Greg Miller, KiwiRail Group chief executive said there is far greater demand for rail services than the group is able to supply.
In his address to the Transport and Infrastructure Select Committee on the Land Transport (Rail) Legislation Bill on February 20, Miller explained why 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,” he said to the committee.
The NZ Ministry of Transport stated that the objective of the Land Transport (Rail) Legislation Bill is to implement a new planning and funding framework for the heavy rail track network owned by KiwiRail.
Miller said the draft New Zealand Rail Plan plays an important role in KiwiRail’s turnaround plan.
“The draft NZ Rail Plan lays out a pathway for sustainable planning and funding that will allow rail to play the important role it should in the country’s transport system,” Miller said.
Miller said the group has failed to meet demand into growth due to historic short term decisions that have seen cost cutting resulting in lack of drivers, locomotives, wagons and fully usable track.
“We have had no capacity for market reclamation,” he said.
Miller said to the committee that KiwiRail’s 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, profit, and loss centres.
Miller also addressed road sector concerns, telling the committee the draft New Zealand Rail Plan is a way to return rail to complement road.
“Freight moved by rail results in 66 per cent lower carbon emissions than freight moved by road. Rail freight is not just efficient long distance. Every one of our customers has a lens on the environmental impact and incorporates these benefits into every rail decision made,” he said.
“With increasing freight volumes, growing road congestion and maintenance costs and the need to meet emission reduction targets, rail is a critical part of our transport system.”
This follows Greater Wellington Regional Council’s Transport Committee agreement to reduce transport-generated regional carbon emissions and invest more funding for regional rail on February 20.
Roger Blakeley, transport committee chair said the committee agreed to strategic priorities for the 2019-22 triennium.
One of the key performance measures for these targets is the contribution to a 30 per cent reduction in regional transport-generated carbon emissions by 2030.
“Contributing to the regional target of a 40 per cent increase in regional mode share from public transport and active modes, [rail] will be the major contributor to a reduction in carbon emissions,” Blakeley said.
On Tuesday KiwiRail welcomed the NZ government decision to use the Provincial Growth Fund to invest $9.6 million in the Kawerau Container Terminal (KCT).
Miller said KiwiRail’s role will be to build the new rail siding and to run week-day train services beginning in 2021 between Kawerau and Port of Tauranga.
“The siding opens the way for containerised exports to travel directly to Port Tauranga from Kawerau,” he said.
“Export containers from Norske Skog, Sequal Lumber, and Waiu Dairy will underpin the new train service as well as creating capacity for other exporters in the region.
“This is part of road and rail working together in a much more integrated way, improving efficiency and saving costs.”
The project is expected to take about 18 months to complete.