I and I’m sure many others were surprised the other day to see such a good opinion piece on why we should invest in rail from Richard Prebble – especially given his history with rail. It was in response to the news last week that Treasury recommended closing the rail network down the freight network. He highlights well a few new points in the debate.

1. There is a significant difference between theory and reality when it comes to the ability to build new roads

The cost is huge. The OECD says the annual cost of traffic congestion in Auckland is $1.25 billion. An incomprehensible figure but most Aucklanders can put the cost into personal terms. The cost to me is that today to be sure of getting to a meeting on time I have to drive up to Auckland the night before.

What will happen to our roads if the freight that now goes by rail has to travel by road? The treasury says that is not a problem. Road freight pays Road User Charges that meets the full cost of roads. If road freight volumes increase then treasury says that will automatically fund new roads.

While the math is correct the answer is wrong.

It is not a question of money. Road funding is allocated on a cost benefit/ratio. But it has proved impossible to get planning approval for new motorways in the cities. Even if we reform the Resource Management Act, something that needs to be done, it will still not enable new motorways. The public is opposed to new inner city motorways.

He’s not quite right when he says that road funding is allocated on a cost benefit ratio as we know the RoNS have sucked a lot of money away from higher value projects. He’s also not quite correct on the cost of congestion and nor was the OECD, the report they pulled the figure from specifically highlighted the issues with the methodology that produced that result and notes a more realistic figure is ~$250 million. However none of this distracts from the point that it’s (rightfully) almost impossible to build new motorways in the city.

2. The rail network has spare capacity (outside of Auckland)

We need new thinking. Let us think of the motorways as corridors. If we cannot get new road corridors into our cities is there any other corridor? Yes, the rail. Is it possible to increase our use of the rail corridor? Yes.

The only transport corridor that has spare capacity is the railway. Warren Buffett has explained his huge investment in railroads, in just these terms. Railroads he says have the only corridors with spare capacity. The railway network goes where the freight needs to travel.

Looked at this way, Kiwi Rail, is not “unsustainable” but a national asset. Kiwi Rail owns corridors to all our ports and connects all our cities and most towns. We set up systems and then they blind us to the obvious.

NZ Rail Network

3. That we need a more holistic approach to transport rather than marginalising rail because of some arbitrary way it’s been set up.

The State Owned Enterprise Act that requires Kiwi Rail to be a profitable enterprise and the Road User Charges that makes our roads user pay has resulted in officials thinking in boxes. As one of the architects of the present system I think I am allowed to say it is not perfect. To solve road congestion we need a more holistic approach.

If there is no other way to reduce traffic congestion why not spend a fraction of the road taxes on rail?

He also adds that spending money on rail doesn’t mean we allow Kiwirail to waste it on things that aren’t needed – something Treasury noted wasn’t happening.

I am sure the Government is right to ask Kiwi Rail to make savings. As owners we are entitled to ask the management and staff to be making continuous productivity improvements. But it is unrealistic to expect Kiwi Rail to make a profit and pay for the full cost of the track.

4. He comes up with one of the same solutions we’ve suggested, allowing the NZTA to fund rail infrastructure. It’s an idea that seems to be gaining growing agreement from a wide cross section of political and economic viewpoints.

Parliament needs to give the NZ Transport Agency the responsibility for also funding the rail network. As we know the cost of congestion the agency can calculate a cost/benefit ratio for funding the rail track to reduce congestion. It has to be at least $100 million a year.

Today rail has the capacity to carry twice as much freight. We motorists would notice the difference. With more investment Kiwi Rail could speed up delivery times and attract even more freight from the road.

5. Lastly and perhaps most interestingly is that he says all of this as a director of the trucking company Mainfreight.

I need to declare my interest. I am a Mainfreight director and shareholder. Mainfreight has reduced the number of trucks we put on the road by making more use of rail.

Right now Auckland needs a third freight track into the city. Mayor Brown’s rapid urban passenger trains run on the same track as Kiwi Rail’s freight trains. Unless a third freight line is built then at peak times freight will be forced off rail onto to trucks. We will have spent billions of dollars to take cars off the road only to have them replaced by more trucks. It makes sense to use Road User Charges to fund the third freight line to keep rail freight off the road.

A single train can easily carry the equivalent of 50+ trucks worth of freight. The amount of capital companies like Mainfreight would need tied up in trucks to handle that plus the operational cost of the fuel and all of the drivers needed must be significant. He also makes good points about the third main between Otahuhu and Papakura which compared to most motorway projects is actually quite cheap.

Overall a very good and useful piece from Prebble.

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39 comments

  1. I agree. A shame the Herald doesn’t see fit to publish this and articles like it in the print edition. It’s almost as if they want the print edition to decline in circulation.

    1. Prebble is a legend. He was one of the architects of using the State Owned Enterprise model. He has said it was because the only parts of government that made money were the Shipping Corporation and Air New Zealand so they figured they would extend that model. He has since said he was misled because both the Shipping Corporation and Air NZ hid massive balloon payments (for ships and aircraft) by not including them as liabilities on their balance sheets. In effect their assets had not been paid for. So they rolled out the SOE concept based on a mistaken idea of the position of those two entities. Most politicians would keep quiet about that but Prebble has the balls and integrity to tell people what he knew and didnt know regardless of what others think.

      1. So he based the SOE model on wrong data which he did not pick up on. Ergo, he was/is incompetent. He failed to do basic due diligence.
        Of course the truth is he had an ideology to pursue and facts were just an inconvenience that had to be ignored.

  2. I agree with most of his comments, except that we need a third rail line. Not needed. Utilise the lines at night to run freight, all the freight you want. Last year when i was in Europe, taking a night train through Germany, which has more industry than NZ ever will, our night (passenger) train pulled over near Wolfsburg and parked up for an hour or two. I was then treated to an almost non-stop display of freight trains going past. Hundreds of wagons of chemicals, steel, and interestingly, masses of wooden logs (probably coming from Austria? which has great forestry industry). Most of all, train after train full of double-decker loads of new Volkswagens of all kinds, being whisked off to other countries and showrooms around Europe. Thousands and thousands of the buggers. Presumably from one shift at VW Wolfsburg. By daytime, the freight was over, and the tracks went back to being 100% passenger. Two tracks everywhere, except at stations where there was an overtaking / express track lane. Seemed to work fine. Oh – and electrical everywhere too. From memory, no sound of diesel.

    1. In just the same way that passengers enjoy frequency and choice, so to do those using freight.

      It also provides the ability to start discussing express trains for passenger services within the Auckland urban rail system.

    2. Third main is barely 40mil. cf 4 billion for Western Ring Route. Not sure you’re aiming at the right target. The additional capacity and efficiency of that easy addition in contrast to the cost is very high.

    3. So if a train can’t leave the Auckland freight sheds until say 7pm, when do you think the goods on board will be delivered in Wellington? What time ferry will they be on?

      1. a 7pm train leaving Auckland would arrive before 7am in Wellington (12 hours). If the line was completely electrified (Papakura to Hamilton, Palmerston North – Waikanae. 221km is needed) then with a few other minor improvements you could get that trip about 2 hours shorter so approx 10 hours. Trucks take around 9 hours (in light traffic, closer to 10 hours normally).

        1. So the first train of the evening arrives at the start of the Wgtn morning peak. And every other train is even more impacted.
          And of course there would be issues at various other parts of the freight network too.

        2. A few issues:
          1) There is not a unified electrification system across the North Island. Auckland and NIMT both use 25kVA AC but there’s something about their earthing (I think it’s earthing) that means trains are not assured of working on both sides of any join, and because they’re not the same the two cannot be connected. Wellington uses 5kVA DC, which is incompatible by any measure with the NIMT electrification. Yes, dual-power trains are available, but no, we have not purchased them.
          2) As passenger services extend frequency and availability later and later into the night (and earlier and earlier into the morning), the window for departure/arrival shrinks to become nearly unusable. As it is your proposal would mean that a freight train might be trapped south of Auckland for an entire working day if there’s a hold-up on its path up, and that would apply to all trains following; where do you propose these many kilometres of locomotive and carriage be stabled, and the drivers rested?
          3) That penalty of a whole day if the arrival window is reached will put most businesses off sending anything vaguely important by rail. Perishable goods will be right out, as would be anything that’s intended to be timed to the departure of a ship from Auckland. Your proposal, as evidenced by the European experience, is effectively an advertisement for road over rail.

          1. There are locomotives that can operate on 4 different electrical power supply systems on the same trip (e.g., the Siemens ES64F4: http://www.mobility.siemens.com/mobility/global/sitecollectiondocuments/en/rail-solutions/locomotives/reference-list-en.pdf – see page 15).

            We keep hearing on the radio that the Wellington trains’ electrical system keeps breaking down. Would it be cheaper to replace this 75-year-old system with the same system as the (electrified) NIMT (and electrify the remainder of the NIMT to Papakura, and the third main from Papakura to the Ports of Auckland), or just buy some suitable multi-system locomotives?

          2. Gah! Just wrote a detailed reply to those points and it disappeared on me! CBF writting it all out again but basically new electric locos can run on all 3 networks (the old ones need replacing anyway). Auckland will get a 3rd line meaning freight can operate alongside passenger services. A few other network improvements (including full electrification of the NIMT) will reduce the transit time down to about 10 hours meaning a train leaving AKL at 7pm will arrive in WLG at 5am. A daytime service would also be possible (depart WLG at 11am arrive AKL 9pm).

          3. Minor technical point – Akl & the NIMT are 25kV (not KvA – that’s a measure of AC power rather than voltage) AC, and Wellington 1.5kV (not 5kVA) DC.

            And a 4th issue: the three NIMT electrifications are each used exclusively by one of three different organisations, none of which has any interest in linking with the other two, with the suburban passenger operations at each end separated by an exclusively freight one in the middle (not to mention quite a few km of unelectrified line) .

            No synergy, I’m afraid.

          4. I’m just not convinced that a freight train can’t run with passenger trains. Sure, the 3rd main is a great thing, and should be done, but even if the suburban service moves to a 10 min frequency, I can’t see that it would ruin timetabling, especially with the ERTMS/automatic signalling system. If the next service is say 5 min late, it will not be the end of the world – we know this since we seem to work with the current frequency of service!

          5. Except it’s not a ten minute frequency. The problem is the lines overlap and have a five minute frequency.

    4. Yes but because of that, Europe actually has a low use of rail for freight compared to the United States. All the capacity is used for passengers whereas in the US there are so few passenger services that there is heaps of capacity for freight.
      http://business.time.com/2012/07/09/us-freight-railroads/
      http://www.thetransportpolitic.com/2011/06/29/freight-as-passenger-rails-worst-enemy-or-something-else/

      “[In Europe] rail accounts for less than ten percent of freight ton-miles, compared to 38 percent in the U.S., according to a 2005 Harvard study by Jose Manuel Vassallo and Mark Fagan. Since 1995, the rail share for freight in Europe has declined from 20 to 17% while it has increased from 33 to 38% in the U.S.”

      Though as you can see from that article, the numbers are a little misleading as the United States just consumes a lot more per capita and so moves a lot more stuff.

      NZ of course has the worst of both worlds where we don’t use the rail for passengers or freight as much as we should.

    5. There is probably spare capacity for freight in the middle of the day between the morning and evening peak, however if the cost of the 3rd rail is only 40 million then it is probably worth considering. At least protect the route so that it an be built when we have a much greater demand for both passenger and freight services.

      1. If there is a train every10 min on all lines then there is going to be major issues getting freight trains across the junctions out of westfield yard with so many conflicting movements.

      2. When riding the Southern Line work on the Third Main is clearly visible, the route is already there, the bridge spans and masts already accomodate it. All except for Middlemore Station which looks like the only even somewhat expensive point.

        Just needs doing, the track into MetroPort is being doubled right now, and IIRC 15m a year for 3 years is set aside for all this. Not sure on the source if that funding however.

        1. Hi Patrick, are you referring to the work that is being done north of Middlemore now? They seem to be preparing to lay a third track from Middlemore station to Otahuhu railyards. Is Middlemore station really a problem (i.e. is it actually necessary to have three tracks at middlemore or could we live with the fact that the line at this point will reduce down to two tracks and then widen to three and sometimes trains will need to stop at signals (hopefully the freight trains during the day)?

          I know that north of Homai to Otahuhu there have been provision made for a third track but two things I am not sure about south of that;
          1) How will they deal with Manurewa and Homai stations as road over bridges will need to be rebuilt to accommodate a third rail (and Manurewa station will need to be -rebuilt – not a bad thing but it might be expensive).
          2) how much provision has been made for a third rail south of Manurewa (i.e. to Papakura)? I have not travelled on this part of the line for a long time so I do not know.

          1. Yes I do, and Middlemore is much more of an issue than Papakura because it has twice the number of passenger trains being north of the Manukau spur. Do Middlemore now.

            As an aside, why do so many writers here put so much effort in to trying to imagine ways to not invest in rail infra, especially tiny adjustments like this, but seem to just wave by billions and billions on roads!

          2. It is always possible to do Middlemore ‘on the cheap’ and retain just the two tracks through this section, but in reality, over time this section of track will become just another bottleneck with all the down-stream opex costs and inefficiencies as the consequence.

            Our network will at yet another point, be just a little slower and more costly to operate day to day than it should. Collectively, large numbers of these sorts of inefficiencies (and that also includes recent rolling stock that is not international best practise) all add up to a significant sum that damages rail’s economic viability. Would we subject our truck network to these sorts of inefficiencies?

          3. +1. Many solutions often keep bottlenecks or just shift them further along, leading to more bottlenecks. Take the chance to have a bottle-opener!

  3. Conan – well I wish that they would close the roads to trucks in Germany during the day – but no, if you have ever driven on an autobahn there – an exhilarating and frankly at times rather scary experience – masses and masses of very large trucks going very fast in one lane, and then all the cars going very much faster in the other lane. I was driving my girlfriend’s very aged Renault 19 with a top speed of about 90, and this was not appreciated by the Porsche, BMW and Mercedes drivers who preferred to cruise at around 180… so i had to stay in the truck only lane – which was really scary there too! The truck drivers took offence at my Dutch numberplate and so inched up to fill my rear view mirror – tailgating to ridiculous dimensions. So now i take the train. Much better.
    But yes, if you think we have a lot of trucks – absolutely nothing like the Germans. So many trucks. So many foreign drivers. All the goods from England going to places like Turkey – all pass through Germany. Hideous amounts of trucking. Best advert for enforcing rail freight I’ve ever seen.

    1. Was in Germany of April / May, Yes 90km/h max speed is abit slow for the Autobahn and Yes lots and lots of trucks on Autobahns, truck speed limit is 80km/h even though most where travelling at 90km/h. What I don’t recall is any trucks travelling faster than 95km/h+ like we see in NZ.
      Driving in the evening is much easier, and at weekends there is ban most truck movements.

      “On some routes in Germany there are also Night Time driving restrictions, which are indicated by road signs and generally include a ban on all vehicles 7.5 tonnes and over”
      “There are movement restrictions for all commercial vehicles of 7.5 tonnes and over and also for commercial vehicles of 3.5 tonnes that are pulling trailers on Sundays and Public Holidays from 00:00 to 22:00. These restrictions are applicable to the entire road network”

  4. Maintenance costs are paid from taxes and rates. I pay both. I travel by both rail and road. I want my taxes and rates to be used for the upkeep of both modes of transport, not just roads.

  5. Mainfreight have been championing rail freight for some time now (because their use of it increases profitability) and they see a third “freight” line into Auckland as way of bypassing urban congestion. I don’t imagine for a moment that they hold out any hope for a significant PT spend making any real difference to that in the forseeable future.

  6. Mainfreight have not only been championing rail for sometime, but have been spending $millions of their own money building new freight depots with rail sidings. Talk is cheap, but investments like those Mainfreight have been making are a commitment for 50+ years

  7. I just had a look over Mainfreight’s 2015 annual report. Nothing on mode share to gauge rail’s contribution to performance in NZ operations but was interested in the Chairman, Bruce Plested’s report. About 1/3 of the one page report is dedicated to the importance of rail for shifting freight in New Zealand. Quite a well-performing company.

    Even more interesting was the mention that Simon Bridges is the 54 member country’s International Transport Forum’s president this year. They put out the statement that “We recognise the potential of rail as a cost-effective, reliable, and environmentally friendly mode of transport for trade and tourism”.

    Hey member countries, your president wants to shut down rail in his country. Maybe you should discuss with him.
    Must be uncomfortable for him at those meetings.

    1. It’s Treasury that wants to shut rail down, not Bridges. He at least seems OK to let it hang by a lifeline for another couple of years.

      But how much better if we had a Minister of Transport who recognised the value of rail as a strategic asset of national significance and was prepared to fund it like one.

      Also a Minister of Transport who recognised that committing a vast amount of future generations’ money to a few poor-business-case motorways is not a wise policy, and who has the balls to abandon this policy now before the mistake compounds any further.

  8. NZTA should fund rail network and charge a rail user charge basis on usage thus bring rail into a similar model that the three other transport modes (air sea and road) pay for their infrastructure. The rail corridors have had very little improvement (apart from electrification) since they were built.

    1. This is a good idea. Trucks pay the same for using the motorway as for using a suburban or country road, so why should rail km be charged any differently? Our rail network has been upgraded in ways we do not see, such as replacing rails with a heavier grade. The rail network suffers form being built the cheapest that was possible, hence 3’6″ gauge with light weight rails and tight bends and small tunnels. While rails can be upgraded and tunnels daylighted it is difficult to change the curve radius.

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