KiwiRail

Background

Prior to the establishment of KiwiRail, rail transport in New Zealand has been under both public and private ownership. Government operators included the Public Works Department (1873–1880), New Zealand Railways Department (1880–1982), and the New Zealand Railways Corporation (1982–1990). New Zealand Rail Limited was split off from the Railways Corporation (which continued to own the land beneath the rail network) in 1990, privatised in 1993 and then renamed in 1995 to Tranz Rail. In 2004 Tranz Rail's rail, ferry and trucking operations were acquired by Toll Holdings and renamed Toll NZ, with the central government buying back the rail network under the New Zealand Railways Corporation (trading as ONTRACK). After several years of negotiations the two parties could not come to an agreement on the amount that Toll should pay for access to the rail network (track access fees). This effectively stifled the ability of rail in New Zealand to recover from the prior years of investment neglect and seriously threatened the ability of New Zealand to get its key primary products to market.

Establishment of KiwiRail

In July 2008, the government announced the purchase for $690 million of Toll Rail (but not its trucking operation), renaming it KiwiRail. The Railways Corporation then owned both KiwiRail and ONTRACK, with both companies merging in October 2008^[4] to create one company that controls both rail and ferry operations and rail infrastructure.

Further restructuring: splitting of land and operations

In 2011, KiwiRail proposed splitting its land and rail corridor assets from its rail operation assets.^[5] On 27 June 2012 it was announced by the company that the value of the land and rail operations would be written down from NZ$7.8 billion to $1.3 billion, and KiwiRail would continue as the rail and ferry operator, while the New Zealand Railways Corporation would manage KiwiRail's land.^[6] The de-merger took effect on 31 December 2012.^[7]

Aims of the 10 Year Turn-around Plan

The focus of the Plan is to increase rail traffic volumes, revenue and productivity, modernise assets and separate out the commercial elements of the business from the non-commercial.^[9]

The plan included the following points:^[9]

• "Step change" on the Auckland – Wellington – Christchurch trunk route:
  • Reduce transit time and improve reliability along the route by easing curves, removing speed restrictions, greater investment in renewal of bridges and sleepers and passing loops. An express freight train journey between Auckland and Wellington took thirteen and a half hours. KiwiRail aimed to reduce transit times to 11 hours.
  • Improve exit and entry from Auckland and Wellington with improvements at terminals and on main lines to reduce transit times and conflicts with commuter services
  • Increase ferry rail-freight capacity by extending the length of the Aratere (achieved 2011) and make the Kaitaki rail–capable (idea since abandoned)
• Improve reliability, capacity and enabling investment:
  • Increased renewals on "other key routes", including investment in sleeper replacement, bridge strengthening and track formation refurbishment.
  • Improved IT systems and processes, equipment and facilities at terminals
  • New locomotives (see DL class) (48 in service by 2017) and 3,000 new wagons (over 1,000 in service by 2017).^[10]
• Review of minor lines (close or mothball if no anchor customers emerge):
  • North Auckland Line (partial mothball 2016)
  • Stratford–Okahukura Line (mothballed 2009)
  • Napier – Gisborne Line (partial mothballed 2012)^[11]
  • North Wairarapa line.
• Clarify and assign costs associated with Auckland and Wellington metro services (resulting in Tranz Metro assets being transferred to the Greater Wellington Regional Council and contracts for running services being made "contestable", as in Auckland.

Two of KiwiRail's major customers, Mainfreight and Fonterra, invested heavily in rail-related infrastructure in line with the Turnaround Plan. Mainfreight has allocated $60 million for investment in new railhead depots, while Fonterra has invested $130 million in a new rail hub complex in Hamilton and another in Mosgiel.^[12]

Progress on the Turnaround Plan by June 2016

The plan has had mixed success, with company Chairman John Spencer stating in 2013 that for its first three years, rail freight revenue had increased by over 25%.^[13] Similar progress in attaining new customers and increasing freight volumes has been made over the life of the Plan to date (other than with coal).

Steady and at times rapid progress has been made on the enabling parts of the Turnaround Plan, such as new locomotives and wagons, lengthening of the rail ferry and track destressing, but not always effectively.

The 10 Year Turnaround Plan was quickly undermined by a series of adverse events, including:

• Earthquakes: 2010 Canterbury earthquake, 2011 Christchurch earthquake, and the 2016 Kaikoura earthquake, resulting in significant infrastructure damage and closure of the Christchurch to Picton line from November 2016 to 15 September 2017^[14]
• Lengthy severing of the rail ferry link between the North and South Islands when the Aratere lost a propeller in 2013^[15][16]
• Significant and lengthy problems with the new DL class locomotives
• Pike River Mine disaster
• International coal price collapse
• Solid Energy, the largest NZ coal mining company, entering voluntary administration in 2015. This was the culmination of a downturn that had begun to appear in 2012-13: significantly less coal being moved from West Coast mines^[7]
• Major rebuilding after fire damage and seven week closure of key freight route Midland line in 2017^[17]

Update 2017 of the Turnaround Plan

Partially as a response to the events outlined above, in the 2017 budget the government announced a further $450 million in capital funding for KiwiRail, and that the company's operations would be placed under another major review, believed to relate to future funding models. The $450 million was earmarked for repairs following the 2016 Kaikoura earthquake and for further locomotive and rolling stock purchases. As part of the Turnaround Plan's agenda to standardise locomotives and wagons, in 2016 KiwiRail announced it would effectively switch off the NIMT electrification in late 2017 and replace the electric locomotives with an additional eight DL locomotives (additional to the 15 as reported in the 2016 Annual Report).^[18]

Freight

KiwiRail Freight is the company's largest business unit, making up the majority of KiwiRail's revenue with $390 million in the financial year ended July 2016. In the same year, KiwiRail moved around 18 million tonnes of freight and carried about 16% of New Zealand's total freight task (tonnes-km) ^[19]

Freight types: Bulk commodities include coal, logs, milk (dry and wet), IMEX (import/export intermodal) and domestic intermodal freight. Formerly large scale freight types such as petroleum products have entirely been withdrawn, and fertilizer has almost disappeared. The freight trading revenue by sector, as per the December 2016 Half Year Report is:^[20]

• Domestic 27%
• Bulk 19%
• Forestry 15%
• Import/Export 39%

Railfreight depots: KiwiRail has a total of 16 railfreight depots. In the North Island, these are Whangarei, Auckland, Hamilton, Tauranga, New Plymouth, Napier, Whanganui, Palmerston North, and Masterton. In the South Island they are Blenheim, Christchurch, Ashburton, Timaru, Oamaru, Dunedin, and Invercargill.

Inland Ports: KiwiRail serves a number of Inland Port yards, although does not own the tracks. These include Conlinxx (Wiri), Midland Port (Rolleston), Longburn International Freight Hub (Napier), Manawatu Inland Port (Palmerston North), MetroPort (Rolleston) and will include Ruakua (Hamilton) when it opens in 2018.

Sea Ports: KiwiRail has major freight yards and sidings at Lyttelton port Company (containers, logs, coal), Port Chalmers (containers), Southport (Bluff), Timaru, Mt Maunganui, Auckland, Centreport( Wellington), Port of Napier.

Anchor freight customers: Key anchor customers include Fonterra, Westland Dairy Products (Rolleston and Hokitika), Solid Energy and the various freight forwarders including Mainfreight and port companies including Port of Tauranga.

Freight wagons: KiwiRail operates 4,855 wagons (although the 2016 Annual Report does not break down revenue and non-revenue wagon numbers). An additional 120 wagons were acquired in the year ending 2016, with over 1,000 new wagons added since 2008. One of KiwiRail's stated aims is to progressively move towards standardized wagons, with the container flat-top being overwhelmingly the dominant type (fitted with curtain sided swap bodies, liquid containers, log cradles and so on to meet almost all freight tasks). The Norwegian coupling is progressively being replaced with automatic Janney coupler on all wagons.

Key freight routes:

• Auckland - Christchurch: domestic general freight, mostly via 10', 20' and 40' containers and curtainsiders or box wagons.
• Auckland - Tauranga: Containerized and bulk export products
• Kinleith/Murapara - Mount Maunganui: wood products only
• Midland Line: Bulk export coal from north of Westport and Reefton, coal containers for Fonterra, dry and wet milk between Westland Dairy plants at Hokitika and Rolleston, export dry milk from Fonterra at Darfield.
• Edendale - Tairei - Port Chalmers: export milk powder in containers.
• Wairio - Invercargill: solely coal in containers for Fonterra use.
• Invercargill - Bluff: run as a 'shunt', sole freight is exports to Southport.

Interislander

Re-branded along with KiwiRail Scenic Journeys as the single brand The Great Journeys of New Zealand in 2017, The Interislander is the company's second largest business unit. It operates ferry services across Cook Strait between Wellington in the North Island and Picton in the South Island. In financial year 2012, $123.9M of KiwiRail's revenue came from the Interislander, with the majority of the Interislander's revenue coming from rail and road freight transport.^[21]

Current fleet

The Interislander operates three ferries. In 2011, the Aratere was extended by 30 m to add extra capacity.^[22]

Image	Name	Built	Entered service	Capacity			Notes
				Passengers	Road	Rail
	DEV Aratere	1998	1999	600 + 31 crew	1050 lane metres [22]	420 lane metres (32 wagons)[22]	Numbers are post 2011 modifications
	MS Kaiarahi	1998	2014	550	1900 lane metres [23]	none	built 1998 as Dawn Merchant; chartered temporarily by Interislander in 2014 as Stena Alegra while Aratere was out of service, then chartered long-term in 2015 and renamed Kaiarahi
	MV Kaitaki	1994	2005	1350 + 60 crew	1780 lane metres (550 cars) [24]	none	Built 1994 as Isle of Innisfree; chartered by Interislander in 2005 as Challenger; renamed Kaitaki 2007

Property and Corporate

KiwiRail is a major land owner in New Zealand, and manages over 18 thousand hectares of land, has in excess of 1,500 property assets with a combined value of over $965 million (Annual Report 2016). Increasingly, KiwiRail is pursuing a commercial approach to asset management, and in the 2016 financial year received over $18 million from property sales.^[19]

Great Journeys of New Zealand

Re-branded along with Interislander as the single brand The Great Journeys of New Zealand in 2017, KiwiRail Scenic Journeys is the long-distance passenger transport subsidiary of KiwiRail, operating the Capital Connection, Northern Explorer, TranzAlpine and Coastal Pacific. The passenger trains are predominantly patronized by tourists to NZ, with the exception of the Capital Connection, which is a commuter train.

In 2012 KiwiRail attempted to sell Tranz Scenic,^[25] but was unsuccessful, and KiwiRail continues to run these services. The division is now experiencing rapid double digit annual growth, due to the growth of Chinese tourism to New Zealand, so much so that Kiwirail in 2017 may purchase an additional eight carriages ^[26] to the 17 AK carriages purchased in 2012.

Tranz Metro

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

Infrastructure and Asset Management

KiwiRail Network replacing sleepers on the Main South Line at Blueskin Bay, Otago.^[27] Closest machine is a dynamic track stabiliser, followed by a Regulator, then a Continuous Action Tamper.

The KiwiRail Infrastructure and Engineering division, formerly known as ONTRACK, has three main areas of operation:

• Development, maintenance and operation of all of New Zealand's main-line rail infrastructure (see List of New Zealand railway lines).^[28]
• Provides rail operators with access to the rail network in return for the payment of track access charges.
• Rail network controller, providing services such as train control and signalling.

The network it is responsible for consists of:

• Route length: 3,898 kilometres (2,422 mi)
• Tunnels: 149
• Bridges: 1,700
• Electrification: 95 km at 1.5 kV DC (Wellington area), 411 km at 25 kV 50 Hz AC (NIMT central section)

The divisions current (2016/2017) major project is refurbishment work in the Kaimai tunnel.

Current rolling stock fleet

Locomotives

Main article: Locomotives of New Zealand

The table below lists only the current locomotives used by KiwiRail.

Image	Class	Introduced	Number in class	Number in service	Power output (kW)	Notes
	DC	1978–1983	68	15	1230	Mainline diesel-electric. Forty stored and fourteen scrapped.
	DCP	1978–1983	17	9	1230	Mainline diesel-electric. Seven stored, one scrapped.
	DFB	1979–1981	19	19	1800	Mainline diesel-electric.
	DFT	1979–1981	11	9	1800	Mainline diesel-electric. Two stored and one being converted to DFBs.[31]
	DH	1978-1979	6	6	672	Heavy shunting locomotive.
	DL	2010–present	48	48	2700	Mainline diesel-electric.
	DSC	1959–1967	70	30	315	Light shunting. Thirty-four scrapped, two preserved, and three owned by industrial owners.
	DSG	1981-1983	24	24	700	Heavy shunting.
	DSJ	1984-1985	5	5	350	Light shunting.
	DXB	1972–1976	14	14	2240	Mainline diesel-electric.
	DXC	1972–1976	32	32	2240	Mainline diesel-electric.
	DXR	1972–1976	2	2	2420	Mainline diesel-electric.
	EF	1988–1989	22	15	3000	25kV AC electric locomotives. Five stored and two scrapped.
	TR	1936–1978	90	17	138	Light shunting, positioned in smaller yards and leased to industrial customers. Forty-four scrapped, twenty-eight preserved and one stored.

Railcars and carriages

Image	Class	Number in class	In service	Passenger capacity	Notes
	Silver Fern Railcar	3	1972–present	96	Two are used for excursions and charters by both KiwiRail and Dunedin Railways Limited.
	AK carriage	17	2012–present	AK 63; AKC 10	Used on the Tranz Alpine, Coastal Pacific, Northern Explorer services
	S class carriages	8	1999–present	60	Used on Capital Connection service.

Divisional financial revenue (NZ $ millions)

Consolidated financial performance (NZ $ millions)

Financial year[* 1]	Operating revenue	Operating surplus	Total comprehensive surplus (deficit)
2008-09[36]	636	63	(186)
2009-10[37]	646	74	(48.1)
2010-11[32]	667.4	100.3	(31.1)
2011-12[33]	715.8	77.6	(77.7)
2012-13[21][34][38]	727	77.5	(174)
2013-14 [35]	740.9	108.2	(229.3)
2014-15 [19]	720.6	90.5	(168)
2015-16 [19]	694	75.9	(194.4)

KiwiRail subsidiaries

• KiwiRail Freight
• KiwiRail Scenic Journeys
• Tranz Metro

Articles about KiwiRail

• KiwiRail value halves, 'BusinessDay, 3 June 2009.
• KiwiRail under price pressure, 'BusinessDay, 17 April 2009.
• MP at a loss after KiwiRail rejects plea, 'The Marlborough Express, 16 April 2009.
• Trains now called KiwiRail, 'Dominion Post, 30 June 2008.