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KiwiRail grows revenue amid modal shift

KiwiRail has increased its revenue for the half year ending on 31 December 2019, despite what group chief executive Greg Miller called a “difficult environment”.

“We are pleased we have held the revenue line in a difficult environment that included an economic downturn in multiple markets, along with natural events that damaged the network. Despite these challenges, we saw our import/export business grow by 5 per cent compared to the previous half year,” said Miller.

The reported revenue for HY20 was NZ$333.6 million ($319.3m), a 3 per cent improvement for this period.

Miller highlighted that rail in New Zealand, and KiwiRail in particular, was going through changes.

“KiwiRail is in a transitional phase that will allow it to play a critical part in an integrated transport system that will deliver long term benefits for New Zealand,” he said.

New Zealand has made large funding commitments to rail infrastructure in the country, to increase rail’s share of both passenger and freight movements. In February, the government announced over $100 million in investment in Northland rail freight, this followed more than $200 million in funding for services in Wellington and Auckland.

“This is a watershed year for KiwiRail, as we start the transformation of our business. The Government has made a huge commitment to rail, and the investment that is being made in our network and in our rolling stock will position us well to meet the current and future demand of our customers,” said Miller.

Additionally, in the last year safety figures also improved, with the lowest number of collisions between vehicles and trains on record.

Work carried out in HY20 included the launch of the design for an intermodal freight hub in Palmerston North, work on double tracking the Hutt Valley Link, the arrival of 450 wagons as part of the rollingstock replacement project, and revitalisation of the Hillside workshops. KiwiRail has adopted the use of building information modelling (BIM) for horizontal construction for the first time, in the construction of the Trentham Underpass.

At the end of HY20, KiwiRail recorded a loss of $33.7m. Freight made up the bulk of the revenue, with $200.4m in revenue, while expenses included salaries and wages, materials and supplies, fuel and traction electricity, and incidents and insurance. Downturns in volumes were driven by market conditions in forestry and domestic markets, as well as flooding at Rangitata and a landslide causing a line closure at Omoto.

Hundreds of millions of dollars being invested in New Zealand’s KiwiRail network

The New Zealand Government has announced a further $109.7 million rail investment in Northland rail freight on the KiwiRail network.

This follows the injection of  $211 million to upgrade Wellington networks and services for Auckland rail.

Greg Miller, KiwiRail Group chief executive, said the Northland investment will enable hi-cube container freight to be transported by rail in the region for the first time ever.

$69.7m will be spent on lowering tracks in the 13 tunnels between Swanson and Whangarei; reopening the currently mothballed rail line north of Whangarei, between Kauri and Otiria; and building a container terminal at the Otiria rail yard, in Moerewa.

“Currently 18m tonnes of cargo is moved in and out of the region every year. Of that, around 30,000 containers leave Northland by road. Most aren’t able to fit through the tunnels, but this investment will change that – opening up a whole new market to rail,” Miller said.

“The tunnel work will have a huge impact on how freight is moved in and out of Northland.

“I’m really impressed by the ingenuity of KiwiRail’s engineering staff to be able to lower the tracks in the tunnels – which is a lot less expensive than boring bigger tunnels.”

This is the second Provincial Growth Fund (PGF) investment in Northland rail, following the $94.8m provided to make significant improvements to the Northland Line between Swanson and Whangarei, announced last year.

An additional $40m will be used by KiwiRail to purchase land along the designated rail route between Oakleigh and Northport/Marsden Point.

Miller said works in Auckland have already commenced, and will be completed in about four years.

“The third main adds an extra rail line between Westfield and Wiri in South Auckland, a section of line that is congested with freight trains going to and from Ports of Auckland and Port of Tauranga, and increasingly frequent metro commuter services. For CRL to deliver the level of commuter service Auckland needs, the 3rd main is crucial,” he said.

David Gordon, KiwiRail chief operating officer – capital projects and asset development, said work on the Wairarapa Line will start later this year, following the government’s $96m investment announced in 2018.

“$70m will be spent on improving the signalling system and track approach to Wellington Station, particularly the area north of the stadium where the Johnsonville, Hutt Valley, and Kapiti Lines all come together,” Gordan said.

A $15m investment in carriages for the Capital Connection service will allow KiwiRail to fully refurbish ex-Auckland Transport carriages including new interiors, seats, and toilets.