that need lowering are on
the Auckland to Whangarei section of the network.
KiwiRail, General Manager of Freight, Iain Hill told a public meeting in
Whangarei in October 2011, that it is estimated to cost $40 million to
improve clearances in the tunnels (KiwiRail, 2011).
The reason for the difference between the two figures is unknown, but it
is probably related to the $100 million being the “wish list” of KiwiRail and
the $40 million the bare minimum requirements to allow Hi-Cubed
containers through the tunnels.
As it appears Fonterra is the only business that would be able to use Hi-
Cubed containers and only for their chilled product (about 65,000
tonnes). The other products from Fonterra and Imerys clay are restricted
by weight, not the height of the container. This is also the case for the
other potential users, Affco and Silver Fern Farms.
Other countries have used Low Rider wagons to transport the Hi-Cubed
containers until such a time as the tunnels are lowered to cater for the
increases heights. Low Rider wagons allow the Hi-Cubed container to sit
closer to the ground than the traditional flat deck wagons. The
disadvantages of the Low Rider wagons are the higher manufacturing
costs and lower operating efficiencies. The advantages of the Low Rider
wagons are that businesses are able to use the Hi-Cubed containers and
the expense of the tunnel lowering can be delayed until a later date.
NRC is considering purchasing their own Low Rider wagon to aid KiwiRail
cater for the demand of Hi-Cubed containers (NRC, 2011). It has been
indicated that KiwiRail may already have some Low Rider wagons (Dick,
2010). It may be possible to relocate these wagons to Northland and
lower the other tunnels in New Zealand first. Currently the only other
tunnels to lower are in the South Island on the West Coast and the
Midlands lines.
Kelvin Taylor 2012 Page 46
6.4.3 Weights
Currently the Northland rail network is weight restricted and unable to
carry containers to their weight capacity. Only businesses with direct
loading capabilities would be able to take advantage of the potential.
The issue of filling the containers to capacity at the rail siding was raised
with Imerys. They indicated that it would too much of a hassle and
uneconomic. Timber has been freighted to Auckland on truck and then
loaded into containers.
Imerys have indicated that they would not be able to put more in each
container. Both Affco and Silver Fern Farms are close enough to the rail
yard to allow the transport of a partially filled container by road, then
filling to weight capacity at the rail yard, but are unlikely to do this
because of the security of the product. Fonterra is the only business that
would benefit from the heavier weight capacity containers.
As a result, the heavier container freight is likely to be restricted to the
Kauri to Auckland section of the rail network. There are 58 bridges on this
route that would need to be capable of carrying 18 tonnes axle weight (or
heavier).
There are a total of 106 bridges in Northland. By not immediately
requiring the whole Northland rail network to be heavy container
compatible, the upgrading of the other 48 bridges and the rail network
can be left until such a time as either finances become available or the
bridges reach their replacement date. This would have the effect of
reducing the immediate financial requirement for the Northland rail
network upgrading.
No information was provided by KiwiRail relating to weight capacity of
current bridges, or the cost of upgrading or replacing of the bridges. The
length of each bridge is unknown. Cost information was provided by a
private consultant (name is confidential) who estimated that a new bridge
will cost between $30,000 and $40,000 per metre. Short bridges cost
more than longer bridges per metre. For double-tracked bridges the figure
will double.
Kelvin Taylor 2012 Page 47
6.4.4 Northport
If Northport was to develop container facilities and build the rail line
would any freight come from outside the district? It is very unlikely as the
same factors that prevent Northland businesses from using more rail
freight would also apply to the businesses from outside the area. They
would be better served by using either the Ports of Auckland or Tauranga.
If the rail line was fully redeveloped, the businesses from outside
Northland would still be better served by the Ports of Auckland and
Tauranga.
If the Port of Auckland was closed, the Port of Tauranga would be unable
to cope with the increased demand resulting in a requirement for
container facilities at Northport. This freight could be transported by road
until such a time as the rail was fully developed to cater for the
requirements.
The conclusion can be drawn that unless the Ports of Auckland becomes
uncompetitive, then the Northport is only likely to service the import and
export of bulk produce for Northland.
Photo 3 Aerial photo of Northport (foreground) and Marsden Point Oil Refinery.
Kelvin Taylor 2012 Page 48
7 Conclusions and Recommendations
The following table provides a summary of the potential gains in rail
freight per year.
Business Distance (km) Tonnes
(000) tkm (000) Requirements
Imerys 65 12.5 812 Container facilities
Affco 240 15 ? 3,600 Rail siding
Container facilities
Silver Fern
Farms 180 ? 20 ? 3,600 Container facilities
CHH Kinleith 180 Northland
160 Main Trunk
135 ?
135 ?
24,300
21,600 Rolling stock
CHH Whangarei ? ?
Golden Bay
Limestone rock 35 300 10,500
Rail siding
Road crossing
Rolling stock
Golden Bay
Other ? ?
Ravensdown 7 Rolling stock
Price structure
Progressive
Enterprises ? ?
Rolling stock
Door to Door
Kaihu Valley
Sawmill 270? ?
Loading facilities
Rail siding Huntly
Fletcher Steel 185 ?
Table 7 Summary of potential rail freight gains
Note ? indicates unknown information or the accuracy is uncertain.
Kelvin Taylor 2012 Page 49
Conclusion
At the Otiria rail yard, Imerys Tableware and Affco both need a container
forklift, a forklift operator, flat deck wagons and empty containers. Imerys
will use Otiria as soon as these requirements are met. Affco will consider
using rail. For Imerys the potential volume is 12,500 tonnes per year
from Otiria to Whangarei and for Affco the potential volume is estimated
at 15,000 tonnes per year from Otiria to the Ports of Auckland.
Recommendations
1. Provide container forklift at the Otiria rail yard. Estimate cost of
$100,000.
2. Contract Forest Loaders to operate the Otiria container facilities. No
capital costs.
3. Relocate the Imerys flat decked wagons and empty containers from
Whangarei to the Otiria rail yard. No capital costs.
4. Provide flat decked wagons for Affco at a rate of 3 per day (average)
at the Otiria rail yard. Required are 6 new flat deck wagons (assuming
2 day turnaround) at an estimated cost of $600,000.
5. Rail the empty refrigerated containers for Affco to the Otiria rail yard.
No capital costs.
Conclusion
Silver Fern Farms needs a container forklift, a forklift operator, flat deck
wagons and refrigerated containers to consider using rail at the Dargaville
rail yard in the future. The potential increase in Silver Ferns Rail use is
estimated at 20,000 tonnes per year from Dargaville to the Ports of
Auckland.
Recommendations
6. Provide a container forklift at the Dargaville rail yard. Estimated cost of
$100,000.
7. Contract Forest Loaders to operate the Dargaville container facilities.
No capital costs.
8. Provide flat decked wagons for Silver Fern Farms at a rate of 4 per day
(average) at the Dargaville rail yard. Required are 8 new flat decked
wagons (assuming 2 day turnaround) at an estimated cost of
$800,000.
9. Rail the empty refrigerated containers to the Dargaville rail yard. No
capital costs.
Kelvin Taylor 2012 Page 50
Conclusion
CHH Kinleith needs flat decked wagons and open topped containers
available in Whangarei before considering using more rail freight in
future. The potential increase from CCH Kinleith is estimated at about
135,000 tonnes per year from Whangarei to Kinleith.
Recommendations
10. Provide flat decked wagons for CHH Kinleith at a rate of 20 per day at
the Whangarei rail yard. Required are 40 new flat decked wagons
(assuming 2 day turnaround) at an estimated cost of $2,000,000.
11. Provide open topped containers for CHH Kinleith at a rate of 40 per
day at the Whangarei rail yard. Required are 80 open topped
containers (assuming 2 day turnaround) at an estimated cost of
$320,000.
Conclusion
KiwiRail has released different figures for the lowering of the same
problem tunnels ranging between $40 and $100 million.
The Northland rail network redevelopment appears so far to have been
done in an ad hoc manner with no regards to the potential freight gains
that will be realised as a result of possible capital expenditure.
Recommendations
12. Produce and release a plan for the total upgrading of the Northland
rail network including costings and a time line.
13. Upgrade the weight capacity for the Kauri to Auckland sections of the
Northland rail network first.
14. Conduct research as to why some businesses use rail outside
Northland, but not in Northland and consider rectifying the issues
identified.
Kelvin Taylor 2012 Page 51
Conclusion
The NRC has put forward a proposal to purchase some Low Rider wagons.
The land for the Marsden Point rail has been purchased.
Currently there is no master logistics plan or any other supports for the
transfer of freight onto the rail network.
Recommendations
15. Set up a regional logistic master plan.
16. Provide grants for rail sidings.
17. Invest in rail infrastructure.
18. Invest in freight hubs.
19. Fund or partially fund feasibility studies for the following businesses:
a. Fonterra Maungaturoto.
b. Golden Bay‟s Hikurangi to Portland limestone rock transfer.
c. Golden Bay‟s other freighted inputs.
d. Golden Bay‟s freighting of final product.
e. All businesses with potential identified in this report.
f. All businesses with potential identified in the report titled
“Northland Inland Port/Distribution Hub. Pre-Feasibility Study”
written by Stewart McElwain in 2009.
Photo4 Container forklift loading containers onto Flat Decked rail wagons
Kelvin Taylor 2012 Page 52
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Kiwirail. (2009b). Kiwirail Submission on the Infrastructure: Facts and
Issues – Towards a National Infrastructure Plan. Retrieved from http://www.infrastructure.govt.nz/plan/submissions/pdfs/s-ifi-kw-
oct09.pdf
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Kiwirail. (2008). Business overview and review of strategic issues for Shareholding Ministers December. Retrieved from
http://www.ontrack.govt.nz/aboutus/resources/publications/Documents/Briefing%20to%20Incoming%20Minister.pdf
Laird, L. (2011). KiwiRail keen to keep North line open. Retrieved from
http://www.northernadvocate.co.nz/news/kiwirail-keen-to-keep-north-line-open/1136057/
Maf (2009) Northland Forest Industry and Wood Availability Forecasts.
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20Availability%20Forecasts
McElwain, S. (2009). Northland Inland Port/Distribution Hub. Pre-
Feasibility Study. Whangarei, New Zealand. Enterprise Northland.
Ministry for the Environment. (2009). RMA enforcement manual case law summaries. Retrieved from http://www.qualityplanning.org.nz/rma-
enforcement/case-law-summaries/index.php
Ministry of Transport. (2011). Truck Crash Statistics for the Year Ended 31 December 2010. Retrieved from
http://www.transport.govt.nz/research/Documents/Truck-crash-statistics-2011-(1).pdf
NRC. (2011). Regional Transport Committee Agenda - 7 December 2011.
Retrieved from http://www.NRC.govt.nz/Download/?file=/upload/10008/RTC%20Agenda
%20-%207%20December%202011.pdf
NRC. (2010). 30 Year Transport Strategy for Northland. The Regional
Land Transport Strategy part 1-8. Retrieved from
http://www.NRC.govt.nz/upload/7465/30%20Year%20Transport%20Stra
tegy%20for%20Northland%202010%20-%20Parts%201-8.pdf
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NRC. (2007). Heavy Traffic Volumes Report chpt 1-5. Retrieved from http://www.NRC.govt.nz/upload/1575/Heavy%20Traffic%20Volumes%20
Report%20Feb%202007%20chp.%201%20-%205.pdf
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volumes/docs/SHTV-2006-2010.pdf
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2010, from
http://www.transport.govt.nz/research/Documents/FreightStudyComplete.pdf
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Whangarei Strategic Assessment: Strategic Context Report. Auckland, New Zealand.
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Woodburn, A. (2007a). The role for rail in port-based container freight
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of Logistics and Transport.
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Transport Management 1, 237–245.
Woodburn, A. (2001). The changing nature of rail freight in Great Britain: the start of a renaissance? Transport Reviews, 21, (1).
Kelvin Taylor 2012 Page 57
9 Appendix
9.1 Appendix 1 The KiwiRail „turn-around plan‟
Kelvin Taylor 2012 Page 58
The rail ‘turn-around plan’
KiwiRail’s 10-year programme to create a sustainable rail business
Investment in KiwiRail announced by the Government today (18 May, 2010) marks the beginning of a long term plan to create a business capable of standing on its own feet financially.
The investment, subject to business cases, follows the Government’s consideration of a 10-year plan prepared by KiwiRail for turning around the rail industry. It calls for investment in the business’s assets rather than an operating subsidy.
The plan reflects the need to create a viable and efficient rail industry capable of meeting its share of freight traffic projected to grow by at least 75 percent by 2031.
The plan aims to increase rail traffic volumes and revenue, increase productivity, modernise assets and separate out the commercial elements of the business from the non-commercial.
It takes into account the following:
1. The views of our customers who say they need an efficient and reliable rail network to serve their businesses and meet future freight growth.
2. The need to develop partnerships and alliances with our customers, stakeholders and suppliers.
3. The need to restore rail’s relevance – eroded over the past 15 years in many areas through lack of maintenance investment that has resulted in poor transit times and unreliable services.
Currently, an express freight train journey between Auckland and Wellington typically takes thirteen and a half hours - similar to transit times in the late 1970s. A truck on the same route takes nine hours.
To be relevant to customers the rail journey for express freight trains needs to be no more than 11 hours and it must be reliable.
We recognise that for the plan to succeed, we will need the support and engagement of our staff as well as their willingness to work with management to improve productivity.
Implementing the plan
There will be five major areas of investment and work to protect and grow our revenue, and create a sustainable rail system for New Zealand:
1. Step change in the Auckland–Christchurch route • Reduce transit time and improve reliability along the route -
easing curves, removing speed restrictions, greater renewals investment in bridges and sleepers and passing loops
• Improve exit and entry from Auckland and Wellington -
Whangarei
AUCKLAND
improvements at terminals and on mainlines to reduce transit times and conflicts with commuter services
• Increase ferry capacity for rail freight - extend length of Aratere and make Kaitaki rail-capable
2. Other key routes • Improve reliability and capacity with increased renewals
Investment in replacement of sleepers, strengthening of bridges,
New Plymouth
Hamilton Tauranga
Napier
Gisborne
refurbishment of track formation
3. Enabling investment • Improved IT systems and processes, equipment and facilities
Whanganui
PALMERSTON NORTH
Masterton
at terminals • New locomotives, wagons • Improved track infrastructure
4. The minor lines • Review business on North
Auckland, Stratford-Okahukura, Napier-Gisborne and North Wairarapa lines
• Consultation with communities, customers and staff
• Close or mothball by 2012 if anchor customers do not emerge
Greymouth
Blenheim
CHRISTCHURCH
Ashburton
Timaru
WELLINGTON
5. Auckland and Wellington metro services • Clarify and assign accountability
for costs associated with operating metro networks
Invercargill
Oamaru
DUNEDIN
Kelvin Taylor 2012 Page 59
Key elements of the ‘turn-around plan’
1. The business needs a connected network Growing the business depends on KiwiRail maintaining a connected national network. However, minor lines that carry little or no traffic will only survive if they have proven future potential and/or an imminent anchor customer. Focussing our scarce capital on productive revenue is a key issue.
2. Growth in volume and revenue quality is essential Freight is critical to the financial success of KiwiRail. It currently generates more than 75 percent of KiwiRail’s revenue from carrying bulk commodities, import-export goods and domestic freight. The predicted near doubling of the freight task over the next 30 years and the opportunity to increase rail’s market share on some routes underpins its importance to the business.
3. Auckland-Christchurch is the backbone of the network The national network does not exist without its backbone (Auckland-Christchurch). Increasing the amount of domestic freight carried on all sectors along the main trunk backbone is critical to the growth and sustainability of the freight business. Other routes are busy and important. But in most cases, rail is already relevant and growth depends on some other factor – like natural growth in the economy.
4. Investment in infrastructure is critical to improving transit times and reliability Targeted investment in key routes – particularly Auckland-Christchurch - will restore relevance and reliability and give the freight business the opportunity to protect the business we have today, reclaim business from the past and grow with the forecast freight growth. Critical elements are easing curves, laying new sleepers and strengthening bridges to decrease transit times as well as improving exit and entry in Auckland and Wellington and building or extending passing loops.
5. Greater ferry capacity is needed for the Auckland- Christchurch route to be competitive Greater rail capacity will be needed in Interislander to support freight business growth. All sailings are likely
to require rail access, whereas today one of our ships does not have rail capability. Greater general capacity will be required also to meet the growing freight task.
6. Wagon and locomotive fleets need to be upgraded
Currently the newest diesel locomotives in the fleet are 30 years old and the average age of wagons between 25 and 30 years. Adding new locomotives and wagons to the fleet is critical to improving transit times and reliability and enhancing our natural advantage from a sustainability perspective through lower fuel use. New locomotives are already on order; further work is required for additions to the wagon fleet.
7. Productivity needs to improve Productivity can always be improved and we are challenging ourselves to review and make necessary changes to achieve the necessary gains. Targeted investment in technology, processes and equipment will enable us to unlock a wide range of productivity improvements.
8. Long-distance passenger business growth will come from creating rail experiences Few tourists or New Zealanders use long-distance trains as a means of travel from place to place. Future growth in long-distance passenger travel depends on improving the quality of the experience. New passenger carriages for the South Island will help but KiwiRail will need better infrastructure and possibly greater expertise in customer service.
9. The metro business depends on true costs being recovered The metro business, funded by a mixture of fare box, council rates, NZTA and Government, is essentially non-commercial relative to our other trading businesses. These areas of business will be accounted for separately so that the total costs are fully understood by the stakeholders and there is wider appreciation of the impact of decisions made. Our job is to partner with the regions and the operators to ensure that the metro rail systems are a vibrant part of the integrated public transport system in each region.
The KiwiRail business
KiwiRail’s trading businesses – KiwiRail Freight, KiwiRail Passenger including Tranz Metro and Tranz Scenic, and Interislander – are set up to listen to and respond to their customer needs and set the market priorities. They are accounted for separately but share overhead costs where practical. KiwiRail Network, KiwiRail Mechanical and Corporate teams support their plans to deliver for customers today and into the future.
KiwiRail key routes
Route Key traffic
Containerised export and bulk products Auckland-Hamilton-Tauranga
Auckland metro network Commuters
Auckland-Christchurch Containerised domestic goods Overseas and local passengers (Overlander and TranzCoastal)
Waikato-BOP forestry lines Wood and wood products
Oringi-Palmerston North-Whareroa Bulk milk
Wellington metro network Commuters
Cook Strait Containerised domestic goods Passengers and cars Westport-Greymouth-Lyttelton Bulk coal International visitors (TranzAlpine)
Edendale-Port Chalmers/Timaru-Lyttelton Containerised dairy products and coal
Kelvin Taylor 2012 Page 60
9.2 Appendix 2 Business Survey
Kelvin Taylor 2012 Page 61
Name
E Mail
Telephone
Postal
Additional comments are welcome.
1 Your contact details
Name
Position
Business Imerys
Phone Number
Postal Address
Contact Details for survey coordinator
Kelvin Taylor 2012 Page 62
2 What volumes of major goods do you freight by all means from your site?
(tonnes/year)
3 Give a brief description of the processes once your final product leaves
your site. eg Loaded into container, transported to Whangarei by truck, rail to export port.
4 Which ones from the following list, applies to your business? (circle any that apply)
A. We have a rail siding
B. Rail runs through or on the boundary of our property, but no siding
C. Rail is close to our property, but no siding
D. Rail is too far away to consider a siding
5 What distance is the Otiria rail siding from your business?
6 Do you currently freight any of your products by the Northland rail network?(circle one)
A. No.
B. Yes.
If yes please give details. Product, volumes, rail end points.
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7 Are there any limiting factors, related to rail that prevent your business transporting larger volumes of product by rail in Northland? (circle one)
A. No
B. Yes
C. Never considered rail (go to question 9)
8 Over the last 10 years, has the volume of products being freighted on rail, in Northland by your business changed? (circle one)
A. Never used rail.
B. Remained the same.
C. Yes. Decreased.
D. Yes. Increased.
Minor
1 2 3 4
Major
5
A Closure of Port Whangarei
B Company policy is to use rail if possible
C Rail better able to meet our requirements
D Road better able to meet our requirements
E Cost of rail vs. road
E Production volume changes
F New products/discontinued products
G Removal of loading facilities at Otiria
H Others (please state)
10 How do you perceive the cost of freighting from door to door, using rail
compared to road? (circle one)
A. Rail is more expensive
B. Rail is similar
C. Rail is cheaper
9 Over the last 10 years, what effect have the factors below had on your
Northland rail freighting patterns?
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11 Has any person from Kiwirail contacted your business in the last 2 years
attempting to procure more business for the Northland rail network?
(circle one)
A. No.
B. Yes.
12 Are you aware that KiwiRail has appointed Keith Holdsworth as Northland
freight development manager? (circle one)
A. No.
B. Yes.
13 Has Keith Holdsworth, from KiwiRail, contacted your business? (circle one)
A. No.
B. Yes.
14 How seriously was using rail freight considered by your business in the last
two years? (circle one)
Not considered Slight
consideration Considered
Seriously
considered Changed to rail
15 What has made your business review rail freight in the last two years?
(circle as many as required)
A. Not considered
B. Regular review
C. Freight/fuel prices
D. Road congestion/travel time
E. Changing company ethics/values
F. Public opinion
G. Contact by KiwiRail
H. KiwiRail “Turn Around Plan”
I. Other (please state)
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16 For your business to initiate or increase the use of the Northland rail network, how important are the following factors?
Minor
1 2 3 4
Major
5
A A different train schedule
B A more reliable service
C The Marsden Point rail line
D Quicker delivery to Whangarei
E Quicker delivery to Auckland
F Quicker delivery through Auckland
G Able to handle Hi-Cubed containers
H Able to carry heavier loads
I Suitable rolling stock
J Storage facilities at Otiria rail siding
K Better loading facilities at Otiria rail siding
L Door to Door services
M Freight hub at Otiria
N Security at Otiria rail siding
O Reduced damaged goods
P Reduced misplaced products
Q Other(please state)
Kelvin Taylor 2012 Page 66
Port of Marsden Point
As part of Kiwirail‟s submission to the Northland Regional Council,
regarding infrastructure, Kiwirail said that they would only consider the
Northland rail network viable if the line to Port of Marsden Point is built.
1 Do you currently import and/or export any product through Northport?
A. No. (go to question 3)
B. Yes. (go to next question)
2 What volumes do you currently freight through Northport?
3 If Northport had rail access (non containerised), how likely is it that your business would use rail to freight through Northport? (circle one)
Very unlikely Unlikely Likely Very likely Extremely likely
4 If Northport had container facilities (assuming all other factors equal to Ports of Auckland and Tauranga), how likely is it that your business would freight containers, by road, through Northport? (circle one)
Very unlikely Unlikely Likely Very likely Extremely likely
5 If Northport had rail and container facilities (assuming all other factors equal to Ports of Auckland and Tauranga), how likely is it, that your
business would freight containers, by rail, through Northport? (circle one)
Very unlikely Unlikely Likely Very likely Extremely likely
Any comments related to Northport.
Kelvin Taylor 2012 Page 67
10 Researcher
Kelvin Taylor is a student at NorthTec, Whangarei, New Zealand, studying
a Degree of Business Management. The paper being completed is a final
year industry project. Contact with Kelvin Taylor can be made by email at