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Network Transformation

Watershed investment

Rail has been an integral part of the New Zealand transport system for more than 150 years, delivering goods and people around the country efficiently, safely and sustainably.

The past year has seen an unprecedented level of rail development underway, as KiwiRail sets out on the pathway back to profit following decades of neglect.

Thanks to extraordinary Government support, we are now seeing the largest rail capital projects underway since World War II. This will enable KiwiRail to translate all customer demands into services and underpin our pathway back to profit.

This is a watershed period for KiwiRail, as we swing into development mode alongside business as usual. The Government has made a huge commitment to rail, and the investment that is being made in our network and in our rolling stock is positioning us well for the future.

Currently, 92 per cent of freight in New Zealand does not travel by rail. The reason is simple. Our rail lines and our freight systems are so run down that it has taken a huge level of commitment from both the Government and from our team to start moving the company into a position where it can return to profit. The truth is there is far greater demand for our services than we are able to supply.

The way rail has been funded in the past has resulted in short term decision making. That means we have not been able to translate current demand into growth due cost cutting resulting in lack of drivers, locomotives, wagons and fully usable track. Those decisions have resulted in higher track and machinery maintenance costs, higher repair costs and higher costs from driver shortages that knock on to cause freight service limitations and increased costs from overtime, travel and accommodation.

Our strategy to return to profitability and deliver a good return to our shareholders is threefold. We aim to run more services, get the equipment we need to be able to grow capacity, and put in place the technology that will enable us to track freight, and track profit and loss centres.

Not only does moving freight by rail produce 66 percent fewer emissions than road freight and help reduce congestion by taking commuters in and out of our cities and long and short haul freight around metropolitan and regional New Zealand, it also offers road maintenance cost savings.

Government funding that will be a key enabler for KiwiRail included the Government’s funding announcement of $897 million in January that enables work to begin on building a third main Wiri to Quay Park that will ease congestion, and electrification of the network to Pukekohe so commuters have a seamless, faster ride in to Auckland. Wellington will get $211m to overhaul services and amenities on the Wellington, Wairarapa and Palmerston North network and beyond. 

This came after Budget 2019 saw the Coalition Government announce more than $1 billion in funding, including $375 million over two years towards:

  • Replacing 900 container wagons
  • Upgrading maintenance facilities
  • 100 locomotives
  • Repurposing old wagons for forestry transport

A further $331 million was announced over two years for:

  • Tracks, bridges, tunnels, signals
  • Handling equipment
  • New freight reservation, booking and tracking system

The Budget also allocated $300 million via the Provincial Growth Fund for rail projects.

 

  • This includes an overall $204.5 million to save and upgrade the Northland Line, and to purchase land along the designated route to NorthPort. The Northland Line was in danger of being shut due to deteriorating tunnels and aging bridges and track. Currently just over one per cent of Northland freight travels via rail, due to containers being unable to fit through the tunnels and speed limits imposed due to the track’s condition.
  • This part of Northland is like the Bay of Plenty’s economy 40 years ago. Connecting the Bay to rail resulted in phenomenal growth and helped create the prosperity it experiences today. Rail access has the same ability to support road freight to transform Northland, as a critical infrastructure that will unlock value in the region. Work is already underway to repair and survey tunnels ahead of work to lower their floors so larger containers can fit through.
  • Also using the Government’s $40 million Provincial Growth Fund allocation, we launched the design for Palmerston North’s new freight hub – a major step forward in New Zealand’s approach to freight logistics. A purpose-designed facility to link rail and road together like this hasn’t been seen before in New Zealand. We are creating world-class infrastructure, which will support the growth of Manawatu’s logistics industry well into the future and is projected to bring $200 million in business to the Manawatu area.
  • Using $6 million in Provincial Growth Fund allocation, we reopened the Napier to Wairoa train line and began running logging trains to Napier Port.
  • We began demolition of dilapidated and disused buildings at Dunedin’s historic Hillside workshops using $20 million in Provincial Growth Fund allocation to redevelop and rejuvenate the site. The planned improvements for the site will allow us to maintain more locomotives and wagons, as well as undertaking new types of work, such as heavy maintenance and upgrades. Demolishing the buildings also opens the way for Hillside to become a centre for engineering excellence in the South Island by attracting complementary businesses such as manufacturing, fabrication and potentially marine engineering to the site.

Existing work already underway includes the $196 million Wellington metro upgrade. We began double tracking at Trentham, the bottleneck in the region’s commuter rail service in order to speed up commuter journeys. Most of the network shut down over Christmas as about 150 KiwiRail and NZTA staff and contractors installed foundations for new masts for overhead power lines, building underpasses, upgrading level crossings and barriers, replacing rail and sleepers and improving slope stability and drainage. This work was made possible because of nearly $300 million in earlier Government funding to encourage commuter growth and reduce road congestion and wear and tear, by making the rush hour commute more reliable.

Keep reading to find out more about some of our major projects.

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Main North Line

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NAL Spotlight

Northland rail rejuvenation

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Napier - Wairoa

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Regional freight hub

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Hamilton commuter service

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Wellington Metro upgrade

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Auckland metro upgrade

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