More cash for KiwiRail?

One of the main concerns held by interested observers of KiwiRail's Turnaround Plan has been its ability to fund the necessary capital works required of the plan. 

The Turnaround Plan - known as TAP for short - is KiwiRail's long term plan to create a business capable
of standing on its own two feet financially.  It's a ten year plan for the period 2010 to 2020, and is estimated to ultimately cost $3.1b, in the form of government cash injections and reinvestment of income from the business.

Back in 2010, the government initially stated that it would provide three grants of $250 million each over the first three years of the plan (i.e., $750 million total for 2010-2012 inclusive), after which KiwiRail would need to continue funding the task from its own income.

2013/2014 was to be the first "self funding" year, but numerous observers were skepical of whether or not KiwiRail would be in a position to go it totally alone that soon - and with just cause.  The first three cash injections were spent very quickly, on track work, new locomotives, rolling stock and track maintenance machines, new IT systems and an upgrade of the Aratere rail ferry.  Meanwhile, economic conditions and unforseen natural events resulted in income not rising as much as anticipated.

Earlier this year the government surprised many by announcing a fourth cash injection, this time of $94 million, bringing the total to $844 million.  This wasn't a surprise to KiwiRail though, as the additional funding had been sought, and was granted in response to a request for additional funding.

This begged the question, will the government provide any further funding beyond the current financial year?

Information has now come to light that negotiations for further funding have been taking place over the past few months between KiwiRail management and central government officials.  KiwiRail is seeking $203 million, broken down into two payments, of $81 million for the 2014/2015 financial year, and $122 million for the 2015/2016 financial year.  If these sums are agreed to, it will bring the total cash injection amount to $1.046 billion since 2010.

Photo by Steve McElney, courtesy KiwiRail

As to what it will be spent on, it would seem "more of the same" applies.  Beyond the current eight DL locomotives on order from CNR in China, a further ten are planned to be purchased in 2015.  Then there's yet more flat top container wagons planned, including 175 in 2015, and 200 in 2016.  No doubt the continuing network upgrade will feature in this funding as well.

Sunday trains come to Swanson

It's been a very long time coming, but Sunday 3rd November 2013 finally saw the commencement of permanently scheduled suburban passenger trains to Swanson, on Auckland's "Western Line".

To the best of my knowledge, this is the first time suburban passenger trains have operated on a regular basis to Swanson on Sundays.  There has of course been many occasions in recent years when trains have operated to Swanson and Waitakere on Sundays for special events, and during the Rugby World Cup they operated every Sunday for several consecutive weeks, but they have never been permanently scheduled.

Swanson Railway Station

The new services are being provided by a mix of ADL class DMU's, and 4-car SA sets.

In the more distant past, it has been possible to travel by train this far west on Sundays, but I'm not sure one could describe it as a proper suburban service.

In 1947, there were four trains that you could travel on from Waitakere to Auckland.

0630hrs - Passenger train ex Waitakere.
0739hrs - Passenger train ex Helensville.
1542hrs - Express train ex Whangarei.
2136hrs - Mixed train ex Whangarei.

In the opposite direction, you had three choices from Auckland:

0651hrs - Mixed train to Maungaturoto.
0915hrs - Express train to Whangarei.
1000hrs - Goods train with Carriage attached, to Whangarei.

Travel options by train may have improved in the 1950's, but certainly by the mid 1970's, there were no longer any rail travel options on Sundays west of Newmarket.

Over the past decade, since Britomart opened, there have been many improvements made to the Western Line timetable, but these have focussed on weekdays, with weekends being largely ignored. The same Saturday hourly service that existed at the time Britomart opened (in 2003) was continued right through to November 2013.  Sunday services on the Western Line commenced between Britomart and New Lynn several years ago, and these were extended to Henderson in 2010, but despite completion of the double track project, service remained non-existant to Swanson and Waitakere.

The renewed effort to extend Sunday services developed this year as Auckland Transport came under growing political pressure to reverse declining use of the trains that was being experienced region-wide.  The Western Line is very popular on Saturdays in particular, despite the hourly service, and getting more trains on the line throughout the weekend, was the most obvious opportunity for growing patronage on the network.

Video of the very first permanent Sunday service, 0622hrs Sunday 3rd November 2013

The new Sunday timetable has trains departing Swanson, for Britomart, hourly from 0620hrs to 0920hrs, then half-hourly from 0920hrs to 1920hrs (departing at 20 and 50 minutes past the hour), then back to hourly until 2120hrs.

The new timetable has also doubled the Saturday service frequency from hourly, to half-hourly, operating to the same times as the Sunday timetable, but with later evening services, and of course the trains on Saturdays operate to Waitakere.

Swanson, looking west

Interestingly, there is enough time in the Sunday schedule for the trains to operate to Waitakere and back within the period that they will remain parked at Swanson.  However, with Auckland Transport not wishing to grow rail patronage at Waitakere station, in preparation for post-electrification closure, it was decided to terminate the new Sunday services at Swanson.

Meanwhile, Auckland Transport have announced that trains will no longer operate from Helensville for the annual Santa Parade event in the city.  These trains have operated for many years now, but unfortunately, Auckland Transport chose not to promote these services in 2011 and 2012, which saw patronage almost disappear in 2012.  They are now citing this decline as their reason for cancelling these services, along with a rather dubious claim that the railway between Waitakere and Helensville is no longer available for passenger trains, despite the recent operation of several excursions on the line.

Despite the latter, Auckland Transport has done well to improve Western Line frequencies.  Already, there has been a notable increase in patronage on Saturdays, and while Sundays has not been as significant, it is growing as well.  With the advent of electric trains to Swanson from 2015, patronage is sure to skyrocket.

Aratere interview transcript

Transcript of this morning's Radio New Zealand interview with Jim Quinn, CEO KiwiRail, on the Aratere incident in Cook Strait this week:

RadioNZ: Good morning Mr Quinn.

JQ: Good morning.

RadioNZ: Why did this happen?

JQ: Well we're still ascertaining the exact details of why, but obviously, in basic terms, the propeller fell off.

RadioNZ: And clearly that wasn't supposed to happen.

JQ: That's right, the propeller is supposed to be attached to the ship.

RadioNZ: One ferry down, where does this leave KiwiRail and its customers?

JQ: Well we are undertaking an urgent assessment of options, but for now we are up the creek without a paddle.

RadioNZ: Or in the strait, without a propeller.

(laughter)

JQ: Yes, you could say that.

RadioNZ: What happened when it fell off?

JQ: It was spotted whirling away. It's a bit humourous really, I keep picturing this thing whirling away on it's own, as though it's escaping.

RadioNZ: But it's not humourous is it Mr Quinn, this is the latest serious incident in a long line of serious incidents related to this ship isn't it?

JQ: No it's not humuorous, I assure you we are taking the matter seriously.

RadioNZ: Where is the propeller now?

JQ: Well we assumed it was on the bottom of Cook Strait.

RadioNZ: Assumed?  It must have sank surely?  Do you know where exactly?  Have you marked the spot?

JQ: We know the approximate location, it's not hard to find. Just look for the flotilla of scrap metal merchants.

RadioNZ: Scrap metal merchants are out there?

JQ: Like a flock of seagulls.  They were there as fast as a tow truck driver to a car crash.

RadioNZ: But you say assumed?

JQ: That's right, we assumed it had sunk after it fell off.  But it turns out....

RadioNZ: Surely it's a given, not an assumption?

JQ: Well it turns out it didn't sink. We....

RadioNZ: Didn't sink?

JQ: That's right, it was spotted floating a few kilometres away by the crew of the Arahura later in the day.

RadioNZ: Floating?  It was floating?

JQ: I understand your surprise, we were just as surprised.

RadioNZ: How is this possible?

JQ: After consulting with the ship's builder, it turns out it's made of plastic.

RadioNZ: Plastic?!

JQ: That's right, hollow plastic.  And of course the forces exerted on it propelling a ship of this size, were just too much. It sheared right off.  But we just made it back alright.

RadioNZ: Just?

JQ: Well water was pouring in the hole.  So we had to get back to dock quick smart.

RadioNZ: Hole?  There was a hole in the ship?

JQ: Where the propeller had been.  The propeller shaft pokes through a hole, so when it fell off, the hole was open.  Ideally, ships operate best without a hole below the water line.

RadioNZ: Why was the propeller made of plastic?

JQ: According to the manufacturer it was intended to enable easy recovery in the event of it becoming detached.  But since they hadn't told us about this, we suspect it might have been done to cut costs.  Another theory we are investigating, is the possibility that the propeller was manufactured in a 3D printer. 

RadioNZ: So what next?  When will the ship be repaired?

JQ: We're not yet sure if can be repaired.

RadioNZ: Why not?

JQ: Unfortunately it appears other parts of the ship that we thought were steel are also manufactured from plastic.

RadioNZ: How much of it?

JQ: (inaudible)

RadioNZ: How much of the ship is manufactured from plastic Mr Quinn?

JQ: Quite a bit.

RadioNZ: How much Mr Quinn?

JQ: Quite a bit unfortunately.

RadioNZ: How much Mr Quinn?

JQ: All of it.

RadioNZ: That's staggering Mr Quinn.  The whole ship is manufactured from plastic?

JQ: Well not quite all of it, just the structural parts.  It has other materials too, like upholstery fabric and horsehair stuffing in the seat cushions, which is perfect for a ship, as horsehair is very water resistent.

RadioNZ: But no steel?

JQ: Not that we have been able to find, but that's not to say that there isn't some somewhere.

RadioNZ: It's just.....just.....difficult to fathom isn't it Mr Quinn?

JQ: Indeed it is, although it's also quite amazing if you think about it.  We own the world's largest model ship.  I expect I'll take a call from James May at some point, sending us his sincere congratulations.

RadioNZ: Will you be replacing the ship?

JQ: That's a big project, and one that will require government approval, so I can't comment at this stage.

RadioNZ: And if you do buy a new one, it will be made from steel, with steel propellers?

JQ: Oh yes, most likely.  That would definitely be our desired outcome from any procurement.

RadioNZ: Thank you for your time Mr Quinn.

JQ: Thank you.

RadioNZ: That was Mr Jim Quinn, CEO of KiwiRail.  It's half past nine.

Marsden Point Rail Link: Where's it at?

News about the long proposed Marsden Point Rail Link, a new branch line in Northland linking the North Auckland Line at Oakleigh with the deep water port at Marsden Point, has been scarce in recent years. Things went quiet on the subject in 2009, which was of course, the first year of the new government, and many, including myself, came to believe it had dropped off the radar.

Unfortunately that assessment is somewhat true, in that the push to have it actually built, has diminished, for the time being at least.  However, the good news is that the planning process did in fact continue.  In October 2009, Northland Regional Council issued its decision to grant the resource consent, and the Whangarei District Council issued its favourable recommendation to confirm the designation.  Shortly after, in November 2009, KiwiRail released its decision to confirm the designation.

This enabled the final round of submissions and appeals, being worked through until there were only five appeals remaining.  In June 2010 an Environment Court hearing was held, which ultimately lead to one appeal being withdrawn, another struck off, and three going into a settlement process.

In April 2012, the Environment Court issued consent to KiwiRail for the Oakleigh to Marsden Point rail link.

Now, in 2013, there is a continuous and fully designated rail corridor from Oakleigh to Marsden Point, and all of the land is now owned by the council for the purpose of building the railway.

While it's true the first sod has not been turned, it is heartening to know that a new rail corridor was successfully established, and it means that if a decision is ever made to proceed with construction, it could begin almost immediately.

But what chance is there currently, of the line actually being built?  Northland Port Corporation reiterated their plans for a container terminal on 23rd October 2013, and the rail link is part of the plan.  Certainly they want the link.  But they are hamstrung to a degree, by their conflicting ownership.

Issues working against the project appear to be:

• The port owners include Ports of Auckland and Port of Tauranga, both of whom have established operations already.
• Lack of any priority by KiwiRail, who are occupied with getting their existing network up to scratch.
• Potential inability of the North Auckland Line to be competitive with the NIMT and ECMT route between Auckland and Tauranga.  It can be upgraded, but will still require substantially lower load schedules due to the gradients, resulting in higher freight rates than can be offered on the Tauranga route.

However, there may be a case for the line being worthwhile, even if the movement of containers to and from Auckland is a minimal contribution overall.  Logs from throughout Northland are moved to the port in large quantities, that, if railed from transfer sites could require three trains a day from Otiria, two from Dargaville, and one from Wellsford.  Then there is large quantities of coal from the port to Portland, woodchips from Portland to the port, and fertiliser from the port to Whangarei.

A private siding into the Carter Holt Harvey Laminated Veneer mill at Marsden Point could also potentially provide sizeable tonnages.

Lastly, there is a need to replace the 170km long Marsden Point to Auckland oil pipeline within the next decade.  This pipeline carries 2.2 million tonnes of petroleum products per year.  Unlike the original pipeline, built 30 years ago, the new one will be constructed in an era of significantly stricter environmental guidelines, and is likely to cost approximately $200m.  Could there be a case for moving the oil by rail instead?  If not, could there at least be a case for moving oil by rail for North Island distribution beyond Auckland, instead of coastal shipping with its greater environmental risks?

The potential for a very busy railway is there.  But the port needs to do better in formulating a business case that will get the attention of KiwiRail and the government alike.

To quote North Port chairman Sir John Goulter from Northland Port Corporation's annual general meeting last month "We have some exciting plans long term. There is a long-term plan that does include containerisation......and possibly we have not taken this out to the general public as much as we should have. Maybe we should be down there and better explain what we can do......Maybe we have been too passive in that regard".

I hope this line gets built.  It could not only gain existing tonnage, but its construction would also lead to much more business being established at Marsden Point.  For KiwiRail, it could eventually be the next Mount Maunganui.