During the budget last month it was announced $1 billion of investment in Kiwirail over two years.

This includes $375 million for new wagons and locomotives, $331 million to invest in track and other supporting infrastructure and $35 million to begin the process of replacing current ferries that are nearing the end of their lives. This funding package includes $300 million from the Provincial Growth Fund allocated for investment in regional rail initiatives.

Yesterday the government announced more details of exactly what this will mean and includes a significant amount of new rolling stock.

“We’re addressing the last three decades of under-investment in our rail system, and enabling growth that will ensure rail is sustainable.

“Part of the funding package will go towards replacing the tired and worn-out 50 year old locomotives in the South Island. We’ve kick-started the replacement process for more than 100 locomotives. New locomotives mean more reliable services and less maintenance costs.

“In addition, 900 flat-top container wagons will be replaced with new, larger ones in our busiest corridors, giving KiwiRail a more competitive freight service,” Winston Peters said.

To put those numbers in perspective, Kiwirail says they currently have 258 locomotives, although based on wikipedia, over 80 of those are only for shunting. This means these 100 new locos represent a replacement of more than half of the fleet. Kiwirail also say they 4,605 wagons so 900 new ones represent a significant chunk. There is further detail below

$375m: over two years towards replacing rolling stock that is at the end of its useable life and to upgrade maintenance facilities which are no longer fit for purpose.

This will include:

Final payment on 15 new locomotives for the North Island (arrived in NZ in October 2018).

  • These locomotives are progressively being phased into use and 14 out of the 15 are now operating. These new locos are more reliable and greater numbers of locos allow KiwiRail to improve the fleet’s reliability.

Starting to replace KiwiRail’s oldest 48 long-haul locomotives, predominantly in the South Island, 52 short-haul locomotives across the country, and a small number of electric short-haul locomotives.

  • Over time these will be replaced with approximately 50 long-haul and 50 short-haul locos, and new electric short-haul locos.
  • The South Island locos are up to 50 years old. Replacing them with new locos, means more reliability and lower maintenance costs.
  • For the locomotives, the specification and market engagement is estimated to take around 12 months, with a further two years for manufacturing, delivery and commissioning of the locomotives once the order is placed.
  • The first locos are expected to arrive in New Zealand in 2022-23.

Replacing 900 flat-top container wagons. These will be used in the busiest corridors, allowing the worst of the 900 existing wagons to be retired with a small portion of those being re-purposed to carry logs.

  • The busiest rail corridors these new wagons will be used on are Auckland-Tauranga, Auckland- Christchurch, and all lines serving ports (Napier, New Plymouth, Wellington, Timaru, Port Chalmers, Bluff – in addition to Auckland, Tauranga and Lyttelton).
  • The benefit is in replacing existing wagons that could potentially fail in service. The new wagons will generally be larger and able to carry more than the existing wagons.
  • Re-purposed wagons would be used for forestry, predominantly in the North Island where harvests are expected to increase.
  • For the container wagons, KiwiRail expects to select a supplier and place an order in late 2019. Delivery of new wagons from late 2020.

There is more detail on some of the other spending detailed here.

But one thing I was disappointed not to see was any information what is one of the most critical rail projects in the country, the third main between Westfield and Wiri. The rail network through this section is at capacity and is one of the key things preventing better off-peak frequencies for passenger trains as well as impacting on the ability to run freight trains. The list below is some of the key outcomes from delivering this.

In saying all of this, I wasn’t expecting to the government to announce anything. Since some rail funding was included in the Government Policy Statement for the first time the responsibility for approving the project sits with the NZTA and they have reportedly been dragging it through business case hell along with another key project, electrification to Pukekohe. For their part, Kiwrail say they expect to get approval for and to start work on the project (as well as improvements around Quay Park) in Q1 next year.

Interestingly this post is very similar to one I wrote exactly 2 years ago in which it was revealed Kiwirail would use more funding from that budget on among other things, new locomotives and wagons. Back then I was also frustrated at the lack of progress on the third main. Although it seems one thing that has changes is the position of Simon Bridges. Back then as Minister of Transport he was reported as saying

“KiwiRail has achieved significant productivity and efficiency improvements over the past two years, despite the challenges of the November 2016 earthquake and the Midland Line fire,” Mr Bridges says.

While yesterday he said:

“In transport, I see a rail announcement today – that’s a bottomless pit. It’s not really achieving anything,”

So they’ve been improving or they haven’t, which one is it?

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68 comments

  1. When they say short haul locomotives, I’m pretty sure that means shunting locomotives, so it’s more like a third of the fleet being replaced or added to, rather than half.

    1. Kiwirail has said in the past they’re planning to (and have already started withdrawing) the DC class (originally built as DA from 1955-1957) and DSC class (built 1959-1967). That’s a total of 50 – pretty close to the short-haul locomotive number.

      The other shunting classes (DH of 1978, DSG of 1981-83, DSJ of 84-85) are a fair bit newer, as is the DF class (1979-81) so presumably they’re being kept for a little while longer.

  2. I wonder if the only reason they decided to invest so much in rails is because NZ First have always pushed hard for rail investment.

    Bridges is simply saying spending money on rail can be a bottomless pit. What is the money actually going to achieve other than replace some old stuff. All I read is that you might get some minor improvements to service, but otherwise it’s just new stuff doing the same thing., It’s just another subsidy to rail.

    I’m not saying it’s not needed. I think it is, but Bridges has a fair point too in terms of what the money is really going to achieve. Rail can’t compete well with a heavily subsidised road freight industry, so why waste your time with that. Replacing some old equipment won’t make rail competitive in a rigged market. If Kiwirail were actually making a profit it would be able to replace it’s own stuff instead of getting a government handout.

    More handouts is not a solution. It’s just dealing with the symptoms. Get rid of all subsidies and let the best mode win in its own niche.

    1. New locomotives and higher capacity wagons will improve efficiencies and reduce costs. But if they want to significantly improve the bottom line the railway will need to carry more freight. That means there will be more places where the freight can enter or exit the network i.e. more sidings and road rail transfer terminals such as inland ports. Some of these are in the pipe line but more will be needed.

    2. I agree, the market is rigged. Trucking companies do not pay their cost when it comes to using the roads, polluting the environment, endangering the public etc.

      But since we can’t easily fix those, we just have to subsidise the rail a bit to make the field a bit more even.

    3. Kiwirail do make a profit on their freight and passenger business.
      However, they make a loss overall because of depreciation and renewals of the rail network that they are supposed to fund out of operations.

      It’s not a clear comparison with road freight because the highway network is publicly built, owned and maintained from the public purse as a public good… and all indications are that road freight’s contributions to that purse are only a fraction of the costs.

      By all means, let’s try removing all subsidies and go fully user pays on both road and rail… my guess is the outcome would be spectacularly different from what we see today.

    4. Letting the market win by getting rid of all the subsidies is a bit utopian. It’ll take too long to get agreement, if that’s even possible.

      We’d need to charge for carbon at about $170/tonne, charge for known future maintenance needs in a future of unknown resource availability, charge for the urban form consequences, charge for the health implications, charge for the public health bill due to injuries, charge for the land use, charge for use of key limited minerals, charge for the limitations that certain modes are imposing on some demographics, charge for the induced stuff – not just traffic but expenditure on stuff and cars. Something in that list will have got up someone’s back, but it’s all valid in the equation.

      The market is a great tool when it is useful. I think in this case, the more costs imposed on other that get priced onto the users, great. But we’ll never get there completely, so direct investment into the modes that are more sustainable is required. Calling maintaining rail a “handout” when the roads maintenance budget is so massive is simply an emotive rallying call to the roads lobby.

    5. Subsidies are not necessarily wrong. Sometimes treating every industry as an isolated market is wrong. Transport has always been an area that governments subsidise as it can have so many positive externalities and because it is so difficult or impossible for firms to do it themselves. If you make and export lawnmowers you can’t build your own road or rail and your own port. But you are correct in saying road freight is heavily subsidised. That is also not always a bad thing if you want jobs and industry. The balance is in tipping enough into rail so it can deal with bulk goods, long distance goods and passengers and leaving the rest to roads.

      Where we have gone wrong in the past is treating depreciation as a tax advantage rather than a real cost. We end up with capital items that are worn out and useless and no provision for there replacement. Worse we have had major assets left off the balance sheet altogether as the shipping corporation and Air NZ did in the early 80’s. Richard Prebble even says he pushed for the State Owned Enterprise model because those two organisations were the only successful parts of Government only for him to find out later the ships and aircraft needed to be paid for later but were not included on their balance sheets! So they were actually in worse shape than the other enterprises.

      1. “But you are correct in saying road freight is heavily subsidised. That is also not always a bad thing if you want jobs and industry.”

        That’s a very broad statement and what evidence is there that industry would perish if we had say national road tolls? For a start, largely we don’t have a manufacturing industry of any scale.

        The status quo suits the transport industry well because the price differential between road and rail keeps goods off rail. More goods (and passengers) using rail would push rails fixed costs down and make them more competitive.

        The introduction of tolls is more helpful than subsidising rail because the user is directly paying for the costs. I struggle to buy into the argument that transport cost increases will cause a huge surge in consumer prices because comparatively we are talking of modest increases.

        Whatever the mechanism, as Heidi says, we need to charge for carbon. Just last week I was talking to a significant manufacturer who said that their imported product was increasing in price by $50 per tonne due to carbon charges.

        It would be a bizarre situation if the rest of the world was charging us for the price of their carbon usage and the Kiwi tax payer was paying for the cost of our carbon use, such as with a roads subsidy. It seems a pathway to poverty.

        1. If we ignore milkpowder, butter, meat, wool, wood products, carpets, aluminium and steel then sure we have no industry. Almost every country that makes things provides subsidies to make sure they get to a market.
          I have no problems with road tolls as a means to manage traffic demand. Just as I have no problem with charging a carbon tax. I do have a problem with rules that would force people to use rail when they are better off using road freight. Just as I have a problem with arm-chair experts who believe rail is the answer to every problem. It works best for bulk goods and goods moved between major hubs otherwise even rail companies prefer trucks.
          Freight costs are a tariff on imports as well as exports and hit everyone. Charge more and less goods will be moved so everyone ends up worse off.

          1. Safety, miffy. Safety Safety Safety. Or the abysmal lack of it, when it comes to roads. That is one reason we need to “force people to use rail”, if that’s how you choose to see it. At the moment road users are exempt from facing the true costs of 380 fatalities and 3000 serious injuries per year. The population at large is “forced” to endure the damaging effects of a highly-dangerous and seriously under-regulated road-transport system. This is no way to be living in the 21st century in a first-world country.

            And miffy – that’s just one of the many reasons to force a change away from our gross over-dependence on road transport.

          2. “Charge more and less goods will be moved so everyone ends up worse off.”
            Ah, Economics 101 and demand curves. So let’s imagine a chicken farm near Pukekohe and they transport 5000 frozen chickens by truck to Whangerei. (about 10 tonnes?) Say there is a road toll of $100 – seems high, but let’s run with that. So the toll is 2 cents per chicken. OK, so there will be mark ups and by the time it gets to Pak n Save they have added 4 cents and Countdown have added 5 cents. Is this really going to shift demand? And another .02 cents on a can of baked beans.
            And who knows for fish bait, or whatever type of bait that you are using?

    6. People driving two ton motor cars are subsidising the heavy transport industry by more than 100 fold because at a given speed the damage is effected exponentially, however the road user charges are only levied on a linear basis. If this anomaly was addressed rail would definitely more than pay its way.

  3. Thanks for this post Matt, it is good to see Kiwirail get some guaranteed funding to take it into the future. I’m presuming that, as most of the locos are for the South Island, and the rest may be for shunting (is that right? Seems a lot!) that they will all diesel locos. Is there any word about the coming or going of electric locos? JAG was pushing hard for new locos in the North Island to be electric – do we know if that has gone anywhere yet?

    re the Ministers’ statement:
    “$300m: for regional rail projects through the Provincial Growth Fund – KiwiRail is considering a range of rail projects around the country”
    – is this where your third rail may be hiding? Or is Wiri not provincial enough?

    1. I’d hazard a guess it will be for rail in Northland, probably the Marsden Point line, or improvements between Whangarei and Swanson. It’s probably pushing the bounds of the PGF to include suburban Auckland!

      Regarding electrics I noticed this line in here:

      ‘Over time these will be replaced with approximately 50 long-haul and 50 short-haul locos, and new electric short-haul locos.’

      I wonder if these are electric locomotives to run the trains between the Port and Wiri in Auckland.

      1. KR could use a couple of them to bring the Hamilton-Auckland connection into Britomart instead of changing at Papakura ? , or do a sneaky late at night transfer and take freight trains through the CRL to Henderson to ship North .

  4. Good ol’ Simon Bridges, using the Crosby Textor inversion game. He/they rarely have anything good to say, like ever!

    Like National hacking (the gaining of unauthorized access to data in a system or computer) into Treasury’s servers for pure self-gain, got caught, National then played the victim, for day after day after week….

    1. Once GA published an article a day early and I commented on it before it was taken down. I’m so sorry for my Operation Swordfish-style hacking of GA, please forgive me ML

      1. But his silly games point scoring behavior is why he is so unpopular and similar behavior on part of the then labour opposition was what kept them in opposition for three terms during the Key era. The public doesn’t like it.

        1. The public also has a low threshold for civil servants playing politics and/or silly buggers. As they should. People seem mad that a politician did a political thing. That bit I don’t get.

      2. It was a storm in a doll’s teacup but for Bridges and National, it was up there with the worst ever scandals known to mankind.

  5. Kiwirails mainline diesel fleet is ancient. With the exception of the DL’s the newest mainline locos are a shade under 40 years old (DF’s) and the oldest still out there is 56 years old with many not that far off that number, rebuilds x multiple not included.

    Hopefully, the purchase of new loco’s will overcome the errors made with the DL’s and at least means they are capable of faster mainline speeds, the DL’s being restricted to 80 km/hr, not exactly a what a modern railway is about.

    1. The older GE and GM-EMD locomotives (DX, DC, DFT) are some of the most rugged and reliable locos ever build, they are still a common sight on railways worldwide. KiwiRail should find something better than a DL.

      I think the new shorthaul locos will be DC replacements also capable of shunting. It’s inefficient to use high-powered locos such as the DL for this type of work.

      1. They may have been rugged and reliable but they are also ancient, obsolete and long overdue for replacement. China is capable of building high quality products, it’s just a question of how much the buyer is willing to pay. If, like the previous government, you have penny pinching attitude, don’t be surprised if the machines you buy for the lowest price have certain deficiencies.

        1. And if wasn’t for all those ancient, obsolete locomotives Auckland wouldn’t have a rail system it has now , and they did more work in that short period than they otherwise would have . And they have/are upgrading 3 of them for the new Hamilton – Auckland run , it shows KR still thinks there is value in them no matter what their age is .

    1. Seeing as China’s CRRC (i.e. Dalian) is now the world’s biggest manufacturer of locomotives and rolling stock, and China is our biggest trading partner, it seems inevitable that we will buy their gear.

      By all accounts, north American locos are built better (bigger and longer lasting) but America’s growth phase has been and gone long ago – China is now the powerhouse of the world. But we do need to make sure that the next crop don’t come slathered with asbestos like the last ones did.

      Of course, we could have (once upon a time) manufactured our own rolling stock (not the locos, that’s too hard), but seeing as successive Governments have shut down nearly all the workshops, that seems unlikely now.

      1. I believe that Kiwirail has a team looking at US and European suppliers, as Kiwirail doesn’t want to have the issues of the DL’s

        1. To be fair to Dalian, a number of specifications in those locos were Kiwirail ideas, such as the copy of the 1960’s GE traction motors to compliment what was in the DX. Trouble is the world had long moved on, to far more reliable brushless designs, the earlier ones KR wanted are an inherent weak point in the early diesel electrics.

  6. One announcement they haven’t made is the withdrawal of log trains from Wellsford unless the consignor pays a very large increase in the price.

    Apparently the Wellsford yard is no longer safe for purpose unless significant money is spent on it

  7. This is from the Radio New Zealand website.
    Key projects:

    “Continued work on the Kaimai Tunnel, Tauranga
    Hoists and generators for Westfield and Southdown in Auckland
    Parts replacement for engines, wagons
    Freight reservation, booking and tracking system
    Final payment on the 15 new trains in North Island – arrived October 2018
    Replacing the oldest 48 long-haul and 52 short-haul locos
    Replacing 900 container wagons – some of the older wagons will be repurposed for forestry haulage
    Upgrades at Hutt Valley and Christchurch maintenance facilities
    Design and procurement of two rail-enabled ferries”

    I wonder what the generators at Southdown and Westfield are for maybe to supply power for refrigerated containers. Do they mean the ones that ride on the wagons with the containers or are they going to be used for containers which are waiting for onward carriage or distribution to customers. In which case they could just be connected to the mains although I suppose emergency power would be needed in case of mains failure.
    I look forward to the Kiwirail app.
    I see they are already converting a steady stream of old PK container wagons to PKL log wagons at Westfield.

  8. Curious about the reference to Bluff. When I was there a few months ago the rust on the rails suggested it had been a long time since Bluff had seen a train. Are there still trains to Bluff?

      1. The line between Dunedin and Invercargill is definitely still operational, although this is separate from the Invercargill to Bluff line.

        I heven’t heard of the Bluff line being mothballed so I would assume it is still in use, surface rust sets in on tracks near the ocean pretty quickly with low use even if trains are still running.

  9. I see that they are getting some short haul Electric locomotives question will the be used on the Auckland network for night frieght to Wiri ? or around Palmiston Nth for shunting work

    1. I think we have been told time and time again that you can’t use the same trains on Auckland’s electrification and the Hamilton-Palmerston North electrification, due to technical issues I honestly don’t understand.

      1. I understand the main reason for that is the signalling – Auckland runs a different set than the rest of NIMT. But could be something else as well

        1. Its the current drawn if there is a short circuit.

          The EFs were designed for the lower current NIMT electrification (single track, relatively infrequent service) & would be badly damaged by a short on the higher current Auckland network.

          No reason new locos couldn’t be designed to operate on both.

          1. If that is the case, and I am very dubious, then all it would take is fitting a suitable circuit-breaker that can cope with the higher fault-current.

            Reason I am dubious is that the fault-current capable of being delivered by either the NIMT electrification or the Auckland system when close to a feeder-point will be very high in both cases, and both must have suitable provision for dealing with it. Both will have substation-based circuit-breaking equipment and this is primarily designed to protect the supply and overhead line in the event of a line-fault such as the wire being brought down or something conductive falling onto it and earthing it.

            A locomotive short-circuit will normally be handled by the locomotive’s own circuit breaker, and should not be relying on a substation trip-out for this protection (unless the wires have come down onto the roof or something, rendering the loco’s circuit-breaker ineffective).

            So if you are not relying on a substation trip-out to protect against a locomotive internal short-circuit, and I don’t believe this is the case with the NIMT, then why should it matter which system the loco is operating on? As I said, both supplies require similar tripping capability in the event of some external fault happening to the lines.

            I think there may be long-standing mythology at work here. But I’m happy to be corrected by anyone who really does know what they are talking about.

  10. What is the Quay Park work to be done? I understand the stabling yards at the Strand were going to be expanded using some of the old freight yards but that was some way off.

  11. The 3rd main project has already started construction has it not? Or are the upcoming closures related to enabling works rather than the project itself? Auckland Transport outlines weekend closures of the Eastern and Southern lines from July through October for the Otahuhu 3rd main project.
    https://at.govt.nz/bus-train-ferry/service-announcements/future-works-on-the-auckland-rail-network/

    Also the NZ Herald reported closures over the Queens Birthday weekend for the 3rd Main project.
    https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12236628

    1. I wouldn’t get too excited yet. They’ve been dicking around for years, building a little bit of third main here and a little bit there. Time to get a move on.

    2. I think the Otahuhu 3rd main project refers to the 3rd platform at the station and associated line changes which is part of the CRL works. The actual “3rd main” between Middlemore and Wiri is still in NZTA limbo.

    3. John B , I like the old photo the Herald use with an ADL and sa carriage being shown , can’t they get it right as we have now gone electric through most of the network .

  12. With discussions around the fleet as a whole I would have thought there’d be mention of the locos the previous government purchased for replacing the electrics, being redirected.

    For purchases with a 50 year life it looks a bit short sighted to be locking in such a large amount of carbon based transport. Why aren’t dual powered or electrics featuring?
    If POAL is to be carbon free by 2030 then there will be more electrics required, and electrification to at least Hamilton should be complete by then with plans to complete to Tauranga.

    Why isn’t Hillside being discussed to supply some of the new rolling stock?

    1. Probably because Hillside was closed in 2012 and almost all of the staff made redundant. Once the know how and capability built up over decades is lost, it’s hard to get it back.

        1. MasterChief , there have been postings from KR that they transferring work to Hillside as the Hutt workshops don,t have the space for all the work that is now required .

          1. And this from Stuff on Jun 25 2019

            “KiwiRail group chief executive Greg Miller said $300 million had been allocated for regional rail projects this year through the Provincial Growth Fund.

            “KiwiRail is considering a range of projects, which could include upgrades to Hillside Workshops. No decisions on those projects have been made yet,” he said. ”

            ” A spokeswoman for Jones said KiwiRail could apply to the Provincial Growth Fund to reinstate Hillside, but no applications had been received.

            Officials were working on a Dunedin package and the minister hoped “to be making announcements later this year”, she said.​ ”

            https://www.stuff.co.nz/national/113749846/dunedins-hillside-may-be-back-on-track

          2. They need to spend some serious cash upgrading the facilities, it’s practically Victorian down there. A person I know wetn through the workshops not long after they were closed down, he was amazed that anything could be done.

          3. MasterChief , you must not forget most off the KR equipment that is in service I think came from te Victorian/Edwardian period and can’t be use on this modern equipment and all the heritage societies would love to be able to use it at a nominal rate to do repairs/maintenance to their fleets .

      1. Didn’t Toll NZ had to bring the old retired Hillside workers out of retirement and put them on contract to train the new guys? If there is lack of specialized rail wagon/coach build workers, Kiwirail might have to the same.

  13. They are also extending the life of the 1987-built electric locos by ten years, and 15 of the 1972-75-built diesel locos by 20 years. Which I think demonstrates their greater commitment to a diesel future than an electric one.

    The 15 DXC’s being rebuilt will get new engines, electrical equipment, cab controls, etc. Essentially a remanufactured locomotive, that will ultimately get to around 70 years old. The electrics on the other hand are getting relatively minor work for a ten year extention, which leads me to wonder if it’s really just to keep them going until a change of government.

    In other news, KiwiRail have booted one of their biggest Northland customers, directly undermining the government’s intent to grow Northland rail tonnage. From next month the Wellsford-Kinlieth logs will be switching to road, meaning a lot of log trucks being added into the CMJ and bringing in more diesel fumes to the Auckland CBD surrounds.

  14. The Media handout that was distributed at the Ministers’ standup included the following line

    “Funding applications to be made to the NLTF Transitional Rail for:” the 3rd main and P-P electrification

    (which I guess is code for Business case hell continues)

  15. Bridges comment shows it is time for rail tracks to be built, maintained, and upgraded by LTNZ. Then charge Kiwirail the same per km cost as trucks.

    Doing the above will return the balance between road and rail and allow Kiwirail to lower their prices and focus on logistics. It also could allow trucking firms to buy trains further getting freight on rail.

  16. Be interesting to look at the utilisation rate of that locomotive fleet.

    Switzerland has the following (excluding EMUS) and they run a shit load more freight than we do.
    Mainline locomotives: 677 (passenger services: 335 / freight services: 342)
    Shunting locomotives: 226 (51/86/ infrastructure: 89)
    Shunting tractors: 257 (24/41/192)

      1. Not all that relevant. Switzerland has ~3800km of std gauge track (about 5100km for all gauges). NZ has ~4100km (narrow).
        NZ moves approx 18million tonnes, Switzerland over 54 million.
        So, NZ has ~180 freight locos and Switzerland approx 350.

        Looks like twice the locos moving 3 times the amount of freight equals better efficiency. More of that is electified too.

        1. It is relevant. NZ’s 18 million tonnes may be travelling a longer average distance than Switzerlands 54million, which means a locomotive will be tied up towing it for longer.

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