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)

Gisborne railway reopening proposal: Public submissions close 12th May

Long time rail supporter Cran Julian has made the following request, for all with an interest, to show their support to the Hawke's Bay Regional Council for reinstatement of the Napier to Gisborne railway.  Please make sure your voice is heard, as we must fight to save this railway line.  It is very important that the council has public support in order to be able to proceed with its proposal.

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It would be appreciated if all those interested in saving the Napier Gisborne Railway through the establishment of a regional shortline venture with the Hawke’s Bay Regional Council as well as other investors please make sure you write submission letters of support to the Hawke’s Bay Regional Council before the deadline closure of 12 May for submissions to the Council’s Draft Annual Plan for 2014-15.

Given the Minister of Transport Gerry Brownlee’s recently stated position in Parliament and media of (to date) not planning to put any Government funding into repairing the line to a “good fit for purpose” operation condition, the Council needs to hear from people who think that the region now needs to fund the repairs as well as have the Council lease the line from KiwiRail, and have a regionally based company with private sector investors and partners operate and maintain it.

As your help is needed to support the initiative of the Napier-Gisborne Railway Establishment Group and the Hawke’s Bay Regional Council in their endeavours to re-open the line as a shortline freight operation for the benefit of Northern Hawke’s Bay/Gisborne/East Coast region and the country as a whole.

This railway line is particularly important to handle the increasing amount of container freight and other produce to/from Gisborne and the increasing wall of wood already starting to be harvested in the Wairoa-Gisborne areas. As well as this, it will also enable the return of excursion trains beyond Napier to a line which is very picturesque and offers unparalleled views ‘up their’ with best scenery in NZ.  And as we all know – the greatest tourist attraction on East Coast is in fact the Napier-Gisborne rail link itself.

There are those that do not want to see this line re-opened, notably amongst them the bike trail lobby, who are exerting pressure on KiwiRail and the Government almost daily to take over the line for a bike trail.

It is time for all rail supporters to stand up and be counted or the permanent closure of this line is a VERY REAL possibility.

A 900 metre long freight train in the Esk valley on its way from Napier to Gisborne. This one train removed at least 50 trucks from state highway 2 and local roads, making the roads safer for the public and cheaper to maintain

 

Napier Gisborne Railway – Proposal Details:

HBRC’s ongoing investment strategy is to improve financial, economic and environmental benefits for the whole region by investing in sound regional infrastructure assets. 

One potential infrastructure investment is the re-establishment of the Napier-Gisborne rail line as a viable alternative to the transport of freight by road. HBRC, in conjunction with private sector partners, is considering investing in the operation of a rail business carrying freight on the line. A critical component of any such investment will be the agreement of KiwiRail and the Government to reopen the rail line and for them to fully fund its return and that of associated infrastructure in a good ‘fit for purpose’ condition.

A proposal from the Napier Gisborne Rail Establishment Group (NGR) is summarised as follows. 

1. Establish and operate a rail freight service between Napier and Gisborne on the existing rail line once it has been returned to full operational status by the Government and KiwiRail.
2. Lease locomotives and the line from KiwiRail, purchase appropriate rolling stock from KiwiRail, or elsewhere, to operate the service.
3. Carry freight, which will largely be logs, fruit and vegetable produce.
4. Anticipate financial losses in the first three years of operation, returning to profit in year 4 and generating significant returns to shareholders as log volumes increase – anticipated in year 6, and HBRC becomes a 51% shareholder in the venture, with businesses and investors in Hawke’s Bay and Gisborne District holding the remaining 49% of shares in the operating company set up for this purpose.

The proposal claims benefits to Hawke’s Bay with social, economic, and employment gains; improved transport infrastructure with price competitiveness and efficiency over road and rail land transport modes; safety and cost benefits through reduced heavy traffic on SH2 between Gisborne and Napier; increased volumes of exports through Napier Port; and the security of an alternative transport route to road in the event of a disaster. 

The NGR Group estimates that investor funding to finance capital and operating budgets will total $10.7million, consisting of: 

• Purchase of rolling stock, plant, equipment etc $ 5.3m 
• Working capital $ 2.4m
• Disaster Contingency Reserve $ 3.0m

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       Total Investor Funds Required $10.7m

A 51% shareholding investment from HBRC would be approximately $5.46m of the Total Investor Funds required over the 2014-15 to 2018-19 financial years. An initial investment of $3.9million would be required from HBRC for the 2014-15 year.

Any investment by HBRC in the NGR would be conditional on:

• The Government and/or KiwiRail fully funding the return of the rail line and associated infrastructure to a "good fit for purpose" operating condition.
• Leases of the line and locomotives from KiwiRail on terms satisfactory to NGR.
• Suitable offtake agreements being concluded between NGR and customers for the freighting of logs and fruit and vegetable produce over the period up to and beyond 2020 to ensure the long term viability of the service.
• NGR’s business case being tested and accepted as satisfactory, and the return to HBRC over the long-term is to cover Council’s cost of funding.

HBRC investor funds would initially be sourced from investment reserves, but ultimately would require refinancing from HBRC’s borrowing programme.

We welcome your views on whether or not you consider this to be a good investment for HBRC, and also if the investment does not proceed during 2014-15 whether HBRC should advocate for the line to be kept in a well maintained condition in its mothballed state so that it could be readily re-opened in the future.

Another 900 metre freight train on the Napier to Gisborne railway

Public Submissions:

Submissions to the council by email:

draftplan@hbrc.govt.nz

Submissions to the council by post:

Draft Annual Plan Submission, Freepost 515
Hawke’s Bay Regional Council
Private Bay 6006
Napier 4142.

People from anywhere are welcome to make a submission