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Transport & Logistics

NZ Rail: Powering the economy

6 May 2015, by Informa Insights

The significance of transport as an indispensable component of economic development has long been recognised. The substantive economic cost of  transport infrastructure is a key requisite for economic growth.

In New Zealand, the critical role of transporting people and goods makes an essential contribution to the above-average standard of living largely enjoyed by the population.

According to the Energy Efficiency and Conservation Authority (EECA) – the government agency responsible for improving energy efficiency in the country – transport accounts for more than 40% of the country’s energy use and is therefore an integral part of the national economy.

In addition, many other contributory factors affecting transport systems have progressively emerged. From safety, public health and personal security to environmental sustainability, many more drivers have surfaced. There is now a recognition that existing transport systems can have serious negative effects on the environment, as well as the advantages they come with.


Thus, in transport decision making, the viability of systems in terms of their resource consumption and their impact on the environment is being examined more closely and taken into serious consideration.

Rail Development in New Zealand: Status Report

Considered the backbone of New Zealand’s integrated transport system, KiwiRail is wholly owned by the Crown, operates as a State-owned enterprise recognised as the New Zealand Railways Corporation, and trades under the name KiwiRail.

Inspired to become a world-class mover of people and freight, as well as the primary solution for their customers in the markets where they operate, the statutory corporation of KiwiRail is comprised of four basic business elements:

  • KiwiRail Passenger, which services the Wellington urban passenger services;
  • KiwiRail Freight, which provides the locomotives for passenger services and rail freight services;
  • KiwiRail Interislander, which operates freight and ferry passenger services on the Cook Strait; and
  • KiwiRail Infrastructure and Engineering, which oversees the maintenance and improvement of the general rail network and manages the overall operations of trains on the network.

The Turnaround Plan: Facts and Figures

In 2010, a $4.6-billion government investment in KiwiRail was announced to mark the beginning of the long-term Turnaround Plan, which reflected the country’s need to establish a sustainable and economically efficient rail industry. The Government-approved ten-year program was exclusively designed to increase rail traffic volume and revenue, modernise assets, increase productivity output, and isolate the commercial aspects of the business.

With their $1.8 billion investment in the network, KiwiRail has taken giant leaps toward the realisation of the plan, continuously expanding their freight operations to attract more and more businesses to avail of rail freight services. They also made large investments in improving passenger services to encourage the public to start utilising them more.

New rolling stocks, major extensions of the Aratere and extensive upgrades to the Auckland and Wellington metropolitan networks have so far been realised and completed on time and within budget. The introduction of new carriages on major lines including the Tranz Scenic meant fast, efficient, and more frequent services for their large customer base.

Other completed projects include:

  • Launched in 2011, the Auckland Rail Electrification project took more than 34,000 construction hours for the installation of around 3,500 masts and foundations that carried around 560km of overhead lines all through 175km of railway tracks.
  • Project DART (Developing Auckland’s Rail Transport Network) refers to the $600-million suite of projects exclusively designed for the advancement of Auckland’s commuter rail network in terms of capacity, reach, and reliability.
  • Completed infrastructure projects and interislander upgrades include replacing the foot of the Makatote Viaduct for the continued safe habitat of the endangered Blue Duck, renovating the Arahura Bridge, upgrading the North South Junction to allow larger freight containers and more frequent services, and the Aratere ship extension to improve passenger and freight capacity.
  • Together with the Greater Wellington Regional Council, KiwiRail completed a $550-million series of improvement programs for the Wellington railway system—upgrading power supplies, stations, signalling, tunnels, tracks, and the Wellington Station Entry—to make it better equipped in providing more reliable and efficient passenger services.

Still aimed at bettering the rail system and general reliability of the commuter services to encourage businesses and more customers to patronise the rail and freight services, more and more projects are still on the development pipeline. These improvements include upgrades to the main networks, stations, signals; refurbishments to tractions, bridges, tunnels; and the general reliability of the commuter services. It is also worth noting that work is still ongoing to strengthen major railway stations for earthquake resilience.

Population and Geography: Challenges and Barriers to Infrastructure

With a population of 4.47 million, New Zealand is geographically comprised of two major landmasses—the narrow and mountainous Te Ika-a-Māui (North Island) and Te Waipounamu (South Island)—and many other smaller islands.  Australia is about 1,500 kilometres east of New Zealand, while the Pacific island areas of Fiji, New Caledonia, and Tonga lie around 1,000 kilometres south. The country’s population and unique geographical setting have created unavoidable challenges and barriers on its rail operations and have influenced some significant decisions.

It should be noted that the country’s challenging topography was instrumental in the decision to use narrow-gauge tracks that were significantly cheaper to build in the mountainous regions. Unfortunately however, this decision brought about commercial and technological constraints on the development of the railways, which took many years to resolve.

New Zealand’s low population density (16 people/km2) also proved to be a seemingly insurmountable problem as it made it virtually unworkable to obtain the “economies of density,” imperative for successful rail services. The dilemma signified that there was insufficient population to validate the decision to operate more trains on the existing tracks. Except for the two major cities, Auckland and Wellington, commuter rail services have constantly been threatened with dissolution, due to the country’s low urban population density and its inclination to dispersed employment.

NZ Rail and the Economy: Where is it heading?

New Zealand Rail has gradually progressed from just being the carrier of people and freight in the country to becoming an institution in itself in both passenger and freight transport over the many years of its development.

Today, rail makes a substantial contribution to the country by moving bulk freight and goods over long distances, transporting urban passengers in Auckland and Wellington, and providing travel experiences for the scenic train and Cook Strait ferry customers. But the biggest contribution rail makes is the economic advantage it affords the country.

Over the course of the Turnaround Plan, New Zealand has so far reaped the following benefits:

  • The aggregation of ports to ensure that the country’s exports remain competitive. Rail has been used to transport cargoes across longer distances and to larger ports. Major importers and exporters took advantage of the service flexibility to maximise their port and shipping options.
  • The provision of alternative transport options that enable efficiency in the domestic freight market. Participants in the freight forwarder market enjoyed continuous growth, and other players have maximised their rail-served depot investments to benefit from capacity flexibility, cost savings, and the “green” credentials.
  • Resilience and flexibility in the freight transport system, as when movement of cargo continued amidst the Manawatu Gorge closure, the Port of Auckland strike, and even following the Christchurch earthquake.
  • The acquisition of economic savings with driver and fuel savings compared to road, zero road maintenance expenses, and significant reduction in unintended consequences including pollution and road accidents.

Looking ahead, the overall freight industry is estimated to grow by almost 60% in the next thirty years. With the dairy industry playing a significant role in the country’s economy, the 41% share of KiwiRail on manufactured dairy products is equally important.

In the major cities of Auckland and Wellington, the suburban rail networks carry over 23,000,000 passengers every year. Although the figure may seem modest as opposed to those who travel by car or other vehicle, its value can be implied from the fact that without it, another 18 million vehicular trips will be added to the already-congested roads.

There is no doubt that tourism is one of the country’s biggest export earners. Thanks to the travel experiences offered by the Interislander ferries and the Scenic trains, the country’s tourism infrastructure is forecast to undergo an unending series of development programs in the years ahead.

The ARA New Zealand Rail conference will investigate the current state and future directions of the rail sector in more depth. View the speakers and agenda here and book now to hear from leading speakers including:

  • The Hon Simon Bridges, Minister of Transport
  • Peter Reidy, CEO, KiwiRail
  • Bob Herbert AM, Chairman, ARA
  • Mayor Len Brown, Auckland Council
  • Philip Chalk, Director Asset Management & Maintenance, ANZ, Network Rail
  • Megan Drayton, Foundation Manager, TrackSAFE
  • Simon Wood, Associate Director, AECOM
  • Brent Efford, NZ Agent, Light Rail Transit Association
  • Anthony Eid, Operations Director, Sydney Trains
  • Noel Burton, Head Engineering NZ, Siemens Rail Automation
  • Ken Shirley, CEO, Road Transport Forum


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