New Zealand Rail Freight At A Crossroads

NEW ZEALAND – To an observer the arguments raging over rail versus trucks will have a familiar ring. In a country like New Zealand however problems are made more complex by the fact that there are two islands making up the state and the debate over whether individually they can make a rail freight system viable with coastal shipping coming into the equation is fierce to say the least.

The circumstances surrounding the purchase and refinancing of the rail freight system were touched on in our article in May but recently critics have said that the government owned KiwiRail’s plans are unsustainable as their detailed ten year plan hinges on over NZ$4.5 billion capital investment with non governmental ‘stakeholders’ required to put up three quarters of that.

One of the major problems is the need to repair, upgrade and improve and the fact that some lines are running under capacity. KiwiRail have threatened regional line closures where they are under used but environmentalists point out that some of the highways are not in good repair and more and heavier trucks will exacerbate the problem.

Unless more specific plans are drafted the suspicion will remain that rail freight rates will rise in an effort to finance much needed works and inefficient sectors will be abandoned, shippers always head for the best rates no matter how noble their intentions and their bottom line is the essential overriding factor in calculating supply chain options. Local press reports say that the latest Ministry of Transport statement pronounces ‘there is no easy or right answer for rail freight’. With those opinions it is to be hoped that KiwiRail find a course of action that pleases all of the people all of the time, however unlikely that is.