KiwiRail Downsizes Its Fleet At Expense Of Growth

When KiwiRail was first formed in 2008 there was much excitement at what was to come.  With some 40 million tonnes of New Zealand's annual 300 million tonne freight task being suited to rail, there was an opportunity with government investment to more than double the pre-existing 18 million tonnes being carried on rail at the time.

Fast forward 17 years to 2025 and KiwiRail is carrying less than ever at around 15 million tonnes per year.  Yards around the country are filled with hundreds of surplus wagons and as reported extensively in South African media on November 2nd 2025, KiwiRail have decided to sell off a quarter of their locomotive and rolling stock fleet to a company in South Africa who will lease them to private operators as part of South Africa's ambitious plan to increase rail freight volumes from 160 million tonnes per year to 250 million tonnes.

The difference between New Zealand and South Africa's approach to rail freight is stark.  New Zealand is going full steam backwards whilst South Africa powers forward.  South Africa has a specified goal of 250 million tonnes, up from 160 million tonnes.  KiwiRail has no stated goal, and never has.

Politicians have poured billions into network upgrades but have never required the company to grow volumes in return.  And so they haven't.  Down from 18 million tonnes in 2008 to just 15 million tonnes in 2025.

In New Zealand we maintain an inefficient state owned monopoly and protect it from competition.  In South Africa the network has been opened up to competition and multiple new companies have lined up to operate trains competing with the state operator.

It's ironic that KiwiRail is doing more to grow rail freight volumes in South Africa than it is at home.

The New Zealand public have been told that the rationale for investing in KiwiRail is to achieve mode shift from road to rail, delivering environmental, economic and social benefits.  Since KiwiRail is carrying less, not more, after 17 years of intense investment to the tune of some $10 billion, we can conclude that the benefits have not eventuated and the rationale for investing in KiwiRail has failed.

At the heart of this failure is the lack of competition on the New Zealand railway network.  KiwiRail has a very specific business plan that targets only a small number of large customers.  They are primarily a logistics partner for the ports working with New Zealand's biggest exporters, with a small domestic freight component between Auckland and Christchurch.

Two former KiwiRail locomotives now in service in Namibia.  KiwiRail have already sold more than a dozen of their serviceable locomotives to African operators and are set to sell another 46 locomotives in 2026 and likely more thereafter, prioritizing growth in Africa at the expense of growth in New Zealand

KiwiRail has divested itself of all other customers over the past 17 years, usually by way of increasing their contract rates by as much as 300%, ensuring the customer leaves and switches to road transport.

KiwiRail's chosen niche market is essentially fully captured.  There is little to no scope for increasing their customer base.  Essentially KiwiRail's freight volumes will only go up or down according to the fortunes of their existing customers.  This is why we see negative growth in KiwiRail.

If New Zealand is to grow rail freight volumes then it requires a competitive and innovative rail industry in which other players can add their own business strategies to the bigger picture.  With some 25 million tonnes of rail-suited freight on offer there is plenty of opportunity for growth, especially with smaller customers who may only fill one or two wagons at a time, which KiwiRail has priced off the market but where other operators will price competitively.  

Whilst KiwiRail may only offer a rate competitive with trucking if the customer loads 30 wagons, another operator may be willing to price competitively with trucking for a single wagon load, but aim to have 30 customers.  Same end result, but with many more currently unrealized customers coming onboard under the latter scenario.  There is also a multitude of legacy issues with KiwiRail that add to the inefficiency of the company that other players won't have.

One of the major impediments to new companies starting rail operations is the establishment costs.  However, with KiwiRail currently presiding over some 60 soon-to-be-surplus locomotives and at least 920 surplus wagons (likely more), now is the opportune time for the government to make the same bold decision the South African government has made, and make the following changes:

• Open up the New Zealand rail network to competition, setting a goal of eventually increasing freight volumes on rail from 15 million tonnes to 40 million tonnes, bringing in private capital in addition to any remaining government investment.
  
  
• Transfer ownership of KiwiRail's 60 surplus locomotives and 920 surplus wagons to the New Zealand Railways Corporation (NZRC), who currently manage KiwiRail's land requirements.
  
  
• Allow NZRC to lease locomotives and rolling stock to new entrants who wish to establish operations on the New Zealand rail network. 
  
  

Australia went through a similar process in the late 1990s, and that resulted in a more than doubling of interstate rail freight volumes.  The UK and parts of Europe had similar results, with the UK alone experiencing 66% growth after private operators were allowed to do business.

South Africa's plans are very ambitious, but there's no shortage of new companies coming on stream, with at least seven buying up locomotives and rolling stock from wherever they can get them, ready to commence operations.

There's no reason New Zealand can't do the same, albeit on a smaller scale.  With so many surplus locomotives and wagons currently available, now is the time to act.  

Rail network planning & funding changes: Making a submission

There are four days left for indviduals and organisations to make a submission on the proposed changes to the planning and funding framework for New Zealand's national rail network - all submissions must be received by 5pm Friday 7th February 2020.

Notable changes proposed include:

• Abolishing KiwiRail's existing track access fees for other operators. 
• Setting new track user charges for all operators, set and regulated in a transparent way by government, with each operator paying the charges into the National Land Transport Fund rather than to KiwiRail. 
• Establishing a new three-year Rail Network Investment Plan (RNIP) with input from local councils and subject to public consultation.
   

These are important changes that will give New Zealanders a greater say in how the network should be developed over time. It also takes us much closer to enabling network access by other operators for moving freight, by separating track access charges from KiwiRail's business.

Submissions can be made here

A further cabinet paper will be released in due course, dealing specifically with the setting of network user charges, and that too will be open to submissions.

A look at KiwiRail's new regional commuter train

The Trains

As a part of the planning for the proposed new Hamilton to Papakura commuter train that was approved by Waikato Regional Council last year, and due to commence running in March 2020, new carriage design concepts were developed by Auckland-based Barnacle Design Ltd.  These have consequently been chosen by stakeholders in the proposal, and have been taken forward to the construction stage by KiwiRail.

Four basic concepts were designed, then considered by stakeholders, all based on former SA and SD class carriages made redundant in 2015 by Auckland Transport.  These included:

• Refurbished SA carriage with 54 seats
• Refurbished SA carriage with 50 seats and toilet
• Refurbished SA carriage with 20 seats, severy and toilet
• Refurbished SD carriage with 28 seats, space for bicycles, generator room, staff compartment and driving cab

Other combinations were also designed early on, including a refurbished SD carriage with severy that focussed on wheelchair accessibility, but reduced the number of regular seats to just three.  But it was the four above mentioned designs that went through to final consideration, and of these, the second, third and fourth designs listed above were recommended.  The 54 seat version was not taken further as it was recognised that international best practice is to provide one toilet for approximately every 50 passengers.

These three carriage designs have subsequently been classified by KiwiRail as classes SR (seating), SRC (seating plus severy) and SRV (seating, genset and driving cab).

The R in the new SRx classification series stands for Regional, and marks the beginning of a new variety of carriage, designed for longer distance service, but retaining the metro-style doors.  This results in slightly fewer seats being available as opposed to traditional quarter doors as used on existing regional carriages from Wellington to Masterton and Palmerston North.  But the cost and complexity of conversion was considered prohibitive, and the metro-style doors presently fitted are relatively modern and fully functional as is.  They also make it easier to board with bicycles and make more of the train accessible to wheelchair users.

One disappointment for me is the lack of ribbon windows as fitted to the SW series used between Wellington and Masterton.  Those panoramic windows really enhance the travelling experience, and create a very sleak looking carriage profile.  But I gather that may have been difficult to acheive with retention of the metro-style doors, which interupt the monocoque chassis design of the former British MkII carriages.  You can only modify such a structure so far before it weakens, without substantional further modifications. And that costs.

And an example of a typical cross-section of an SR class carriage:

13 carriages (ten SA and three SD) have been purchased, of which 11 will be refurbished, leaving two SA carriages stored unrefurbished.  Of the 11 to be refurbished, there will be 5 x SR, 3 x SRC and 3 x SRV. 

In normal service there will be two consists of 2 x SR, 1 x SRC and 1 x SRV.  The other three refurbished carriages will be one spare of each class. 

A new servicing depot will be constructed at Te Rapa, and all refurbished carriages will be serviced there.  All the carriages to be refurbished are now at Hutt Workshops, having been moved from storage in Taumarunui in 2018 and early 2019.  Work began on their refurbishment in February 2019.

The Stations

The trains will serve four stations in total, being Frankton and Rotokauri in Hamilton at the south end of the journey, Huntly along the way, and Papakura at the north end of the journey.  This is somewhat disappointing when you consider the substantial population growth taking place in Te Kauwhata, Pokeno and Tuakau, but also Ngaruawahia and Pukekohe (for alighting northbound and boarding southbound) have potential. 

Whilst the passenger service is between Hamilton and Papakura, the trains themselves will run between Hamilton and Otahuhu, where they will access the stabling sidings at Westfield during the day.  The plan is to extend the passenger service to Puhinui from 2022, once the new interchange with airport buses is completed.  It is further planned to extend the passenger service to the Strand from 2024, but only if the third main project has advanced enough to enable this by then.

Starting from the south, the first station is Hamilton (Frankton) station, and minimal work is required here as the existing station building and shelter are to be used.

At Rotokauri, a whole new station needs to be built, and this will be in the form of a central platform between the two mainlines, one of which will be slewed west to create the space necessary.  Pedestrian access will be via a level crossing with cages, although this may yet be changed to an overbridge design, if not from day 1 then at a later date as usage increases.  Such overbridges are far from cheap, as they need to be wheelchair accessible and this may in turn necessitate the need for elevators.  It may be a good idea to leave that consideration until such time as the service is considered permanent, and not a trial.  An overbridge would however be an opportunity to also provide a direct pedestrian link with the shopping mall on the eastern side of the tracks, which isn't currently planned to be linked.

The new Rotokauri station, with park 'n ride

At Huntly, the existing station which hasn't been used since the Overlander last ran is to be reopened after an upgrade that involves a new or heavily reconstructed platform, new shelter, basic chip seal park'n ride, upgraded siding and signals, and resurfaced pedestrian overbridge linking the station to the town centre over the railway lines and state highway 1.

The upgraded Huntly station and proposed park 'n ride site

The Huntly station is unusually located on a siding rather than on either of the mainlines.  It was previously a central platform between the mainlines slightly further south of its present location, but that was demolished and the tracks straightened in the late 1990s.  The new, very basic station, was then provided on the siding, and was last used by the Overlander.  This slows trains down a bit, as they need to pass through the turnouts at each end of the siding, and travel at yard speed within the siding. For northbound trains, they need to crossover the southbound track to access the siding.  It's not ideal, but I do note that the original central platform design further south could potentially be reinstated one day if usage justifies it. The straightening or widening of state highway 1 here never eventuated, and is unlikely to ever do so now that the Huntly bypass is nearing completion.

Papakura station does not require any work for the service.

Other stations were considered for the service, but ruled out, though I understand consideration is being given to extending the scope of the proposed Pukekohe electrification to include Tuakau or Pokeno.  Both locations are undergoing substantial growth but their usage has been deemed more suited to frequent services, which has oddly increased their chance of being added to the metro network but worked against them being included in the Hamilton train project.

Concept design for Tuakau station, although this is not being proceeded with at this time

The Timetable

The Hamilton-Papakura service is to operate as two morning trains from Hamilton to Westfield on weekday mornings (no passengers north of Papakura), two from Westfield to Hamilton on weekday evenings, one from Hamilton to Westfield on Saturday mornings, and one from Westfield to Hamilton on Saturday afternoons.  A Sunday service is expected to commence in year four (assuming a successful three year trial), but has been held off for now to allow for Sunday track shutdowns associated with the proposed third main project.  The indicative weekday timetable:

The Locomotives

Three DFB locomotives overhauled for the proposed trains, which I understand to be 7077, 7295 and 7335, have been allocated to the service.  The cost of these three overhauls, amounting to $8m, has been fully allocated to the establishment budget of the service.  They will be used in freight and long distance passenger service until the Hamilton train commences.  The normal plan will be to have two in service and the third held as a spare, on any given day.

The SD-to-SRV carriage conversion includes retention of the driving cab controls, and through-train locomotive control system, so it will be possible to drive the trains from either end.  If not on the long distance run, then for the positioning moves at each end of the journey.

New Zealand's newest multi-million dollar rail facility set to open

New Zealand's newest multi-million dollar rail facility, Midland Port, is set to open next week.  The rail link is primarily to move containers 30km between Lyttelton and Rolleston, specifically to get trucks off the streets of Christchurch, but will also be used to move containers to and from points south and west.

A contracted rail freight service between Rolleston and Lyttelton will offer a daily dedicated 24-wagon rail shuttle for customers.

In my opinion this would not be a viable project for KiwiRail.  But for a company like LPC, willing to add in external benefits such as traffic congestion reductions, time savings and environmental and safety benefits to the cost analysis, the numbers stack up. 

It's a great example of why the rail industry needs more and more players to drive things forward. Innovation is about thought process as much as it is technology.

Click here to view video 

The railway construction project contract was awarded by LPC to Fulton Hogan, with tamping work sub-contracted by Fulton Hogan to KiwiRail.

The new Jones Road level crossing on the new link into Midland Port (Gerald Petrie photo)

DBM Engineering's freight train

Quite neat to see a non-KiwiRail "freight train", operating under an independent licence, on the national network.  With thanks to Alex Burgess, who filmed the move.

DBM own quite a collection of locomotives and rolling stock, which until now have been based at their Otahuhu depot, but are in need of relocation due to proposed development of the depot site for a new freight forwarding depot.

With thanks to Alex Burgess, who filmed the move.

Gisborne rail service viable and essential

(reproduced from "Hawke's Bay Today", 20th October 2015 edition)


Talking Point – Rail Service Viable and Essential

By Alan Dick - 

 “The immediate challenge however is how to handle the “wall of wood” from the Wairoa forest” 

In your article “Nash talks up re-opening of rail link” (Monday, October 19), MP Craig Foss, as a determined opponent of rail, is quoted: “The evidence was that the line was hardly being used before the washout.” He added: “Businesses were choosing not to use the line and had been choosing not to for many years.” He is wrong. 

In fact, in the immediate period leading up to the washouts, three or more fully loaded trains were moving squash and other products from Gisborne to Napier Port – and demand was such that double the number of trains could have been running except that KiwiRail could not provide the required locos, wagons and drivers. 

What had happened? From 2010, all Hawke’s Bay and East Coast MP’s, with the exception of minister Foss, had been urging businesses to use rail. Correctly sensing demand, KiwiRail spent $300,000 to lower the bed of three tunnels, to finally enable full capacity 40ft high-cube containers to be carried on the line.

Brand new high-cube curtainsider wagons, for palletised traffic, in Gisborne in 2012

Then entrepreneurial Gisborne-based transport operator Steve Weatherell (running 80 trucks nationally) took the opportunity as a freight forwarder to shift his customers’ product from road to rail. 

For his customers, a smooth, damage-free ride for their sensitive product and direct movement of full containers from packhouse to portside without repacking or double handling. 

For Weatherell Transport, better service for their customers and avoiding a difficult road. For Hawke’s Bay and Gisborne, dual transport mode choice, reduced heavy traffic congestion on a difficult route, and consequently safety and environmental benefits. 

Weatherell Transport tripled tonnage on the Gisborne railway in early 2012, demonstrating how effective other operators can be at securing freight contracts for the rail network

What a tragedy when the washouts struck in March, 2012. Avoidable with proper attention to culvert and drainage maintenance, had the line remained intact KiwiRail would have now had a fully viable rail business with all the resultant environmental and economic benefits for our region. 

 

High-cube containers enroute from Napier to Gisborne, 2012

That takes us to today. 

The Gisborne container freight market potential remains and, in fact, will grow with a wood processing hub to be established. 

Gisborne Port is a specialised log exporter but is unlikely to ever attract export container ship calls. Napier is the logical container destination, being closer than Tauranga. 

The immediate challenge, however, is how to handle the “wall of wood” from the Wairoa forest harvests, which will ramp up dramatically over the next few years. Not including logs, which will continue to move by road to processors like Pan Pac, Wairoa export log harvests will move from 323,000 tonnes next year to a million tonnes and more from 2020. 

Forest managers believe that conservatively half of that volume can, and should, move by rail from a log hub at Wairoa to Napier Port. there will still be plenty of work for truckers, moving logs on short trips from the harvest sites to the log hub and carrying extra volumes direct to the port.

High-cube containers being transferred from road to rail in Gisborne. Rail is the only transport mode able to move these fully loaded from Gisborne to Napier, and without it, growth of the local economy is hampered

There is a viable business for a rail operator on the East Coast line, based initially just on Wairoa logs alone but with heritage steam tourism and Gisborne container potential. KiwiRail have at least two such proposals on their desk. 

 

New Zealand's newest shortline operator, the Gisborne City Vintage Railway, is set to commence operations between Gisborne Port and Muriwai from November 2015

And the worst case outcome? KiwiRail rejects the rail freight proposals in favour of a lease to cycle or golf cart tourism promoters.

The then consequence of State Highway 2 having to handle quadrupled log volumes will be heavy traffic congestion from a road transport industry with insufficient capacity to cope, the road being wrecked, tragic deaths and injuries from accidents, and game-changing opportunity for the economic and social development of northern Hawke’s Bay lost forever. It can’t be allowed to happen. 

High-cube containers travelling south from Gisborne by rail, 2012

* Alan Dick is a Hawke’s Bay regional councillor, former Napier mayor and is chairman of the Hawke’s Bay regional transport committee. 

(All photos courtesy Napier-Gisborne Railway Ltd)

CentreRail ramps up Castlecliff rail operation

As part of Wellington-based CentrePort's lower North Island growth strategy, a second weekday train service from Castlecliff (Wanganui) to Wellington was introduced on Monday 28th September 2015.

The first run of new train 565 on Monday 28th September. Photo by Brad Harvey

Until Friday 25th September, Castlecliff was served by train 560 from Palmerston North each weekday morning, and train 561 back to Palmerston North each weekday afternoon.

The new timetable has new service 566 arriving from Wellington in the morning, returning to Wellington in the afternoon as train 565, and a rescheduled 560 arriving from Palmerston North in the afternoon, returning as new service 567 to Wellington in the evening.  Trains 560 and 565 are scheduled to cross at East Town.

The weekend 562-569 service continues as before, operating as required.

CentrePort has made rail the backbone of its central New Zealand growth strategy, operating and trading as CentreRail, linking hubs in New Plymouth, Castlecliff, Palmerston North and Blenheim, with CentrePort in Wellington, targeting forestry and dairy products in particular.

CentreRail uses dedicated trains between Castlecliff and Wellington, but also makes use of scheduled KiwiRail services for tonnage from New Plymouth and Blenheim.