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CHINA CNR CORPORATION PREFERRED TENDERER FOR SUPPLY OF 300 WAGONS

14 December 2010

CHINA CNR CORPORATION PREFERRED TENDERER FOR SUPPLY OF 300 WAGONS China CNR Corporation (CNR) is KiwiRail's preferred supplier of 300 CFT (container flat deck wagons) needed urgently to bolster its ageing wagon fleet, KiwiRail Chief Executive Jim Quinn confirmed today.

Media statement

For immediate release

14 December, 2010

CHINA CNR CORPORATION PREFERRED TENDERER FOR SUPPLY OF 300 WAGONS

China CNR Corporation (CNR) is KiwiRail's preferred supplier of 300 CFT (container flat deck wagons) needed urgently to bolster its ageing wagon fleet, KiwiRail Chief Executive Jim Quinn confirmed today.

The 300 wagons are expected to cost approximately $29 million and be delivered by mid 2011. The order is the first stage of a process to replace more than 3,000 wagons over a 10 year period.

"The average age of container flat wagons in our fleet is almost 30 years," said Mr Quinn. "Their age and condition is compromising our ability to meet the growing needs of our customers.

"The new wagons will enable us to respond to the market growth we are experiencing and retire those that are most prone to mechanical problems."

Mr Quinn said KiwiRail had considered nine bids to build the wagons, including one from its own Hillside Workshops.

"The bids were evaluated on a range of financial and non-financial considerations. Hillside emerged as the third best bid but unfortunately not close enough to the CNR bid to justify a local build."

Mr Quinn said the Hillside Workshops bid was approximately 25 percent more expensive than the CNR tender. Evaluators also considered Hillside would not be able to create the capability required to produce the wagons meet the delivery time needed by the market.

"The decision reflects our need to get the best possible value for the limited money we have to rebuild our business and to apply that money to the projects that will improve our relevance to our customers."

However, he said the tender process had raised the possibility of Hillside being able to import components and assemble wagons for KiwlRail's future needs. Work will begin early in 2011 on examining options for local assembly of wagons in the future. However, again this will need to close the gap significantly if is to be an option we will pursue.

"We have also reviewed our costs to build locomotives against a re-checked price from CNR our current supplier for the DL Locomotives. That review has shown that our workshops would be around 70 percent more expensive supplying locomotives.

"We will not be pursuing local build or assembly for future locomotive orders as this shows that the gap is simply too great to close."

Mr Quinn said improving the quality of rolling stock is essential for KiwiRail to improve service for its freight customers and deliver on the KiwiRail Turnaround Plan commitment to double freight revenue in ten years.

 

"This is a huge challenge, but I believe with the combination of the new rolling stock, network improvements, new technology and a greater focus on customer service we will get there."

 

He said CNR is a proven supplier to the rail industry in New Zealand. The company built 100 IM wagons which went into service in late 2008. Its Dalian plant has been building KiwiRail's 20 new diesel electric locomotives.

END

Issued by KiwiRail

Media contact: Kevin Ramshaw, General Manager Public Affairs, 0274 507 420 or 04 498 3231