Briefing for Shareholding Ministers

Briefing for
Shareholding
Ministers
KiwiRail's Briefing for Shareholding Ministers made public on 12 November 2014. Some information has been withheld in this
Briefing under the following sections of the Official Information Act 1982:
• section 9(2)(g)(i) - free and frank expression of opinions tendered by officials
• section 9(2)(g)(i) - protection of officers and employees from improper pressure or harassment
• section 9(2)(i) - to enable commercial activities to be carried out without prejudice
October 2014
Page 1 of 66
CONTENTS
KiwiRail Overview ..................................................................................................... 3
Governance and Executive Leadership .................................................................. 4
Our Values ................................................................................................................. 8
Introduction: A Fresh Look at an Established Asset ............................................ 9
Key Facts ................................................................................................................. 10
The KiwiRail ‘Value Proposition’ ........................................................................... 11
Business Outlook and Strategy............................................................................. 12
Sustaining a Zero Harm Environment ................................................................... 15
Rail’s Role in the Economy .................................................................................... 21
Current Points of Interest....................................................................................... 26
Empowering Our People ........................................................................................ 29
The KiwiRail Business and Portfolio Performance .............................................. 31
KiwiRail Freight ....................................................................................................... 33
Interislander ............................................................................................................ 41
Passenger................................................................................................................ 46
Infrastructure and Engineering ............................................................................. 50
Appendices ............................................................................................................. 55
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KIWIRAIL OVERVIEW
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GOVERNANCE AND EXECUTIVE LEADERSHIP
KiwiRail is a single entity with a portfolio of business activities. Governance is provided by a single
board chaired by John Spencer. The company is managed by Peter Reidy and an executive team
of seven.
KiwiRail Board
John Spencer is a Wellington-based businessman and company
director. He is Chairman of KiwiRail Limited, WEL Networks
Ltd, Tertiary Education Commission and Raukawa Iwi
Developments Ltd. He is a Director of Tower Ltd and Mitre 10
NZ Ltd. He was the Chief Executive of the New Zealand Dairy
Group prior to the formation of Fonterra and has held senior
management positions in New Zealand and Australia.
John Spencer, Chairman
Paula Rebstock is an Auckland-based economist and company
director. She is Chairwoman of the Insurance and Savings
Commission, the Work and Income Board and ACC. She is a
Director of Synergia, a member of the University of Auckland
Business School Advisory Board and the Financial Performance
Auditor for Nga Puhi Trust Board. Other roles include the Lead
Reviewer for the State Services Commission Performance
Improvement Framework and Chair of the New Zealand Police
Women’s Advisory Network.
Paula Rebstock, Deputy Chair
Bob Field is a Manawatu-based businessman and company
director. He is an ambassador for Toyota New Zealand after
45 years of international experience in the motor industry,
including 25 years as Toyota’s CEO in New Zealand. He has
extensive governance experience with a wide range of national
organisations involved in tackling such issues as
unemployment, business excellence and productivity, road
safety and conservation.
He is currently Chair of CMD
Nominees Ltd and an honorary member of the NZ Initiative. He
is also a director and adviser to Emirates Team NZ. (Updated)
Bob Field, Director
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John Leuchars, Director
John Leuchars is a professional company director. He was a
consulting engineer who held director and managing director
positions in international consulting engineering companies for
30 years. These included managing director of Connell Wagner
(NZ) Limited (now Aurecon) and of Connell Mott MacDonald,
when he was based in London. He has experience in a broad
range of industries in a hands on design role or at governance
level. John has had governance experience in a number of
private and public companies and not for profit organisations.
John is currently a director of Genesis Energy Limited, The
Wellington Gateway General Partnership Companies Nos.1 and
2 (Transmission Gully motorway) and Milmeq Ltd.
Rebecca Thomas has more than 25 years’ experience in
financial markets in New Zealand and overseas. She has a
background in law and business having held roles as both a
CEO and Independent Director on UK-based Boards. She is a
Director of Mint Asset Management Ltd, Black and White Group
Ltd. Rebecca is also an Associate Member of the Foundation
Board of the Financial Markets Authority and a Trustee of The
Professionelle Foundation.
Rebecca Thomas, Director
Kevin Thompson is a Nelson based professional director and
civil engineer. He was Chief Executive of Opus International
Consultants from 2001 to 2010. He is Deputy Chair of the
Environmental Protection Authority and Chair of the Authority’s
HSNO Committee. He is an advisory member of the Defence
Capability Management Board, a Director of the Australian
Road Research Board and a Director of Aquamax Hydroblasting
Ltd. He is a Distinguished Fellow and President of the
Institution of Professional Engineers New Zealand.
Kevin Thompson, Director
Guy Royal has a background in private equity with commercial
and corporate law for more than 18 years in New Zealand, Hong
Kong, Vietnam and the United Kingdom. While in the UK Guy
worked for CDC Capital plc, a private equity fund with more than
NZ$3 billion in direct investments and lending in various
industries internationally. He is Managing Director of Tuia
Group, a professional advisory firm with offices in New Zealand,
PNG and Samoa.
Guy Royal, Director
Page 5 of 66
KiwiRail Executive Team
Peter Reidy was appointed KiwiRail’s Chief Executive
Officer on 1 March 2014. He brings to KiwiRail a
successful track record of leading and building service and
infrastructure-based
businesses
in
the
freight,
engineering, energy, building products and asset
management sectors in Australia, New Zealand, Asia and
the United Kingdom.
Peter Reidy, Chief Executive Officer
David Walsh has been with KiwiRail for just over five
years. He started as the CFO and two years ago
expanded the role to include a wider group of corporate
functions. David has wide experience through a range of
industries including the New Zealand Racing Board,
Fonterra, TransAlta and Shell NZ.
David Walsh, General Manager,
Corporate and Finance
Iain Hill joined KiwiRail from Express Couriers Limited
where he was the Group Manager, Transport and
Distribution. Iain has experience in managing large road
and air-freight networks.
Iain Hill, General Manager, Freight
Thomas Davis moved to Interislander from the KiwiRail
Network business where he was the Acting CEO.
Previously, he had been Chief Financial Officer for
ONTRACK, headed the Interislander and been an
executive within Tranz Rail.
Thomas Davis, General Manager,
Interislander
Page 6 of 66
Deborah Hume joined KiwiRail from the New Zealand
Transport Agency where she had been Wellington,
Nelson, Tasman and Marlborough Regional Director. She
had previously worked for NZTA’s predecessor, Transit,
as well as doing risk management consultancy work and
being a principal in a multinational infrastructure company.
Dr Deborah Hume, General Manager
Passenger and External Relations
Rick van Barneveld leads the infrastructure and
engineering arm of the KiwiRail business. He was the
Chief Executive of Transit New Zealand prior to joining
Evans & Peck and working on a project to plan, design
and construct a 215 kilometre railway in Queensland.
Rick van Barneveld, General
Manager, Infrastructure &
Engineering
Andrew Norton, General Manager
Human Resources
Dr Bob Stacy, General Manager
Zero Harm
Andrew has previously held senior and executive roles
with Public Service Association (PSA) NZ, Auckland
District Health Board and his most recent role, Executive
General Manager Human Resources for Downer in
Australia.
Andrew brings a combination of Senior
Executive level HR capability, an indepth understanding of
Industrial Relations in NZ and Australia, strong
engagement skills with front line engineering and
customer service teams, experience in developing
Executive leadership in large organisations.
Dr Bob Stacy joined KiwiRail as its General Manager,
Zero Harm, on 3 March 2014 and is responsible for
Health, Safety and Environment. He has extensive senior
safety and health leadership experience in Australia
including BHP Engineering, BHP Transport, CSR, Downer
Group and General Electric. His business experience
across the BHP Group covered shipping, mining, rail and
road operations and he was responsible for implementing
a safety change programme that reduced the frequency of
lost time injuries from 27.6 per million man hours to 0.7
per million man hours in six years.
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OUR VALUES
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INTRODUCTION: A FRESH LOOK AT AN ESTABLISHED ASSET
The development of railways has been an unfolding story.
It began in the 1860s with the creation of a transport network that became the “universal carrier” before
evolving into a niche provider as road and air transport developed.
The change has not diminished rail’s relevance. Our customers will attest to that.
Ask freight customers who move export goods to ports or carry consumer goods throughout the
country. Ask Auckland and Wellington commuters who use rail to avoid congested highways. Or ask
overseas visitors who enthuse about the spectacular New Zealand they see from Scenic trains.
They will all affirm rail’s importance to their business, their working life or their appreciation of the
New Zealand experience.
The view of freight customers is reinforced by the Ministry of Transport’s updated National Freight
Demand Study, which forecasts continued growth in rail’s most significant traffics.
The legacy of the past remains with us. Rail is a huge infrastructure asset as well as being a transport
and logistics business. It’s also an institution firmly rooted in public consciousness.
The country’s geography, typography, climate and demographics are all challenges to running a
commercial railway business.
Former Treasury official John Wilson wrote a paper in 2010 paper on what he described as “the
privatisation experiment” – the private sector ownership of Railway between 1993 and 2008.
In his view, the rail system reverted to public ownership and public funding despite the best endeavours
of two commercially aggressive private sector owners.
This happened because “although Tranz Rail and Toll faced hard budget constraints, the public,
including a significant part of the business community, did not find the consequences of these hard
budget constraints acceptable.”
The goal set by our shareholder since the railway returned to public ownership, has been to create a
business that is financially independent. This was enshrined in the sustainability plan endorsed in
2010.
We are now four years into the plan. Highly encouraging growth in freight volumes have not been able
to offset the impact of setbacks – mostly beyond KiwiRail’s control – that have undermined the basic
premises of the plan.
As a result of these realities, we have been re-examining the business as part of the development of a
new, 30-year plan. The information we are gathering will deliver a range of options in the coming
months for rail’s future.
The information in this briefing paper has been developed to help our shareholder understand the
nature of the business we have and the issues we are considering as we work to formulate a plan for
the next 30 years.
John Spencer
Chairman
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KEY FACTS
An important contributor to the New Zealand economy
•
•
•
•
•
•
The rail network moves more than 17 million tonnes of freight a year;
Approximately 30 percent of New Zealand’s exports travel to port by train;
The freight railway complements state highways. If rail freight traffic were moved to road,
it would add one-and-a-half million more truck trips to highways, several of them already
congested;
Rail freight tonnage grew by 18 percent between 2006-07 and 2012, 4 percent more than
road tonnages and 2 percent more than coastal shipping;
The Ministry of Transport is forecasting strong growth in the traffic that forms the basis of
KiwiRail’s freight business;
KiwiRail employs 4,100 staff and invests more than $1 billion in New Zealand a year.
Investment in rail has delivered benefits
•
•
•
•
•
•
•
Investment in rail can be extremely cost effective. A modest $13 million spent on passing
loops on the line between Hamilton and Tauranga, has doubled the capacity of the line;
Investment in the track network, rolling stock and ferry capacity has improved service
reliability and reduced transit times;
Before the commissioning of 40 new DL locomotives in the last three years, fleet
locomotives were on average 30 years old;
Upgraded urban rail networks deliver almost 23 million passenger trips a year, the
equivalent of an extra thirty thousand daily vehicle journeys on Auckland and Wellington
roads;
Mainline derailments, an indicator of network robustness, reduced to 18 this year, the
continuation of a decline from highs of around 60 10 years ago;
Total harm incidents reduced by 44percent over the last 12 months;
The average distance locomotives travel between failures improved from a failure each
15,000 km to a failure each 45,000 km – an indicator of improving locomotive robustness.
The current industry model is not conducive to achieving economic
independence
•
•
•
•
The scope and scale of today’s KiwiRail business is only marginally changed from that
which was privatised in 1993;
KiwiRail combines the roles of infrastructure manager and transport operator on a network
that is one of the more challenging in the world because of terrain, climate and population
distribution;
Two private sector companies struggled to be commercially successful operators of the
rail business without making significant service or route cuts;
Apart from its current role in complementing the highway network and bridging Cook Strait,
the rail network has an “opportunity value”. It exists as an alternative transport network
whose value could be enhanced by future developments in fuel costs, climate change or
technology advances.
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THE KIWIRAIL ‘VALUE PROPOSITION’
Positives
•
•
•
•
•
•
•
•
Rail complements the highway network – one freight train can move as much freight as fifty
trucks;
An efficient rail network reduces future road capital expenditure on road renewals and
enables better future transport investment decisions;
Rail freight consigned to road would add something like one-and-a-half million highway trips
a year;
The scale of the rail business, and recent investment in rolling stock gives the business the
flexibility to react quickly to short notice changes in freight traffic i.e. changes in port calls by
shipping lines.
Modest investment in freight rail can deliver disproportionately big benefits;
Freight customers appreciate that infrastructure work and new rolling stock has made the
rail network more reliable and resilient;
Urban passenger rail networks ease highway congestion. Without them, there would be an
extra thirty thousand daily vehicle journeys on Auckland and Wellington roads;
Improving the efficiency of the railway business provides an “option value” for the
New Zealand economy in the event of future economic, social or technological
developments.
Challenges
•
•
•
To be successful, the rail industry needs to be a safer place to work
It will take more time to fix past underinvestment in the rail network;
New Zealand’s topography, climate and small population make it a tough place to run a
railway;
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BUSINESS OUTLOOK AND STRATEGY
Reinvestment to Rebuild
Rail has been an important mode of transport in New Zealand for 150 years. For much of its first
100 years, it was the dominant carrier of both freight and people.
The growth of motor vehicle traffic and aviation, followed by deregulation of road transport in the
1980s, changed its role to that of a niche operator fulfilling specialist roles in the movement of bulk
freight, urban passenger transport and travel experiences.
Lack of investment in both infrastructure and rolling stock in the years that followed deregulation,
limited rail’s competitiveness and resulted in a decline in effectiveness and business performance.
Re-investment over the last 10 years followed a recognition that rail has an important role to play in
the New Zealand economy.
Rail’s strength is not in competing with road, but complementing it, or other forms of transport. In
significant parts of New Zealand, an under-used rail network runs parallel to a congested highway
network. The cost of improving the reliability of the rail network to make it an even more viable
option for freight customers, is modest compared with the cost of building new or even repairing
existing highways.
An example of the benefits to be gained from investment in the freight rail network is the $13
million spent on the East Coast Main Trunk (Hamilton-Tauranga) route. Building passing loops has
doubled capacity on a line which carries approximately 40 percent of the traffic in and out of the
Port of Tauranga.
The early focus of re-investment was on the Auckland and Wellington suburban networks. But
investment in the freight network – both infrastructure and rolling stock over the past six years –
has enabled rail to increase its share of the freight task by carrying more freight over long
distances.
Business Plan Expectations Impacted by Unexpected Events
After its establishment in 2008, KiwiRail developed a business plan which aspired to make the
business financially self-sufficient by 2020. The plan was based on continuing to operate a
business which had not fundamentally altered since before rail was privatised in 1993.
Its fundamental assumptions were that business targets could be met by generating greater
revenue by investing in network infrastructure, rolling stock and ferry capacity and maintaining a
connected network.
While it has fallen short of revenue targets, through the plan’s first four years, the freight business
has grown by more than 20 percent. This is in spite of setbacks which could not have been
anticipated when the plan was formulated. These included the Global Financial Crisis, the
Christchurch earthquakes, adverse market conditions and climate induced events (droughts, floods
and slips).
There have been two further setbacks in 2014 – the withdrawal from service of the ferry Aratere for
seven months and the discovery of asbestos material in the new DL locomotives.
In combination with earlier events, they have led to an appreciation that the original (2010)
sustainability plan did not provide sufficient contingency for unexpected events. It also underestimated the amount of Crown investment that would be needed through the ten years and overestimated the level of revenue that could be generated to fund investment.
Page 12 of 66
The Development of a Long Term Plan
In response to the setbacks of the first four years, the KiwiRail Board has instituted a commercial
review of the business under the name, Project 2045. The aim, as the name implies, is to develop
a new 30-year plan.
The review provides an opportunity to re-examine rail’s role in the New Zealand economy. The
2010 plan took a step in this direction but remained largely consistent with the historical view of
rail’s role. One of its major premises was that KiwiRail should continue to operate a “connected
network”, ie the major lines that form the backbone of the network, were to remain in operation.
The Review is being conducted in collaboration with Treasury, the Ministry of Transport and the
New Zealand Transport Agency. It is examining the economics of each route and developing from
the work, a range of future options.
From these, the intention is to develop a new model for rail. The challenge to be met is to not only
find a model that enables KiwiRail to meet its obligation to operate commercially but as a major
infrastructure asset, for the rail network to serve the public interest.
Options are expected to be ready for consideration towards the end of the 2014 calendar year.
Back to Basics Approach
In addition to Project 2045, we are implementing a “Back to Basics” framework as part of our drive
to optimise the business and achieve operational excellence.
The framework focuses on five perspectives of the business:
•
Sustaining a Zero Harm environment;
•
Engaging our customers;
•
Empowering people;
•
Improving our financial position;
•
Delivering portfolio performance.
Page 13 of 66
It will be accompanied by a more unified “total KiwiRail” approach which will replace the current
business unit “federalism” with a new network partner operating model.
The immediate aim is to focus on the strategies and initiatives that will stabilise the business,
improve financial performance, restore market and shareholder confidence and improve our safety
performance.
We have set 10 clear priorities for 2015:
1. Zero Harm: introducing critical risk controls and nation-wide safety systems. We will
provide visible leadership for safety and capability for improving safety within the business
units;
2. Leadership and culture: creating good succession planning and improving management
through the different management tiers;
3. Risk management: standardising learning across the group;
4. Developing an integrated business: simplifying the structure and creating critical
competencies and excellence centres across portfolios;
5. Service reliability: improving on time performance for freight, interisland and passenger
services as well as improving rolling stock reliability;
6. Decision on Cook Strait ships: optimising our Interislander fleet configuration;
7. Asset utilisation: implementing capacity management systems;
8. Cost-efficiency and productivity: understanding our cost base and implementing key
value driving projects;
9. Customer management: getting the product and the price right, improving the yield in our
freight business and securing the Wellington Tranz Metro contract;
10. Stakeholder management: improving our relationships with our stakeholders.
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SUSTAINING A ZERO HARM ENVIRONMENT
Sustaining a Zero Harm Environment is fundamental to the way KiwiRail runs its business.
It encapsulates the way we care for and protect our employees, contractors, customers, visitors to
our sites, the communities in which we live and work, the environment around us and the business
we operate.
Such is the importance of Zero Harm to KiwiRail, a dedicated general manager, reporting directly
to the Chief Executive, has been appointed.
In FY2014, KiwiRail implemented a plan which involves identifying and reducing critical risks,
implementing robust and compliant safety management systems, building Zero Harm capability
and developing environmental accountability.
To achieve this, our leaders will engage the workforce and maintain operating discipline.
Safety performance highlights FY2014 include:
• Total Recordable Injury Frequency rate reduced by 40 percent from the previous year;
• Continued reduction in main-line derailments;
• Establishment of Critical Risk Networks for tunnels, Signals Passed at Danger (SPADs)
and track occupancy hazards and issues.
In FY2015, KiwiRail will work to reduce the level of risk of high potential events and improve its
workplace health and safety record. We plan to reduce Total Recordable Injury Frequency rate by
at least 30 percent.
KiwiRail is committed to doing its utmost to ensure that the welfare of staff and customers is
protected and everyone goes home after their shift as fit and healthy as they arrived.
The driving principles for FY2015 include:
• Working towards a One-KiwiRail approach to Zero Harm;
• Implementing systems and processes that enable us to move beyond compliance;
• Providing the tools and knowledge to support our people;
• Engaging KiwiRail leadership and unions in the Zero Harm journey.
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Background
By their nature the rail and ferry industries have a number of hazards that can have significant
consequences for people or the environment if they are not properly controlled.
The hazardous nature of the business has been recognised at times in the past, most recently in
2000 when the then Minister of Labour, the Hon Margaret Wilson, commissioned a Ministerial
Enquiry into occupational safety and health within the business operated at that time by Tranz Rail.
The resulting report found that a different standard of safety and health was being applied within
Tranz Rail from that applied to most other businesses.
Today, KiwiRail’s commitment to the protection and care of our people, the public and the
environment is central to creating a sustainable business. Without good safety performance our
licence to operate is threatened.
While we have addressed key safety issues and have seen an overall improvement in key
indicators we continue to have unavoidable incidents within the rail environment.
KiwiRail measures safety performance in a number of ways. The two most significant are the lost
time injury frequency rate (LTIFR) and total recordable injury frequency rate (TRIFR).
But measures of issues such as signaling irregularities (signals passed by trains in contravention of
the message being conveyed – at their worst, a SPAD A), train derailments and collisions within
freight terminals, are also helpful in building a picture of safety compliance.
Safety Performance
Our lost time injury frequency rate (LTIFR) has increased slightly from 2013. Our LTIFR for
FY2014 is the equivalent of one injury per 16 employees. This puts us at the lower end of safety
performance for similar industries in New Zealand and Australia.
Our Total Recordable Injury Frequency Rate (TRIFR) has been reduced by 40 percent from the
previous year. Although part of this is due to a change in definition of what constitutes a medical
treatment injury 1. We also still have a long way to go when compared to our international
benchmarks. Our objective for this financial year is to reduce this figure by a further 30 percent.
Over the past 10 years, the incidence of the more serious form of SPAD has been rising, reflecting
the growth of traffic on the network. In the 2006 year there were only 28 SPAD As, recorded. The
total has risen to 50 this year.
While signal irregularities have been rising, there has been a pleasing decrease in terminal
collisions which are often more serious in terms of resulting injuries. Over the last 10 years,
collisions peaked at 106 in 2010 and have decreased steadily to 64 in the 2014 year, two less than
the previous year.
Train derailments continue to decline as both network improvements and new rolling stock have an
impact.
1
TRI = LTIs + MTIs. Medical treatment injuries no longer include referrals to a medical practitioner where no
treatment is provided.
Page 16 of 66
Our driving principles for FY2015 will continue to be:
• To work towards a One-KiwiRail approach to Zero Harm;
• To implement systems and processes that allow us to move beyond compliance and
continuously improve;
• To provide the tools and knowledge to support our people at the front-end of our
businesses;
• To engage KiwiRail Leadership in the Zero Harm journey.
2011-12
2012-13
2013-14
LTIFR
7.6
12.8
13.6
TRIFR
55.5
54.6
32.9
SPAD As
53
71
50
Terminal collisions
76
66
64
Train Derailments
27
20
18
Progress in Group Activities
Establishment of Critical Risk Networks (CRN)
Effectively managing operational risk is a key business activity. While all of our activities have
related risks KiwiRail has recognised that these could be better managed.
Critical Risk Networks (CRN) have been formed to activity identify hazards and manage high level
risks that result from Signals Past at Danger (SPADs), Tunnel Operations and Work on Track.
Signals Passed at Danger – Category A.
A rail movement which exceeds its limit of authority and travels beyond a red signal or notice-board
at which it should have stopped, is classified as a Signal Passed at Danger (SPAD A).
There were 66 recorded SPAD A occurrences in FY2014, 50 of them involving KiwiRail as the
operator and/or employer of the Locomotive Engineer.
The creation of the SPAD working group was in response to the increase in SPAD incidence.
KiwiRail is working to improve understanding of why they occur, improve in-cab procedures,
improve signalling systems and harness emerging technologies.
Track Occupancy
A critical risk network has been formed to develop a safety improvement strategy for track
occupancy, recognizing the risk of a collision between a train and track maintenance staff.
Track Worker Protection has focused on balancing the introduction of new electronic systems with
the tightening of rules around when people can be on track. A new system called Eprotect aims to
improve safety for Compulsory Stop Protection (CSP) worksites. It uses technology which
provides automatic control systems for approaching trains.
Tunnel Safety
New occupational safety legislation being enacted places an onus on KiwiRail to consider carefully
the risks associated with travel through tunnels, particularly those that are problematic because of
Page 17 of 66
their length, gradient, tunnel geometry, accessibility, isolation, frequency of service or use by
particular traffic (such as Otira).
Tunnel risk is being addressed through programmes to install fire suppression on locomotives
operating on the coal route, substituting petrol with diesel on small plant and improving personal
protective equipment (PPE) for gas detection and worker isolation.
Environmental Performance
KiwiRail’s freight services produce roughly 60 to 80 percent less emissions than a comparable
truck trip. Since 2010 the business has seen a constant reduction in the carbon intensity of its
freight services with a 4 percent reduction from 2013. Carbon intensity is calculated on the basis
of emissions from fuel and electricity consumed divided by the net tonne kilometres of freight
carried. This is reflective of better planning and utilisation of freight services as well as the benefits
of the 40 DL locomotives starting to be realised.
Our main initiative to improve our fuel burn and reduce carbon intensity for our customers is the
EnergyMiser project.
Implementation has been delayed due to the DL fleet being withdrawn from service in February.
Equipment had been installed in the cabs of 32 percent of the planned locomotive fleet by the end
of June.
In the absence of New Zealand data on transport emissions we compare our performance with
data from the UK 2. At 31.3 gms per net tonne kilometre (NTK) rail compares very favourably to the
truck equivalent at 123.20 gms per NTK.
Both of our tourism focused services, Interislander and Scenic trains continue to hold a Silver level
endorsement from Qualmark for responsible tourism activities. This acknowledges efforts in
energy saving, waste reduction and involvement in community activities.
KiwiRail has a number of interfaces with the environment ranging from the construction of the rail
network including bridges and culverts to the management of stormwater collected within our sites.
We hold 220 resource consents for a range of these activities and other activities covered by the
Resource Management Act. These consents are managed through an online database providing
an auditable trail of conditions.
2011-12
Carbon intensity (gms CO2-e per NTK)
2012-13
2013-14
32.51
32.49
31.13
Energy used (TJ)
-
4,194
3,982
Carbon emissions - scope 1 and 2
(tonnes of CO2-e)
-
289,915
276,418
2
Department of Environment, Food and Rural Affairs. Greenhouse Gas Conversion Repository. Data compared to is
All Heavy Goods Vehicles for 2014.
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Public Safety on the Rail Network
Rail is an inherently safe form of transport because it operates in a dedicated, controlled
environment – the New Zealand rail network.
Level Crossing Safety
The most regular interaction between the public and the railway occurs at level crossings – 1,400
public road and 85 public pedestrian crossings.
Only half of the network’s crossings are controlled by electronic devices such as lights and bells
and barrier arms. The remainder are commonly controlled by signs which require road users to
stop and check that the track is clear.
Unfortunately, some road users, either on purpose or through inattention, ignore signage and even
electronic signals. The result is between 20 and 30 collisions a year and consequent injury or loss
of life.
In the 2014 year, 22 vehicle collisions and three pedestrian collisions were reported. This is a
slight increase in vehicle collisions on last year’s 20 but a reduction of three on pedestrian
collisions.
Public awareness programmes and work over the last 10 years to improve safety at those level
crossings considered to constitute the greatest risk, have almost halved the number of collisions.
In FY2014 seven level crossing upgrades were completed, a figure consistent with past years. But
even at an accelerated rate, upgrades will not alter the fact that approximately half of the country’s
crossings do not have electronic signals fitted.
Level crossing safety awareness programmes are run in conjunction with TrackSAFE, an
Australian harm prevention charity. The Chief Executive of KiwiRail chairs the New Zealand
TrackSAFE board and sits on the Australian Board.
Rail safety campaigns include an August Rail Safety Week and reminders to road users before the
summer holiday period to be careful at level crossings.
Tunnel Safety
The issue of passenger trains in tunnels first arose in 2013 when it was considered necessary to
review safety in the Otira tunnel because of its special nature – in particular its length, gradient and
Page 19 of 66
presence of coal dust. The outcome of that review was that AK class carriages could be the only
rolling stock deemed suitable for using the tunnel.
KiwiRail then established a Tunnel Working Group to widen the review. Its first task was to rank
tunnels according to risk. The result was the identification of seven tunnels on the network with the
highest risk profile. They are Otira, Rimutaka, Tunnels 1 and 2 North Island Main Trunk, Kaimai,
Mihiwaka and Lyttelton.
The principal operators of passenger services on the New Zealand Rail network are KiwiRail itself
and heritage railway operators. In June 2014, KiwiRail contacted the Federation of Railway
Operators of New Zealand (FRONZ) and major heritage operators and briefed them on the new
environment and the work that was in progress.
KiwiRail, in consultation with NZTA and WorkSAFE has been working to establish new safety
regime for the moment of trains through long tunnels.
This issue is dealt with in greater detail in the Appendix Two.
Safety Initiatives in FY2015 and Beyond
In 2015, significant change to the New Zealand health and safety legislative framework will occur.
Shaped in part by this expected change – and to help KiwiRail achieve a Zero Harm environment the Zero Harm strategy was developed in FY2014.
The strategy targets four areas in which we will engage our workforce and build operating
discipline into our business:
• Identifying and reducing critical risk;
• Implementing compliant systems;
• Building Zero Harm capability;
• Improving environmental accountability.
The restructure and appointment of key Zero Harm roles will continue into FY2015 with the
establishment of Zero Harm leadership positions and regionally located Zero Harm specialists
within the KiwiRail business units.
To help them implement Zero Harm initiatives, responsibilities and accountabilities, a corporate
Zero Harm team will provide key centralized support functions to deliver:
• An integrated Assurance, Risk and Investigation team;
• A Safe Working Standards and Business Systems team;
• A Zero Harm Support Services team.
Page 20 of 66
RAIL’S ROLE IN THE ECONOMY
Over many years, rail has evolved from being the dominant carrier of freight and people to a niche
role in both freight and passenger transport.
Today, rail contributes to the New Zealand economy in three ways:
• The movement of bulk freight and goods hauled over long distances and shuttles between
ports and distribution centres;
• Urban passenger transport in Auckland and Wellington;
• Travel experiences on scenic trains and Cook Strait ferries.
KiwiRail’s 900 weekly freight trains are an integral part of the New Zealand economy. They move
heavy freight through the country and to and from major ports, complementing and taking pressure
off the highway network.
Rail freight plays a particularly important role in getting export goods to market. Approximately
30 percent of New Zealand’s exports travel to port by train.
The freight railway complements state highways. If rail freight traffic were moved to road, it would
add something like one-and-a-half million more truck trips to highways, several of them already
congested.
The Ministry of Transport, in its 2014 update of the 2006-07 National Freight Demand Study
(NFDS), noted the importance to the economy of freight movements. It recognised that the costeffective and efficient movement of goods bound for export — estimated at 30 percent of total
flows — is particularly vital.
The updated findings, based on statistics up to and including 2012 are positive about the
performance of rail over the six years since the first study was completed. KiwiRail Freight’s
FY2014 year can be regarded as out of step with the picture the study paints, but the conclusions it
reaches about rail freight’s importance to the economy remain valid.
The study found that rail tonnages had risen 18 percent between 2006-07 and 2012, faster than
road (4 percent) and coastal shipping (2 percent). These increases reflected growth in volumes of
dairy products, logs and retail goods.
Looking ahead, the study is forecasting that the overall freight task will grow by almost 60 percent
over the next 30 years. It identifies strong growth in the traffic that currently drives the KiwiRail
freight business.
KiwiRail provides three separate categories of freight services namely domestic, bulk and
import/export (IMEX).
We move bulk commodities such as coal, fertiliser, steel, aluminum and milk. The NFDS estimates
KiwiRail carries 60 percent of all coal measured by volume and 91 percent measured by tonne
kilometre.
Freight trains carry containerised goods to and from ports. Given the importance of the dairy
industry to the New Zealand economy, KiwiRail’s 41 percent share of manufactured dairy products
is significant.
In Wellington and Auckland, suburban rail networks carry approximately 23 million passengers a
year. While the figure is modest compared to the number who travel by vehicle, its importance lies
in the fact that without it an extra 18 million vehicle journeys would be added to roads that are
Page 21 of 66
already congested. That translates to approximately 30,000 extra daily vehicle journeys on each of
Auckland and Wellington highway networks.
Tourism is one of New Zealand’s biggest export earners. The travel experiences provided by
KiwiRail’s Scenic trains and Interislander ferries, are significant contributors to the country’s
tourism infrastructure.
Engaging our Customers
Without customers, KiwiRail would not have a business. Building and maintaining relationships
with customers is critical to our commercial success. It depends on:
• Providing reliable services that meet customer needs;
• Having the infrastructure and mechanical resources to sustain those services;
• Engaging and partnering with customers to achieve the best outcome.
Major Business Routes and Traffic
KiwiRail operates a 4,000km rail network and three ferries which move passengers and freight
across Cook Strait.
The traffic using the network separates into the following categories:
Import-Export Freight to and from Major Ports.
Export goods such as processed dairy products and meat (mainly in containers) is moved to ports
such as Auckland, Tauranga, Napier, Wellington, Lyttelton, Timaru, Port Chalmers and Bluff.
Imported goods are carried from sea ports to inland ports and distribution centres, particularly in
south Auckland.
Domestic Freight Between Major Centres
Consumer goods move south from Auckland to distributions centres in the lower North Island and
Christchurch.
Bulk Commodities for Processing or Export
Coal, milk, timber and steel are all moved in bulk for either export (coal, timber and steel) or
processing (milk and timber).
Freight and Passengers Across Cook Strait
The New Zealand freight supply chain is heavily dependent on KiwiRail’s three ferries to move
freight, either on commercial vehicles or rail wagons, across Cook Strait. Passengers and their
vehicles use the ferries to move between islands or as part of travel experiences.
People in the Auckland and Wellington Metropolitan Areas
Between them, the two urban rail network deliver approximately 23 million passenger trips a year
Travel Experiences
Scenic passenger trains provide travel experiences between Auckland and Wellington,
Christchurch and Greymouth, and Picton and Christchurch.
Page 22 of 66
Major Rail Traffic Flows
Page 23 of 66
New Zealands Rail Network by line
Line
Profile
Traffic
Issues
North Auckland
Links Auckland with the far
north, terminating in the
Bay of Islands. Branches
to Dargaville and Otira.
Dairy products, some forestry
products, general goods and china
clay. Traffic mainly North to South.
•
Four lines carry commuter
traffic, primarily into
Auckland city, between
Waitakere in the north west
and Pukekohe in the south.
11 million commuters a year.
Significant growth expected as new
electric trains are introduced.
•
Incorporates the North
Island Main Trunk
(Auckland-Hamilton), East
Coast Main Trunk
(Auckland – Mt
Maunganui) and forestry
lines to Kinleith, Kawerau
and Murupara.
Construction of three
passing loops on ECMT
has enabled rail traffic to
double on the line.
Incorporates NIMT,
Interislander ferries and
Main North Line. The
Northern Explorer
passenger service travels
on the NIMT between
Auckland and Wellington
while the Coastal Pacific
travels seasonally between
Picton and Christchurch.
NZ’s busiest rail freight route.
Containerised and bulk goods travel
to and from the Ports of Tauranga
and Auckland as well as to and from
freight consolidation centres such
as Westfield and Fonterra’s
Crawford Street store.
•
Elongated route for mainly domestic
traffic. Containerised general and
FMCG freight moves predominantly
north to south. Route has
historically suffered because of
limited investment compared to road
which makes journey times less
competitive.
•
Auckland Metro
Auckland to
Tauranga,
Waikato -Bay of
Plenty
Auckland to
Christchurch
•
•
•
•
•
Lower North
Island
Incorporates Marton-New
Plymouth Line, Lower
North Island Main Trunk
and Palmerston NorthNapier line.
Often referred to as the “Milk Route”
because of bulk milk movements
from Oringi in the Wairarapa to
Fonterra’s Whareroa plant near
Hawera. Main traffic is bulk milk
and processed dairy products north
on NIMT or east through Napier.
Work on tunnels on MNPL and in
Manawatu Gorge have enabled
larger containers to pass through.
•
Value lies in its potential
rather than current traffic.
Major constraints are
tunnels which cannot
accommodate 9ft 6in
containers and lack of
access to Marsden Point.
Competition for access
between freight and
commuter traffic on South
Auckland lines.
No direct connection
between Britomart station
and the Western Line.
Prohibits “through traffic”
at Britomart and places
constraints on network’s
effectiveness.
Competition for access
between freight and
commuter traffic between
Westfield and Wiri – to be
mitigated by building a
third line.
Track, bridge and Kaimai
Tunnel work needed on
ECMT to increase line
resilience and reliability.
Freight trains slowed by
commuter traffic in
Auckland and to a lesser
extent Wellington.
Track infrastructure and
alignment issues increase
transit times. A rail trip
takes 24 hours compared
with 18 for typical road
journey.
Price competition from
major shipping lines who
take domestic freight to
supplement international
trade.
Congestion in Palmerston
North rail yards would be
eased by building a bypass.
Page 24 of 66
Wellington
suburban network
Incorporates North Island
Main Trunk (Wellington to
Waikanae), Wairarapa Line
(Wellington to Masterton),
Johnsonville Line and
Melling Branch Line.
11.7 million commuters a year use
the Wellington network which has
benefitted in recent years from both
infrastructure and rolling-stock
upgrades.
•
•
•
•
Wellington to
Picton
Three roll-on-roll-off ferries,
Aratere, Kaitaki and
Arahura, link Wellington
and Picton. Ferries
complete seven sailings a
day.
Ferries carry rail freight, commercial
vehicles and passengers and their
vehicles. Freight is mainly
containerised consumer goods but
commercial vehicles move livestock
between the two islands.
•
•
Canterbury-West
Coast
South of
Christchurch lines
Incorporates the Midland
Line (RollestonGreymouth), Main South
Line (RollestonChristchurch), NgakawauStillwater Line, and
Hokitika Branch Line.
Incorporates the Main
South Line, Wairio
Industrial Line and the
Otago Central Branch Line
(to the Fonterra store at
Mosgiel).
Often referred to as the “Coal
Route”. Coal trains move coal
loaded at Ngakawau north of
Westport to Port of Lyttelton
travelling on the Nakawau-Stillwater
Line, the Midland Line and the Main
South Line between Rolleston &
Christchurch. Dairy products are
moved on the Hokitika Branch Line
from Westland Dairy’s plant to
Greymouth and out to Lyttelton.
The passenger TranzAlpine service
runs daily between Christchurch
and Greymouth.
Heavy volumes of dairy traffic move
north from Edendale in Southland to
Fonterra stores at Mosgiel, Port
Otago and potentially from
Clandeboye dairy factory in South
Canterbury to Lyttelton.
Industrial coal moves north from
Ohai-Nightcaps to dairy and other
factories.
Taieri Gorge Railway run scheduled
passenger services on Main South
Line north to Palmerston and south
to connect with Otago Central Line
to Middlemarch.
•
•
•
•
•
•
•
•
Parts of overhead wiring
network remain to be
replaced.
Bridge replacement work
in the Wairarapa
scheduled.
Slope stability work still
required to reduce slips
during storms.
Decision to be made on
the future of the Capital
Connection (Palmerston
North-Wellington)
commuter train which
uses the NIMT.
Service reliability
Aratere’s propulsion shaft
issues in November 2013
have highlighted the
importance of restoring
service reliability for
customers.
At 30 years, the railcapable Arahura is
nearing the end of her
working life. Because a
rail-capable replacement
would be prohibitively
expensive, road-bridging
options are being
considered as part of fleet
reconfiguration.
Rugged terrain and
extreme weather test
infrastructure resilience.
Otira Tunnel (8.5km long)
constrains capacity on the
line
Out-dated signalling
system on Midland Line a
capacity constraint.
Wooden bridges remain to
be replaced.
Deferred maintenance still
to be addressed.
Relatively lower traffic
volumes in the south
make road more
competitive.
Backlog of infrastructure
renewal work.
Mihiwaka tunnel, north of
Dunedin, potential hazard
for heritage passenger
services because of
tunnel length and access
problems.
Page 25 of 66
CURRENT POINTS OF INTEREST
Napier – Gisborne Rail Line
Freight services ceased on the Napier Gisborne Line after the March 2012 washouts near Beach
Loop. KiwiRail announced its decision not to reinstate the line after extensive work determined we
were unlikely to generate sufficient revenue in the foreseeable future to cover costs.
As part of the mothballing decision KiwiRail undertook to work with the Government and regional
interests to consider the strategic value of the corridor, including alternative uses and how to best
realise that value for the good of the New Zealand economy.
Since mothballing the line a number of parties have sought to preserve their position and/or
expressed interest in all or part of the corridor for different purposes, including the Gisborne rail
yard.
Hawkes Bay Regional Council (HBRC)
The HBRC has expressed interest in leasing the line to re-establish freight services between
Gisborne and Napier in conjunction with a private operating company, the Napier Gisborne Rail
Establishment Group (NGR). The Council approved a potential investment in NGR in its 2014/15
Annual Plan, conditional on a number of factors including:
• the line being returned to a good “fit for purpose” operating condition;
• leasing the line and locomotives from KiwiRail on satisfactory terms;
• the Council being satisfied that an investment in NGR would cover the Council’s cost of
funding over the long term.
Tourism
A number of parties have expressed interest in leasing the line to continue or establish tourism
ventures.
One grouping would utilise the mothballed rail track:
• Adventure tourism operations
•
Heritage or charter operators using heavy rolling stock.
Alternatively, if the rail and sleepers were removed the corridor could be used as a cycle pathway.
Gisborne Iwi
Under their 2011 settlement with the Crown, the Rongowhakaata iwi received a conditional “first
right of refusal” to purchase at market value the land on which the Gisborne rail yard is currently
located, subject to KiwiRail declaring the land “surplus to rail requirements”.
Page 26 of 66
The iwi would like to purchase the rail yards to build permanent housing for a historically significant
whare that will be relocated from Te Papa. KiwiRail has entered negotiations to sell the site
subject to a number of conditions
Wellington Metro Rail Tender
KiwiRail is partnering with Keolis Downer EDI (KD) to tender for the contract to operate the
Wellington Regional passenger rail network from 2016.
KD is a joint venture between Keolis and Downer EDI. Keolis is a public transport operator
established in 15 countries across four continents and the largest public transport operator in
France. Downer EDI is a leading provider of engineering and infrastructure asset management
services in Australia and New Zealand.
Both have impressive track records of transitioning into new cities and a strong culture of
developing and implementing new rail initiatives including the development and implementation of
multi-modal, smartcard ticketing in Australia, UK and Europe.
KiwiRail signed a Memorandum of Understanding with KD on Thursday 2 October agreeing to the
joint bid, and an Expression of Interest (EOI) was submitted to Greater Wellington Regional
Council on 6 October. Greater Wellington Regional Council will announce the shortlisted bidders
and issue a Request for Proposal (RFP) in December.
With customer satisfaction at 92.7 per cent and on time performance at 94.7 per cent and
passenger numbers still growing, recent benchmarking shows KiwiRail through Tranz Metro as
consistently one of the best performing rail operations in Australasia. KiwiRail and KD will work
collaboratively to build on what Tranz Metro has achieved to date and deliver even greater
Page 27 of 66
operating efficiencies, new technologies, and more value for money while maintaining strong
customer and stakeholder satisfaction.
Performance Issues with Auckland's New Electric Trains
KiwiRail and Auckland Transport are continuing to work together to confirm causes of and
resolutions for an intermittent power fault which is affecting the performance of the new Auckland
electric trains.
It appears the fault is the result of a phenomenon known as resonance over-voltage. Investigations
to date indicate it is being triggered by the way the train responds to the natural resonance
frequency of the network.
Interim solutions have been identified that allow the continued, reliable use of the trains for
commercial service, while further work continues to fully define the extent of the issue and the
options for resolving the situation.
Page 28 of 66
EMPOWERING OUR PEOPLE
KiwiRail employs approximately 4,100 staff. The average age of staff members is 46 and 85
percent are male.
We recognise that to deliver on our targets, we must have an engaged and motivated workforce
led by managers with vision and energy and have a clear sense of what targets they need to
achieve.
We have developed six core values we consider to be critical to achieving engagement and
motivation.
Our prime value is zero harm and focussing on the importance of safety to the business followed
by developing awareness that staff are working for one business, KiwiRail, rather than a collection
of individual businesses.
Our most visible employee performance indicator is the staff engagement index. It is indicating
that our staff are becoming more engaged.
From an index of 65 in FY2010 and 67 in FY2012, we moved to 73 in both FY2013 and FY2014.
Page 29 of 66
From FY2015 we are considering a range of approaches to gauge employee engagement in
addition to the staff engagement index. This will include greater engagement by front-line
supervisors/team leaders and gangers with their staff and feedback from unions.
The difficult year the business has experienced in 2014 may have a short-term impact on the way
our staff regard KiwiRail but we are confident the drive to embed our core values we have
identified along with our Back to Basics framework and greater engagement and support for
frontline leaders will, over time, improve engagement levels.
A priority over the past year has been to ensure senior managers understand their special
responsibility to communicate the KiwiRail values and energise their people.
Workplace Relations
There are a number of industrial agreements in accordance with which KiwiRail staff work. The
most significant is that negotiated with the Rail and Maritime Transport Union (RMTU).
During the 2014 year, KiwiRail and the RMTU continued their discussions on the renewal of the
collective agreement that establishes remuneration and conditions of work.
This collective agreement is in the process of being ratified by the RMTU and we expect to sign the
new agreement for a two year term in November 2014.
Page 30 of 66
THE KIWIRAIL BUSINESS AND PORTFOLIO PERFORMANCE
Delivering Portfolio Performance
KiwiRail’s financial performance is driven by its business units, primarily Freight, Interislander,
Passenger and Property.
2013-2014 Business Performance
After three years of encouraging growth in the freight business, KiwiRail’s FY2014 performance
was impacted by weaker import-export and bulk freight volumes, the need to withdraw the ferry
Aratere from service for seven months and the shorter-term loss of the DL locomotives following
the discovery of asbestos containing material in coatings around locomotive engineer bays.
As a result, revenue was on a par with 2013 but higher costs were responsible for operating
earnings being some 28 percent lower.
The FY2014 result was disappointing because the year had begun promisingly. The introduction
of new and improved rolling stock provided the Freight business with capacity to meet demand
created by a growing economy. Freight revenue in the first four months of the year was tracking
ahead of plan.
By year’s end, while Freight lagged behind plan, it was only slightly ($1.7 million) down on last
year. In the circumstances, this was a creditable performance from the business unit that
generates the bulk of our income.
While the year had its share of disappointments, there were also achievements. Total harm
injuries reduced 44 percent from the prior year, derailments dropped to 18, a far cry from the 60
recorded 10 years ago and a reflection of the improving quality of network infrastructure.
The Passenger business produced encouraging results from Wellington suburban rail and long
distance scenic journey operations. Passenger numbers and customer satisfaction in our Tranz
Metro business both increased while profitability improved in Scenic Journeys.
Page 31 of 66
Summary of KiwiRail Group 2013-2014 Financial Performance
2014
2013
% change
Operating Revenue ($m)*
723.6
727.0
(0.5)
Operating Expenses ($m)*
(648.3)
(618.8)
(4.8)
Operating Surplus ($m)*
75.3
108.2
(30.4)
Net Operating Surplus ($m)
77.5
108.2
(28.4)
Net Profit/Loss after taxation ($m)
(248.0)
(174.7)
(42.0)
Operating Cashflow ($m)
67.1
77.0
(12.9)
Total Assets ($m)
992.7
1,009.6
(1.7)
* before major one-off items
Operating Performance
30 June 2014
(NZ$million)
30 June
(NZ$million
Percentage
change
Freight
462.0
463.7
(0.4%)
Interislander
116.7
124.3
(6.2%)
Tranz Metro
52.6
50.1
4.9%
Scenic Journeys
21.0
20.0
4.8%
Infrastructure
35.2
35.1
0.3%
Property and Corporate
36.1
33.8
6.7%
723.6
727.0
(0.5%)
Total operating revenues
Page 32 of 66
KIWIRAIL FREIGHT
Freight is the major KiwiRail business unit revenue earner, earning up to 70 percent of revenue
when goods carried by ferry is combined with rail freight.
Each week Freight operates approximately 900 services around the country. Commercial and
customer service teams are predominantly based in Auckland with representatives at each of its
major depots around the country.
The Interislander ferry service is an integral part of the national rail network. The three ferries
provide important value options in terms of rail and freight capacity across the Cook Strait.
Broadly speaking there are three key freight markets, each of these segments is characterised by
their own market-unique drivers and circumstances, which in turn determines the applicability of
rail as a transport solution.
Import and Export (IMEX)
Containerised export commodities, such as milk powder, tend to be moved in large quantities and
as such they lend themselves to rail. Superior axle load capacities can more efficiently transport
large and heavy consignments. In addition, key exporters with large freight footprints often have
infrastructure in place that is optimised for Rail to Port journeys.
There is plenty of opportunity to develop this market further through greater integration of land
transport planning including consolidation of ports and the development of inland ports and hubs.
Port rationalisation and the introduction of larger vessels into New Zealand will result in fewer ports
serviced and more import/export cargoes hubbed around the country via rail and coastal shipping
to connect with these services.
Bulk
Bulk commodities are well suited to rail where there is an intrinsic ability to carry large
consignments and make use of the benefits of scale.
KiwiRail already moves almost 70 percent of coal volumes. While coal volumes carried have been
affected by low world prices, trials have demonstrated rail’s ability to carry projected increased coal
volumes from the West Coast to Lyttelton.
Milk is another bulk commodity where movement by rail takes pressure off the highway network.
Forestry traffic reduced in the second half of FY2014 largely as a result of high log inventories in
China. Maturing forests over the next three to five years should result in a significant uplift in log
volumes moving on the rail network.
Domestic
The domestic market encompasses freight movements where the end product consumption is
likely to be inside New Zealand and predominately services the Auckland to Christchurch market.
While the majority of this market is of products fit for immediate domestic consumption or use,
there is a broad array of other commodities that are transported in this category - grain, steel and
gas for example.
Rail plays an important role in this market by providing a line haul service from one rail destination
to another, at which point freight forwarders carry out further processing for final delivery to end
customers. It differs from the Bulk category in that trains tend to cater for multiple customers with
Page 33 of 66
consolidated consignments of freight rather than a dedicated service of one commodity type such
as logs.
With consolidation in the road transport industry likely, there is significant opportunity to make
greater use of rail within this sector.
Business Category Volumes
Business
Category
Bulk & Forestry
IMEX
Domestic
Other
Total
NTKs
1,899,515,116
1,249,015,128
1,343,395,672
38,539,525
4,530,465,441
42%
28%
30%
1%
Business
Category
Bulk & Forestry
IMEX
Domestic
Other
Total
Net Tonnes
8,543,204
6,279,635
2,372,755
331,745
17,527,339
49%
36%
14%
2%
Volume of Freight carried on the Network
Measure
NTK carried
(millions)
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
3,991
3,983
4,233
4,233
4,585
4,530
Rolling Stock Renewal
The age and limited fleet size of both locomotives and wagons has presented a major challenge to
growing the freight business.
The youngest in the current fleet of locomotives was 20 years old before the commissioning in
2011 of 20 new DL locomotives.
Although the fleet of locomotives was refurbished in the early 1980s these are considered
underpowered and outmoded by today’s standards.
Without new locomotives and wagons opportunities to convert more freight to rail would have been
at risk.
KiwiRail has 4,820 wagons. About half are container flat wagons, the rest made up of specialised
wagons for specific commodities – coal, fertiliser, refrigerated goods and milk.
The average age of wagons has been between 25-30 years, and most wagon axle loads are only
14 tonne.
Around 70 percent of the container fleet was built to a 1970 design and based on a 14 tonne axle
load capacity. Since 1970, container weights have steadily increased and to stay competitive in
the modern market, an axle load of at least 18 tonne is needed.
A priority for the business has been to add new wagons able to carry heavy loads and maximise
capacity of each service.
Page 34 of 66
Over the last four years, almost 900 new wagons designed to carry containers has been added to
the wagon fleet. New flat top wagons now comprise roughly a third of the container fleet.
In addition, new coal wagons, curtain-sided wagons for serving freight-forwarding customers and
log bolsters for carrying logs have been added.
Locomotives
CLASS
TOTAL
POWER
TRACTION
ORIGINAL BUILD
DL
40
2700kW
269kN
2010-2013
EF
17
2984kW
256kN
1988
DXR
2
2240kW
262kN
1972-1976
DXB
14
1940kW
262kN
1972-1976
DXC
32
1940kW
262kN
1972-1976
DFB
12
1828kW
240kN
1980
DFT
15
1828kW
175kN
1980
DC
55
1119kW
160kN
1965
DBR
5
709kW
85kN
1965
Wagons
TYPE
NUMBER
AVERAGE AGE
AVERAGE AXLE
LOADING [T/axle]
14
Container Flat Wagons Light
1302
37
Container Flat Wagons Heavy
1078
6
18
Box/Curtainside Light
555
37
14
Box/Curtainside Heavy
175
14
18
Logs Light
527
40
14
Logs Heavy
24
21
18
Coal
373
17
18
Milk Tanker
66
22
18
Gas Tank
4
32
14
Flat General
121
39
14
Infrastructure
179
30
14T
4 Wheelers
117
41
12
Canopy Light
76
40
14
Canopy Heavy
48
18
18
Reefer CFT
55
38
14
Grain/Fertiliser
27
24
18
LCS
93
39
14
Auto
0
N/A
N/A
Page 35 of 66
Workshops
KiwiRail maintains rolling stock at railway workshops in the Hutt Valley. Hillside Workshops in
Dunedin was sold in late 2012.
Hutt Workshops
The Hutt Workshops site has the capability to undertake all aspects of maintenance and
refurbishment of railways rolling stock in New Zealand - including heavy maintenance and
structural repairs.
The site specialises in the refurbishment of mainline and shunt locomotives, metropolitan
passenger trains (EMU) and other rail assets.
The Hutt Workshops site refurbishes mechanical and electrical components for the New Zealand
railways industry.
Their work is commissioned by KiwiRail, Greater Wellington Regional Council, and former
Auckland Regional Transport Authority (ARTA), now Auckland Transport.
Key facts:
• Over 120 employees;
• Site established 1929;
• 25.5 hectares (63 acres) set in industrial zoned area of Lower Hutt.
Major facilities:
• Production plants – 26700 sqm;
• Inventory Store – 5650 sqm (total);
• Test track and load testing facilities.
2013/2014 Performance
After three years of steady growth, freight revenue during FY2014 held steady at 2013 levels.
There were three principal reasons for this pause: reduced volumes of import/export and bulk
traffic, the loss of the ferry Aratere for the second half of the year and the discovery of asbestos
containing material in the new DL locomotives.
A weakening forestry market, a reduction in Fonterra exports, softer coal prices and some shipping
schedule changes between the Port of Auckland and Tauranga were the market issues which
impacted on revenue.
Revenue at $462.0 million was $37.4 million or 7 percent below budget and marginally
($1.7 million) below last year. Operating surplus performance for the freight business at $132.3
million before one-off items, was $23 million below target and slightly ($2.0 million) below last year.
Average yield showed an improvement, up from 8.20 (c/NTK) FY2013 to 8.30 (c/NTK).
Aratere’s absence from December after a propeller shaft failure impacted on domestic services.
Major freight forwarders were forced to make other arrangements to get goods across Cook Strait
which included converting to road or moving goods using coastal shipping services.
Not only did the ship’s absence reduce revenue but it also affected confidence in KiwiRail’s ability
to provide reliable service.
Page 36 of 66
The DL locomotives were withdrawn from service on 28 February as a result of the discovery of
asbestos containing material. The second tranche of 20 locomotives had only been introduced into
service in August.
These issues are reflected in the reduction in freight net tonne kilometres carried, down from 4,585
million FY2013 to 4,530 million FY2014.
Despite these issues, the domestic business managed to record revenue growth of 7 percent.
The problems associated with Aratere and the DL locomotives arrested what had been a steady
improvement in on-time performance of premium freight trains as a result of investment in
infrastructure and rolling stock. FY2013 on-time performance had reached 89 percent against a
target of 90 percent but dropped back to 84 percent in FY2014.
The standard measure of locomotive efficiency, locomotive mean distance between failure
(MDBF), a measure of locomotive reliability, also deteriorated slightly from 46,000km FY2013 to
45,000km FY2014 as a result of the removal of the higher performing DLs from service.
In September 2013, a further 300 new container wagons were added to the freight fleet, increasing
the new container wagon fleet to more than 835 which is approximately a third of the container flat
top fleet.
Performance Measures
Measure
2011-2012
2012-2013
2013-14
Freight premium train (%<30mins)
81%
89%
84%
Freight operating cost/NTK
7.6c
6.8c
6.4c
Freight labour cost/NTK
2.0c
3.1c
3.2c
2011-2012
2012-2013
2013-2014
External Revenue ($000)
457.6
463.7
462.0
EBITDA ($000)*
129.1
134.3
132.3
Total Assets($000)
299.3
369.4
341.2
Financial Performance ($m)
* Excludes major one-off items
FY2013 comparatives have been restated where appropriate to reflect FY2014 changes in
business and structure.
Page 37 of 66
Asbestos Contamination in the New DL Locomotives
Background
One of the issues that confronted KiwiRail when it was formed in 2008 was the increasing age of
its locomotive fleet. Many were thirty or more years old, the most recent having been
commissioned in the 1980s.
Earlier on locomotive replacement had established that the best combination of quality and price
was to be obtained from sourcing locomotives from China. KiwiRail placed its first order for 20 new
locomotives with CNR’s locomotive and rolling-stock plant in Dalian in 2009 and a second order for
another 20 some months later.
With a pulling power of up to 2000 tonnes and a double-cab configuration, they enabled a single
locomotive to do the work of two of the older locomotives on a number of routes. The purchase
contract stipulated that the locomotives be fit for purpose and compliant with New Zealand law.
The specifications clearly stated that asbestos was not to be used in any part of the locomotives.
The DLs, as they were classed, entered service progressively from early 2011.
The Issue
In late 2013, locomotives operating in Australia, built by a separate Chinese supplier, were
withdrawn from service because of the discovery of asbestos in exhaust systems. KiwiRail sought
and obtained further assurance that its DL locomotives did not contain asbestos in lagging around
the exhaust system. In early 2014, routine tests detected the presence of asbestos containing
material in coatings around locomotive engine bays. In recognition of KiwiRail’s commitment to
ensuring the health and safety of staff, the locomotives were withdrawn from service.
The Operational Repercussions
Taking 40 locomotives out of a fleet of 190 puts a strain on resources. The DL locomotives had
initially been allocated to the Upper North Island traffic routes. But after the commissioning of the
second batch of 20, they were being used in other parts of the North Island, including on the North
Island Main Trunk and the “milk route” in the lower North Island.
When they were withdrawn from service on 28 February, KiwiRail put in place a train plan which
included suspending services in Northland and repositioning locomotive horsepower to ensure
each service was optimised. Although there was only a minor reduction in overall services, there
was a reduction in tonnage capacity which did impact some businesses and supply chains around
the country.
Northland services were restored in mid-April 2014 when second generation locomotives that
showed a lesser level of contamination in tests began filtering back into service. All of the 20
second generation locomotives are expected back in time to meet the freight peaks of the last
quarter of the calendar year.
The Response
All 40 locomotives were withdrawn on 28 February. Two series of independent tests carried out
indicated a very small presence of asbestos fibre in five locomotives but no asbestos dust. The
tests also indicated the asbestos identified was contained and could not get into the air to be
inhaled.
The testing regimes and recommendations were validated, by an internationally-recognised,
Australian occupational medicine expert. He confirmed that the risk of any exposure to airborne
fibres was low and if any did arise it would be insignificant in relation to both New Zealand and
Page 38 of 66
International workplace exposure standards for respirable Chrysotile fibre.
Packing material in the engine bay doors as well as sound-proofing material from the engine bay
and cabs of the locomotives were identified as needing to be removed from all of the 40
locomotives.
KiwiRail and the Rail and Maritime Transport Union worked collaboratively to manage the issue
and ensure the safety of all employees. WorkSAFE New Zealand was also closely involved and
indicated it was satisfied with the operating and management procedures developed and that
KiwiRail and the RMTU had taken all practicable steps to manage the work-related hazards.
The Outcome
CNR accepted full responsibility for removal and associated costs of the asbestos containing
material. It is working with an asbestos removal expert and has seconded a team of 15 staff to
Hutt workshops to carry out the work.
The manufacturer is considered to be genuine in its commitment to rectifying the issue and has
provided options by which the impact of the DLs’ loss from service can be recognised. In view of
the strength of the relationship established with CNR over a period of five years, KiwiRail has
opted for a negotiated settlement on terms which enable the relationship to continue and the
rectification of the remaining DLs to be completed.
Opportunities and Outlook
Freight will continue to be the revenue driver for the KiwiRail business. After a difficult 2014, the
Board and management are taking a cautious approach to FY2015.
The priority will be to restore customer confidence in rail freight’s capacity to deliver in a timely
manner, to grow revenue where possible and to increase revenue yield.
The New Zealand domestic economy is currently buoyant but high stocks in China of both dairy
products and logs are affecting international demand and may impact on KiwiRail’s import-export
and forestry businesses. Business analysts are predicting that demand for both commodities will
return when stocks in China diminish.
Currently, demand for New Zealand meat products is reviving which could result in higher volumes
of processed export meat being railed.
We can be optimistic about the prospect of increased traffic to and from the Port of Tauranga as a
result of the 10-year agreement among Kotahi, Maersk and Port of Tauranga but the reintroduction of PrimePort Timaru for Fonterra’s South Canterbury output, could reduce traffic on
the Main South Line.
With no immediate prospect of a lift in world coal prices, we do not expect any significant increase
in bulk coal traffic. A mild, wet winter offers the prospect of good spring grass growth and good
early bulk milk volumes, but as always, the outcome is unpredictable.
Page 39 of 66
Aratere returned to service in July (2014) and is now performing to expectations. Ensuring a
consistent and reliable performance over the peak season is critical to restoring customer
confidence in KiwiRail.
In the longer term, the prospects for rail freight remain positive. The Ministry of Transport’s
updated NFDS is forecasting the overall freight task will grow by almost 60 percent over the next
30 years. It identifies strong continuing growth in the traffic that currently drives the KiwiRail freight
business. It predicts Auckland will continue to grow in both population and share of economic
activity, but more importantly, as a national distribution centre.
The 7 percent increase in domestic revenue in FY2014 is an indicator that investment in new
rolling stock and encouraging customers to establish depots on rail land, is paying dividends.
Increasing domestic traffic, particularly goods moving from Auckland to the South Island, has been
identified as one of KiwiRail’s most promising business opportunities.
Twenty year ago, approximately 60 percent of this traffic was carried by rail. Improvements in the
highway network and lack of investment in rail resulted in this falling to below 20 percent by 2010.
Page 40 of 66
INTERISLANDER
Business Overview
The Interislander provides freight and passenger services across Cook Strait on three ferries:
Arahura, Aratere and Kaitaki.
Arahura and Aratere were purpose-built for New Zealand conditions, containing dedicated rail
decks for rail freight. Kaitaki cannot accommodate rail traffic.
Increasing capacity on Cook Strait ferries, particularly for rail freight, was identified as a priority in
the 2010 business plan.
In April 2011, Aratere had a 30-metre extension fitted to her mid-section. The result was a
30 percent increase in freight capacity as well as improved engine capability, a new bow that
reduces wake in the Marlborough Sounds and improved passenger capacity. These changes
improved Aratere’s capacity to meet crucial time-gates for time-sensitive freight.
In November 2013, damage to a propeller shaft resulted in the loss of a propeller and a second
withdrawal from service for significant work. This incident is described in greater detail below.
Arahura, the second rail-capable ferry is now 30 years old and due for replacement in 2016. The
ship is scheduled for a special survey in 2015. Options on whether to proceed with the survey or
replace the ship are currently being evaluated.
Kaitaki has the greatest capacity for commercial vehicles and passengers. Her lease was renewed
for three years in FY2013.
Interislander owns the Wellington Departures Terminal building and the majority of land holdings at
the terminal. CentrePort owns and maintains the Arrivals Terminal, gangways and link-spans.
Port of Marlborough owns and maintains the terminal building, gangways and link at Picton.
Fleet Assets
Ship
Arahura
Aratere
Kaitaki
Stena Alegra*
Age
(Years)
30
15
18
Tonnage
Ownership
12,735
17,816
22,365
22,152
KiwiRail
KiwiRail
Leased
Short-term lease
Freight Vol
(lane metres)
756
1,052
1,150
Passenger
Numbers
539
670
1,650
Crew
50
39
60
* On six-month charter in place of Aratere January – June 2014
Performance
The business’ performance FY2014 reflects the absence of Aratere from November 2013 and the
steps taken to provide a replacement. Aratere was taken out of service just as the November to
February peak season for freight and passengers was gathering momentum.
The result was a reduction in Interislander revenue of almost 6 percent on FY2013 to $116.7
million and a reduction in operating surplus of 66 percent to $6.6 million.
Acquiring a replacement vessel, the 22,152 tonne Stena Alegra, and getting her to Wellington and
into service by early January 2014 was a remarkable achievement.
Page 41 of 66
The fact that Interislander commercial vehicle revenue was $1.7 million higher than FY2013 and
almost $2 million higher than FY2012, is a good result and directly related to the speed and
efficiency with which Stena Alegra was brought into service.
The loss of Aratere’s rail capacity reduced the number of rail wagons carried by just over 3,000.
But the greatest impact of Aratere’s absence was on passenger revenue, down $9.2m on FY2013.
A hundred thousand fewer passengers and 42,000 fewer passenger vehicles travelled on
Interislander ferries during the year.
The disruption to services inevitably affected on-time performance. In FY2013, ferries recorded an
82 percent arrival at destination within fifteen minutes of schedule. In FY2014, on-time
performance slipped to 66 percent. On-time performance was also affected by shortages of key
staff while we operated four ships at times rather than only three.
The overall impact of Aratere’s absence for KiwiRail, including revenue loss and the cost of the
Stena Alegra charter was approximately $27 million. There has also likely been a longer term
impact on Interislander’s earning capacity and reputation with customers which will extend beyond
the current financial year.
KiwiRail’s other two ferries, Arahura and Kaitaki, both performed creditably during the year and
both passed milestones of their own.
The second rail-capable ferry, Arahura, celebrated 30 years of service in December 2013 and
completed her 50,000th crossing of Cook Strait on 26 June 2014, the equivalent of roughly 4.6
million kilometres. Arahura joined the Interislander fleet in 1983 and has been an outstanding
performer over the years.
Interislander’s flagship passenger ferry, Kaitaki, spent six weeks in Brisbane during August and
September for standard dry-dock work; and also $4.5 million invested in refurbishing the
passenger space.
The work followed the confirmation in May 2013 of the ship’s charter from Irish Ferries for four
years until 2017.
Performance Measures
Measure
2011-2012
2012-2013
2013-2014
Passenger journeys
755,398
748,724
641,277
Commercial lane metres
1,184,647
1,209,237
1,243,969
On-time performance (%<15 minutes)
Labour cost/revenue
75%
30.9%
82%
31%
66%
27%
External Revenue
123.9
124.3
116.7
EBITDA
15.5
19.4
6.6
Total Assets
131.6
124.1
128.9
Financial Performance ($m)
Page 42 of 66
Outlook and Emphasis for 2015
The priority for 2015 is to restore customer confidence in Interislander’s capacity to provide reliable
service. Since returning from repairs in Singapore, Aratere has performed reliably however there
were initial problems with speed resulting in an inability to maintain a three-sailings-a-day schedule
because of marine growth and the size and efficiency of the old propeller. This has now been
addressed and the ship is sailing a three sailing timetable.
While Arahura has been a remarkable servant for 30 years on Cook Strait, she is scheduled for a
special survey in 2015. Options to progress with this work or replace Arahura are being evaluated.
The costs associated with acquiring a rail-capable replacement has led to consideration of a roadbridging alternative using a conventional ferry.
This option is being investigated by a project team and a decision is pending.
Page 43 of 66
The Aratere Propeller Shaft Failure
Background
Aratere was built in Spain for Tranz Rail and entered service in 1999. While she experienced
operational problems in her earlier years, she later settled into the role of “work-horse” of the fleet.
In 2011, the ship’s capacity to handle rail wagons, commercial vehicle and passenger traffic was
increased by approximately thirty percent by adding a new mid-section. At the same time, two
small (further) engines were added. New propellers were added to improve fuel efficiency. The
result when Aratere re-entered service was increased capacity, improved on-time performance,
better handling, reduced wake and improved fuel efficiency.
The Issue
On Tuesday 5 November, Aratere suffered a mechanical issue with one of the two shafts which
drive the ship's propellers. While she was able to return to Wellington (Terminal) the ship was
subsequently withdrawn from service. Divers who examined the shafts confirmed that the tail
section of the ship’s starboard propeller shaft had broken. The propeller had been lost at sea
although it was subsequently recovered. Aratere is fitted with equipment which monitors all
mechanical systems, including tail shaft bearing temperatures. These systems provided no
warning of imminent failure. The crew were not aware of anything unusual prior to the failure.
The Operational Repercussions
Aratere makes three daily return sailings (one more than her sister ferries) and provides
approximately 45 percent of Interislander’s fleet capacity. Losing this capacity inevitably impacted
on the business, particularly because it occurred at the height of the pre-Christmas freight peak
and it severely reduced Interislander’s capacity to move rail wagons because only the smaller
Arahura of the two remaining ferries, had a rail deck.
The Response
Initially, Aratere freight was re-allocated to the remaining two ships and what could not be carried
was re-booked onto Bluebridge vessels.
The highest priority was to arrange the charter of a temporary replacement and a dry-dock for
Aratere so that repairs could be made. In spite of there being a limited number of roll-on, roll-off
vessels able to use the Picton and Wellington berths, Interislander found and chartered Stena
Alegra in three weeks and had her in operation in eight weeks.
An initial investigation into the failure of the starboard shaft and a risk assessment and inspection
of the port shaft was completed. This was done to obtain permission to operate Aratere as a
freight only ship to provide capacity at the peak of the season.
The repair work on Aratere was carried out at Singapore’s Keppel shipyard in conjunction with a
routine two-year, dry-dock that was due. The most significant work included replacing both port
and starboard propeller tail shafts and bearings and realigning the shafting system. The original
propellers were fitted because new propellers would have taken up to nine months to procure and
fit. The pair fitted in 2011 were excluded on the basis that they could have contributed to the
November shaft failure.
The Outcome
Aratere re-entered service in early July. Initially the ship struggled to maintain three sailings a day.
Mechanically and electrically, Aratere ran perfectly but her original, smaller propellers were less
effective than the larger propellers they were replacing. Initially, morning sailings from Wellington
Page 44 of 66
were cancelled and Aratere held back for the afternoon freight-critical departures from Wellington.
However hull cleaning and ship operating improvements enabled Aratere to resume her normal
intensive around-the clock schedule. In spite of the problems experienced, Aratere’s size, rail-deck
capacity and purpose-built for Cook Strait characteristics make her an invaluable part of the
Interislander fleet.
The Cost
The overall impact of Aratere’s absence for KiwiRail, including revenue loss and the cost of the
Stena Alegra charter was approximately $27 million. There has also been a longer term impact on
Interislander’s earnings capability and reputation with customers which will extend beyond the
current financial year.
The Responsibility
KiwiRail has put in place a forensic investigation, conducted by national and international maritime
experts, to establish why the failure occurred. Their findings have guided the process of repairing
Aratere and determining cause and responsibility. The process has not yet reached a conclusion –
which is why KiwiRail has been unable to comment publicly. However, we are on record that we
will pursue compensation if it emerges that our suppliers or advisors have not met their obligations
and we will provide transparency into the cause when our commercial and insurance processes
are concluded.
Page 45 of 66
PASSENGER
Business Overview
KiwiRail Passenger operates urban passenger services in Wellington, operating as Tranz Metro
and long-distance passenger services under the Scenic brand.
Long distance passenger services include:
• The Northern Explorer: Wellington – Auckland on alternate days;
• TranzAlpine: Christchurch – Greymouth, daily throughout the year;
• Coastal Pacific: Christchurch – Picton, daily through all but the winter season.
In addition, Scenic runs the Capital Connection, Wellington-Palmerston North commuter service
Monday to Friday as well as charter services in association with heritage groups and cruise ship
visits.
Metro Services
Tranz Metro provides urban passenger (commuter) services throughout the Wellington region.
They operate between Wellington and Waikanae, the Hutt Valley, the Wairarapa, and Johnsonville
in Wellington’s northern hill suburbs. Services are provided under contract to the Greater
Wellington Regional Council (GWRC). The contract is currently in the process of being retendered with the current contract expiring June 2016. KiwiRail and Keolis Downer have signed a
Memorandum of Understanding to undertake a partnership to tender for the Wellington Metro
operation.
GWRC owns the rolling stock used on the network.
Tranz Metro operates more than 2,200 services each week and carried 11.7 million passengers
during the 2013-2014 financial year. Wellington is the destination for 90 percent of passengers.
Customers contribute 51.7 percent of revenue while Government (27.5 percent) and GWRC
(20.8 percent) contribute the remainder. Capital comes via GWRC with the majority of funds
coming from central Government.
Until early in the 2011-12 financial year Metro relied on ageing Hungarian-built Ganz Mavag and
English Electric units to provide services.
From mid-2011, new Korean-built Matangi units entered service increasing reliability and improving
customer service. Currently 10 percent of services are still provided by Ganz Mavag units but
GWRC has determined that the entire fleet will be converted to Matangi units, apart from the
locomotive-hauled carriages used on services to the Wairarapa. This is expected to occur by
mid-2016.
Scenic Journeys - Long Distance Tourism Experiences
Cheap airfares and competition from the private motor vehicle have eroded the functional role that
rail once played in moving people around the country.
The focus for the long-distance passenger business has been on attracting tourists – international
and domestic. Long distance passenger train travel in New Zealand is based on creating a travel
experience rather than simply getting people from one place to another.
Page 46 of 66
The model for long-distance, tourism experiences, is based on the success of the TranzAlpine
service between Christchurch and Greymouth.
Scenic Journeys has a fleet of 43 carriages, including 18 South Island-based, big window
carriages, eight North Island-based big window carriages, eight Capital Connection carriages and
nine charter fleet, small window carriages.
In addition, there are three Silver Fern railcars and 11 luggage vans.
During the 2013-2014 financial year Scenic Journeys’ trains carried just under 314,500
passengers. Customers contribute 100 percent of operational funding with no Government
funding.
In 2009 the Government allocated $39.9m to fund 17 new carriages for the Scenic fleet.
Capital Connection Service
The Capital Connection week-day train between Palmerston North and Wellington is more of a
commuter service than a scenic experience. The introduction of regular commuter services to
Waikanae in early 2010 undermined its financial viability. KiwiRail agreed to continue running the
service until the end of the 2014 year, absorbing it losses and seeking to grow revenue.
Despite initiatives to grow patronage, the train has lost popularity steadily over recent years – down
from 178,000 passengers a year in FY2011 to 139,000 FY2014. The target of break-even by 2015
appears a distant prospect at this stage.
Rail Passenger Services
Service
No. of
Services
Tranz Metro
Passengers
2011-2012
Passengers
2012-2013
Passengers
2013-2014
11,274,139
11,355,402
11,684,055
*1
Northern Explorer
306
55,059
30,683
32,144
Coastal Pacific
416
42,166
37,084*2
34,933
TranzAlpine
715
105,938
99,545
108,380
Capital Connection
Long-distance
passenger total
483
158,972
145,590
139,022
1,920
362,135
312,902
314,479
*1
*2
Reflects reduction in services
Reflects seasonal layoff
2013-2014 Performance
While Passenger is a smaller contributor to the overall business than Freight or Interislander, it
produced a pleasing FY2014 improvement in performance.
Tranz Metro revenue of $51.7 million was only $1 million short of budget. Revenue generated
accrued to Greater Wellington Regional Council as the service owner.
Page 47 of 66
The improvement was achieved as a result of passenger growth of almost three percent on
FY2013.
The Scenic Journeys’ business, heavily impacted by the Canterbury earthquakes effect on the
tourism market, rebounded to earn revenue of $20.9 million that was on a par with plan. The
operating surplus loss of $1.3 million was 40 percent ahead of budget.
The result reflects the recovery in patronage of the flagship TranzAlpine service and the service
reductions in the other two trains which reduced costs.
Overall, external revenue was up by almost $10 million. Passenger benefitted by $7 million from a
structural change associated with the Mechanical Depot while $1.8 million came from greater
Tranz Metro patronage and $1 million from Scenic.
Tranz Metro performance continues to reflect the investment in Wellington urban network
infrastructure and new electric trains. Passenger numbers have grown steadily – up from 11.1
million in FY2010 to almost 11.7 million this year – as service reliability has improved.
In FY2010, 89 percent of trains were reaching destination within five minutes of schedule. For
FY2014, on-time performance had risen to 95 percent.
Customer satisfaction on the Wellington Metro is independently surveyed at 92.8% (where
customers rate the performance as good, very good or excellent) which benchmarks performance
to the best achieved in Australasia and the UK.
FY2014 was unusual for two strong earthquakes which resulted in services being suspended. In
July 2013, services were suspended from Sunday afternoon 21 July until midday Monday 22 July
following a 6.5 magnitude earthquake and again from Friday 16 August until the following day as a
result of the even larger 6.6 magnitude quake.
While the new Matangi electric trains have introduced a new era of comfort and reliability, they
were briefly taken out of service on 7 October 2013 while the manufacturer carried out a
precautionary check on a locking nut that couples individual units.
Scenic Journeys
The most significant improvement was in patronage for the internationally-rated TranzAlpine
service between Christchurch and Greymouth. Patronage was up 6 percent, still well below
pre-earthquake levels, but heading in the right direction. This increase was in spite of the closure
of the Otira tunnel as a precautionary safety measure in mid July 2013 and the need to bus
passengers around the Otira tunnel.
A 40 percent improvement in operating surplus performance was particularly pleasing for a
business that has been buffeted by the decline in South Island tourist numbers since the
Canterbury earthquakes.
Passengers have responded positively to the use of the new AK carriages – operating now on all
three long distance service — which have enhanced sight-seeing and comfort. The new carriages
were recognised during the year with a Designers Institute of New Zealand Best Design Silver
Award.
Numbers on the Northern Explorer, which runs between Auckland and Wellington, were up by
about 1,500 on FY2013 but the trend on the Picton-Christchurch Coastal Pacific was less
encouraging. Approximately two thousand fewer passengers than in FY2013 used the service.
Page 48 of 66
As discussed, the introduction of regular commuter services to Waikanae in early 2010
undermined the financial viability of the Capital Connection service. KiwiRail agreed to continue
running the service until the end of the current year, absorbing its losses and seeking to grow
revenue.
Despite initiatives to grow patronage, the train has lost popularity steadily over recent years – down
from 178,000 passengers a year in FY2011 to 139,000 FY2014.
Performance Measures
Measure
2011-2012
2012-2013
2013-2014
Tranz Metro on-time performance (%<5 mins)
92
94
95
Long-distance operating cost/passenger ($)
54
69
70
External revenue
66
70.1
73.6
Operating Surplus
-0.6
2.1
3.1
Total assets of Scenic
51.8
43.0
36.0
Financial Performance ($m)
FY comparatives have been restated where appropriate to reflect FY2014 changes in business unit
structure.
Outlook
During 2015, KiwiRail will bid to secure the Greater Wellington Regional Council contract to
provide suburban rail services in the capital. We can expect competition for the contract which
makes the focus on improving on-time performance and customer service doubly important. We
will also make a decision on whether to bid for the contract to operate suburban train services in
Auckland when that contract comes up for renewal in 2016.
We expect a decision to be made on the future of the Capital Connection service. Despite
initiatives to boost patronage, the competition it receives from the expanded and improved Kapiti
Line commuter services make its survival problematic without some form of funding assistance.
We will continue with initiatives to boost the number of passengers using Scenic Journeys’ trains.
Figures for FY2014 have been encouraging for the TranzAlpine and Northern Explorer services.
KiwiRail will be looking at ways to deal with the continuing decline in patronage of the Coastal
Pacific service.
Page 49 of 66
INFRASTRUCTURE AND ENGINEERING
Business Overview
KiwiRail Infrastructure and Engineering is the infrastructure management and maintenance arm of
the rail industry, responsible for managing the national rail network.
It undertakes a range of activities to maintain the network and provide rail operators with safe and
timely access to it.
In 2004, operating as ONTRACK, we took responsibility for the rail network on behalf of the Crown
and inherited decades of deferred maintenance. Since that time the rate of activity has
substantially increased.
In addition to the network maintenance work, there is a programme of renewals - replacing assets
that have reached the end of their useful life, for example timber bridges.
In 2004 there were nearly 2,800 timber piers and 4,700 metres of timber spans in the network with
much of this timber being 80 – 130 years old. Since that time the rate of timber pier renewals has
quadrupled.
The effects of an ageing network can be seen in other areas. Most of the mainline formation was
constructed between 50 and 75 years ago and was engineered for lighter axle loads at the time.
As axle loads have increased significantly along with tonnage and speeds, much of the formation is
now wearing and showing signs of stress.
Currently, 200 kilometres of rail (five percent of the network) is approaching the end of its predicted
life. In an ideal world, KiwiRail would be renewing 1 percent of rail (40km) a year.
Ninety to 100 years is the normal age at which a bridge would be replaced. Twenty three percent
of all railway bridges are at least 90 years old. Thirty three percent are 80 years old or more.
In addition to maintenance, there are also upgrades to the rail network, introducing totally new
assets or replacing existing assets with something better. The rail traffic using a given line dictates
the nature of much of this activity.
The bulk of the investment has been in catch-up maintenance and renewals. Little work has thus
far been done on the freight network that could be considered “step changes”.
Major upgrade works over recent years include:
• The rehabilitation and electrification of the Auckland urban network to enable new, modern
electric multiple units to be introduced;
• The rehabilitation and upgrade of the Wellington network in advance of the introduction of
the Matangi trains;
• Building passing loops on the East Coast Main Trunk route between Hamilton and
Tauranga to double train capacity on the country’s busiest freight line;
• Introducing modern signalling equipment in key areas on the network;
• A deviation around the Kai Iwi tunnel removing a major impediment to the transport of the
largest containers used extensively for dairy produce from Fonterra’s Whareroa plant in
south Taranaki;
• The “day-lighting” of three tunnels at the eastern end of the Manawatu Gorge combined
with the earlier lowering of the floors in two long tunnels opened the way for trains on the
Palmerston North-Napier Line to also carry the larger hi cube containers;
Page 50 of 66
•
•
•
•
Between late 2010 and early 2011, a series of tunnels between Pukerua Bay and
Paekakariki were lowered to enable larger containers to pass through and increase train
speeds on the section of line;
Refurbishment of the Wairio industrial line in Southland used for moving coal, principally to
dairy factories;
Refurbishment of the Auckland and Wellington urban networks;
KiwiRail worked with the Northland Regional Council to designate a rail link from the North
Auckland Line to Marsden Point. While designation will secure the route and give
landowners certainty there is no date set at this stage for building the link.
Measuring Improvements to Network Infrastructure and Performance
Performance Measures
New rail laid (Km)
New sleepers laid (000)
Line de-stressed (Km)
Bridges replaced (m)
Timber piers replaced
Derailments
Level Crossing Upgrades
2011-2012
36
105
242
524
77
27
10
2012-2013
30
101
155
492
76
20
8
2013-2014
24
67
130
130
25
18
7
Financial Performance ($m)
External revenue
EBITDA
Grants
Total assets*1
Infrastructure & Engineering Assets (ex-land)
Land assets*2
34.2
(55.1)
161.5
3,669.2
411.0
3,258.2
35.1
(64.7)
181.2
298.7
298.7
0.0
35.2
(79.1)
93.4
265.3
265.3
0.0
1
* Reduction between 2011-12 and 2012-13 due to $2.45 billion decrease in, and values resulting from, the normal revaluations
performed by independent valuers; and a $6.5 billion decrease in all other fixed assets as a result of the decision to restructure our
balance sheet’
2
* Land assets were not transferred to KiwiRail from NZRC
FY2013 comparatives have been restated where appropriate to reflect the FY2014 changes in
business unit structure.
Urban Rail Projects
Auckland Rail Projects
There are three main components to the upgrading of Auckland’s commuter rail network:
• Project DART – The $600 million suite of rail infrastructure projects now completed, that
has increased the capacity of the network to enable services to operate at roughly
10 minute intervals;
• Electrification of the Auckland passenger rail network – including all lines between
Swanson and Papakura ($500 million);
• Rolling stock – Procurement of a new Electric Multiple Unit (EMU) fleet by Auckland
Transport.
Page 51 of 66
Project DART
•
The original goal was to enable six trains an hour on each of the main suburban lines while still
providing for freight movements through the network.
•
The key elements included the duplication of the Western line, the redevelopment of
Newmarket junction and station, construction of the Manukau Rail link and the rehabilitation of
the Onehunga Branch Line.
Electrification of the Rail Network
•
Auckland’s commuter rail network has been electrified between Papakura in the south and
Swanson in the north at a cost of $500 million.
•
The three main elements of work included traction (overhead poles and wires and power
supply), signalling, and providing sufficient clearance beneath bridges.
Wellington Region Rail Programme
A total of $550 million has been invested to improve the Wellington railway system to provide more
reliable passenger services.
This has been a joint programme between Greater Wellington Regional Council which owns the
Matangi new electric multiple units introduced in late 2010 and KiwiRail Infrastructure &
Engineering which has led the upgrade of the existing railway infrastructure to accommodate the
new trains and improve the overall reliability of the network. This work has included upgrading the
power supply, signals and station infrastructure around the Wellington region.
Work was also carried out to increase capacity of the network. All seven tunnels on the
Johnsonville line were made larger by lowering their floors. Double tracking and electrification of
the North Island Main Trunk was extended to enable regular commuter services to travel to
Waikanae.
At the entrance to Wellington Railway Station, a third main line was installed to reduce delays at a
bottleneck in the system where previously four main lines reduced to two. Work is planned to
improve ageing infrastructure on the Wellington network.
2013-2014 Performance
Maintenance work continued to focus heavily on the business-critical Auckland to Tauranga route.
A particular goal was eliminating timber bridges by the end of FY2015. At this stage, the target
looks likely to be met only a couple of months beyond the end of the year.
Storm repair work and the second year of a three-year cost reduction programme reduced the
extent of work on renewal of basic infrastructure such as track, sleepers, bridges and line destressing. This is reflected in the performance measure comparison.
However, the commissioning of six new rail maintenance machines at a cost of $12 million,
provided a fillip to basic track maintenance. The three new ballast regulators and three new
tampers, improve track formation, provide a smoother ride and prolong track life. They replaced
equipment that was 30 years old.
The rail grinding programme begun in FY2013, completed a full year on the network, moving from
the North Island to the South Island. The grinder extends the life-span of track by smoothing and
removing defective metal from the rail head. It also has long term cost saving benefits by reducing
the amount of track and wheel maintenance needed and reducing fuel consumption.
Page 52 of 66
The grinder, which made its first appearance in October 2012, is operating on the New Zealand
network for the first time.
Signalling projects were started in the Bay of Plenty and Dunedin areas. During the year, staff
made significant steps towards centralising more signal boxes. The majority of these projects will
be completed in FY2015 but the Petone Box was centralised in FY2014 while Te Rapa and Taita
followed soon after, in the first weeks of FY2015.
The major upgrade work was in the area of signalling and improving entry to and exit from major
depots.
The introduction of Centralised Track Control (CTC) to the section of the Marton-New Plymouth
Line between Wanganui and Marton – replacing the Track Warrant system of train control - was
completed in time for bulk milk traffic to operate. The foundation for this work had been carried out
the year before.
Rail yard work was carried out in Palmerston North to improve the flow of traffic both passing
through and loading and unloading.
Further work was done in South Auckland in preparation for the creation of a third line which will
enable freight traffic to operate more independently of the increasing amount of commuter traffic on
the Auckland network. This included work associated with the new depot at Wiri which will house
Auckland’s new electric commuter trains.
Completing the connection on the Midland Line to Fonterra’s new Darfield dairy factory was an
important milestone and an indication of the continuing growth of the dairy industry in the South
Island.
Other projects included re-cabling a section of the Addington to Lyttelton tunnel which had been
significantly weakened by the Canterbury earthquakes and replacing sections of fibre on the North
Island Main Trunk Line.
One of the most significant measures of network robustness is the incidence of derailments. It is
pleasing to record the continuing reduction in derailments over time. The FY2014 figure of 18 is in
stark contrast to the 60 to 70 that were the norm a decade ago.
Improving the quality of asset management has been a priority for a number of years. The final
link in the introduction of the new Maximo asset and works management system went live in April
2014, on time and on budget.
With similar objectives, a major inventory re-engineering project was launched. So far $2.0 million
has been recovered and all aspects of materials handling and management have been improved.
Auckland and Wellington Suburban Networks
Both Auckland and Wellington suburban networks have benefitted from extensive upgrades over a
number of years.
In Auckland, the focus has been on electrifying the network for use by the city’s new electric
commuter trains.
It has involved the installation of 3,500 masts, carrying 560km of 25kv overhead wires across
175km of railway tracks.
Page 53 of 66
The complexity and scale of this project is comparable to recent rail upgrades in some of the
world’s largest cities.
KiwiRail has installed state-of-the-art signalling technology that will enable greater levels of
automation, communications and safety across the network.
This includes the implementation of a new train control system that overrides drivers if they are
travelling too fast towards red signal lights and advanced, automated signalling equipment that is a
world-first for New Zealand and replaces equipment that has not been upgraded for more than fifty
years.
With infrastructure work substantially completed during FY2014, the project now involves working
closely with Auckland Transport and train manufacturer CAF to ensure the smooth introduction of
the new trains onto the network.
Improvements on the Wellington network have included replacement of ageing overhead wiring
and support masts, the introduction of new signaling technology to replace the old Petone Signal
Box, the replacement of wooden bridges on the Wairarapa Line and strengthening of the sea wall
along the Wellington harbour edge between Petone and Wellington.
New overhead electrification hardware is being introduced between Redwood north of Wellington
and Muri which is south of Paekakariki. The project is scheduled to be completed in FY2015.
Overhead wiring has also been replaced near Woburn and north of Trentham on the Wairarapa
Line.
Manually-controlled signalling equipment at Petone and Porirua has been replaced with the latest
computer-controlled signalling equipment. Generator backed-up power supplies have also been
provided. The new technology brings improved reliability and easier maintenance and service.
Bridge replacements on the Wairarapa Line are part of a commitment by KiwiRail and Greater
Wellington Regional Council to investment in infrastructure on the line. Long term planning has
begun to determine a programme for replacement of all remaining timber pier bridges on the
Wairarapa Line.
Outlook and Emphasis for 2015
The focus during the year will be to continue meeting financial targets and control costs as well as
completing a number of projects started in FY2013 and FY2014.
Projects include the change from track warrant to CTC in Dunedin, centralisation of signal boxes,
re-signalling the forestry route in the Bay of Plenty and starting repairs to the Kaimai tunnel floor.
We will also begin work on seven bridges on the North Island Main Trunk Line in the central North
Island, work that once complete will be major step towards the complete timber replacement for
line. While 10 bridges will remain to be replaced, they are relatively modest structures.
Page 54 of 66
APPENDICES
Page 55 of 66
Appendix 1 - Brief Rail History
The New Zealand rail system grew from separate beginnings made by individual provinces or
entrepreneurs from the 1860s onwards. Colonial Treasurer and later Premier Sir Julius Vogel
made rail a major plank in his programme to develop the colony in 1870. By 1880 New Zealand
Railways (NZR) was operating more than 1,900 kilometres of track, and carrying almost three
million passengers and 830,000 tonnes of freight a year.
The first half of the twentieth century was a ‘golden age’ for rail. By 1953 the network reached
its peak at 5,689 kilometres. But advances in air and road transport began to cut into its
competitive advantage. In 1936 a system of transport licensing had been introduced to protect
rail from competition. Initially road was limited to carrying loads no more than 30 miles but this
gradually increased, reaching 150 kilometres in 1977.
The NZ Railways was reorganised in 1982 to become a Government-owned corporation with a
commercial mandate. Also, the government began deregulation of the transport industry,
removing statutory protections for rail against competition by road. In 1980, rail carried
approximately 30 percent of all goods, but following deregulation, its market share dropped
significantly.
In 1990, the operating assets of the NZ Railways Corporation were transferred to a limited
liability company under government ownership, New Zealand Rail Ltd. In 1993, the company
was sold to a private consortium comprising Wisconsin Central Transportation Corporation and
two investment groups. Three years later, the new owners made a public offering of shares in
Tranz Rail Holdings, listing the company on the New Zealand Stock Exchange and the
NASDAQ market in the United States.
The process of deregulation, commercialisation and privatisation resulted in a reduction in the
number of employees, from 21,000 in 1982 to 3,757 in 2002. After the sale in 1993, the
New Zealand Railways Corporation continued as a residual government body with two principal
activities: to manage all known litigation, contingent issues and statutory obligations; and to
manage the rail corridor lease with Tranz Rail and the lease of other crown land held for
operational rail purposes.
During the 1990s, Tranz Rail expanded into new markets, including the movement of bulk milk
to dairy processing plants and establishment of New Zealand’s first inland port south of
Auckland. The new port, a joint development with the Port of Tauranga, is connected by train
with Tauranga and created a significant new line of containerised freight business.
In 2003, Toll Holdings Limited, an Australian-based transportation and logistics operator,
acquired approximately 85 percent of the shares in Tranz Rail. As a result of Toll’s offer for
shares in Tranz Rail becoming unconditional, an agreement between Toll and the Crown was
triggered, a key feature of which was the buy-back of track and associated infrastructure by the
crown. The Crown undertook to invest $200 million in improving rail infrastructure while Toll
undertook to invest $100 million in new rolling stock. In September 2004, ownership and
management of the network and its assets was vested in the existing New Zealand Railways
Corporation which adopted the trading name ONTRACK. Under the agreement, Toll retained
exclusive rights to the network for freight purposes, subject to meeting minimum tonnage levels
annually.
Page 56 of 66
In late 2007 and early 2008, the Crown negotiated with Toll Holdings for the purchase of the
company’s New Zealand rail and ferry businesses. A purchase was concluded on 30 June
2008 for $665 million and the business re-named KiwiRail.
With Government investment of $750 million over three years, KiwiRail embarked on a Strategy
in 2010 to create a business within 10 years that would be financially self-sufficient.
Page 57 of 66
Appendix 2 - Heritage Train Operations in Tunnels
Introduction
KiwiRail is reviewing the safety aspects of operations in rail tunnels. The review is
informed by the findings of the Pike River mine disaster enquiry and the subsequent
changes in safety legislation encapsulated in the Health and Safety Reform Bill currently
before Parliament.
The review covers all tunnel operations, including freight train services, passenger train
services, and infrastructure maintenance work. It includes the operation of charter,
tourist and heritage passenger operations by both KiwiRail and other operators.
The New Zealand rail regulator NZTA has required that KiwiRail lead a review of such
passenger operations in tunnels in consultation with other heritage operators.
The most significant early impact to emerge is the effect the review might have on
heritage rail groups who operate excursions using locomotives and rolling stock that are
unlikely to meet higher standards of crash-worthiness or fire resistance.
The New Safety and Health Legislation
The new legislation is expected to come into effect by 1 April next year (2015). It
reinforces the onus on KiwiRail and other rail participants to consider carefully the risks
associated with rail operations in tunnels.
The legislation imposes a duty on a person under this Act to ensure health and safety (and)
requires the person (in this case KiwiRail and other rail participants) —
a) to eliminate risks to health and safety, so far as is reasonably
practicable; and
b) if it is not reasonably practicable to eliminate risks to health and safety,
to minimise those risks so far as is reasonably practicable
Background
The review of safety of rail tunnel operations started in 2013 when it was considered
necessary to review safety in the Otira tunnel because of its special nature – in
particular its length, gradient and presence of coal dust. One outcome of that review
was that AK class carriages would be the only passenger rolling stock considered
suitable for conveying passengers in the Otira tunnel.
Page 58 of 66
Subsequently, KiwiRail established a National Rail Tunnel Working Group (NRTWG) to
widen the review. The NRTWG conducted a preliminary risk ranking of tunnels to help
identify where to focus initial efforts.
The result was the identification of eight tunnels on the network with the highest risk
profile. They are Otira, Rimutaka, Tunnels 1 and 2 North Island Main Trunk, Britomart,
Kaimai, Mihiwaka and Lyttelton (category 1 tunnels).
The principal operators of passenger services on the New Zealand Rail network are
KiwiRail itself and tourist and heritage railway operators. In June 2014, KiwiRail
contacted the Federation of Railway Operators of New Zealand (FRONZ) and major
heritage operators and briefed them on the work that was in progress re safety of tunnel
operations.
Subsequently, major heritage operators attended a workshop arranged by KiwiRail. In
an opening presentation, the NZTA provided background to the new environment and
made the point that “the status quo is not an option”.
KiwiRail has also commissioned work on the regimes that apply to tourist and heritage
passenger services passing through tunnels in other countries, particularly Britain and
Australia. In brief, the research indicates few restrictions apply elsewhere although it is
also clear that New Zealand is unusual in the number, length and narrowness of tunnels
on its network.
NZTA Expectations
The NZTA notes that serious tunnel incidents are not common, but that they are
possible, and that the consequences of such an incident have the potential to be
catastrophic, particularly if fire is involved.
It required that KiwiRail lead a review of tunnel risks and work with tourist and heritage
operators to put in place appropriate mitigations for heritage / charter / excursion
operations in order to reduce safety risks.
It noted that the overall outcome of the review was unclear and that additional
requirements, further restrictions, or cessation of some operations were potential
outcomes.
Progress to Date
KiwiRail and tourist/heritage operators have made progress on developing a proposed
interim arrangement to manage operations through tunnels until the full review has been
Page 59 of 66
completed, any new standards agreed, and accepted by the NZTA. The proposed
interim arrangement is currently being considered by NZTA.
In the meantime tourist / heritage operations through category 1 tunnels are being
considered on a case by case basis with input from NZTA.
The most notable so far has been in relation to Steam Incorporated’s September 14
(2014) Daffodil Express from Wellington to Carterton and return, using the Rimutaka
tunnel. It is notable because the train is steam-hauled and the consist includes woodenframed and clad carriages with minimal crash-worthiness provisions.
KiwiRail in its role as access provider applied to NZTA for a safety case variation on the
basis that:
1. A satisfactory risk management assessment had been made and risk mitigated
by the use of banker diesel locomotives moving the train through the tunnel with
the steam engine on “light steam”.
2. A satisfactory emergency management plan based on the deployment of
experienced staff in carriages equipped to meet known contingencies.
3. Supervision of the train by KiwiRail staff.
NZTA approved the application subject to a number of additional provisions, one of the
most significant being that banker locomotives used to move the train through the tunnel
must be fitted with fire suppressant equipment.
NZTA has emphasized that approval for individual tourist / heritage operations during
the period prior to completion of the review does not set a precedent for the future and
that the future regime to be established will be the result of the work carried out as part
of the review.
Working Towards a New Safety Regime for Tunnel Operations
A firm date for agreement on a new regime has not been set but the expectation is that
good progress towards an outcome must be demonstrated with a target for completion
by the end of 2014.
The work carried out in the months to come will influence the regime that is finally put in
place. Although the outcome cannot be known at this stage, significant change is
inevitable. The constructive input of all organisations involved is the best means to
achieve an outcome that is workable for all concerned.
Ends
Page 60 of 66
Appendix 3 – Glossary
Accident
An undesired, unplanned, uncontrolled event that results in harm to people,
damage to property, loss to process or adverse impact to the environment.
ACSO
Auckland Commute Services Operator.
ADK/ADB
Auckland DMU ex Westrail. Older model (1969).
ADL/ADC
Auckland DMU ex Westrail. Newer model (1981-85).
Amicus
Toll’s integrated freight accounting train and rolling stock management system.
APL
Accident priority list.
Arrival road
A track on which trains stop on arrival at a yard.
Average haul
The (weighted) average distance freight is carried. It is calculated as net tonne
kilometres/net tonnes.
AVI
Automatic Vehicle Identification.
Axle load
The weight on any one axle (tonnes).
Bogie
A twin axle wheelset or “truck”.
Bogie Wagon
A rail wagon with twin axle wheel sets.
BRG
Board Reference Group.
Bulletin
Means a numbered instruction, either typed or hand-written, issued by the
INFRASTRUCTURE & ENGINEERING Network Controller (Authorities) or an
INFRASTRUCTURE & ENGINEERING Train Controller qualified to issue Bulletins.
Exception – Information Bulletins, which include information on daily instructions,
special trains and maintenance work, will not be numbered as they apply to the
specified day of operation only.
Cabotage
The practice of prohibiting foreign vessels from engaging in coastal trade.
Cascading
Replacing assets or components and using the items recovered in a less arduous
or less important role elsewhere in the system.
CEA
Collective Employment Agreement.
CIMW
Coupled In Motion Weighbridge.
Clearance gauge
The maximum permitted dimensions of the rail vehicle and load.
Consist
The set of wagons or carriages which form the train.
Controlled
Network
Comprises all track where occupancy and movement by Rail Service Vehicles is
under the control of INFRASTRUCTURE & ENGINEERING.
CTC
Centralised Traffic Control: remote centralised control of signals and points and
therefore train movements.
CWR
Continuous welded rail.
DART
Developing Auckland’s Rail Transport Network.
DART 1 & 2
Newmarket Redevelopment – relock - control centre.
DART 3
Boston to Avondale.
DART 4
Avondale to Whau Creek.
DART 5
Whau Creek.
DART 6
Whau Creek to Titirangi Road.
DART 6b
Titirangi Road area.
DART 7
Titirangi road to Henderson.
DART 8
Henderson to Swanson.
Page 61 of 66
DART 9
Manukau Rail Link.
DART 10
Infrastructure Renewals.
DART 11
Quay Park Junction.
DART 12
Eden Park, bi-directional running.
DART 13
Minor Capacity and Safety - relocks (Wiri, Otahuhu, Papakura) - capacity
enhancement - eliminate pinch-points - network wide capacity.
DART 14
Over run protection.
DART 15
Upgrade infrastructure – foots - pedestrian crossings – fencing – platforms - Alcam
study.
DART 16
Local control centre – temporary - long term.
DART 17
Distributed stabling.
DART 18
Logistics - modelling software - project management software - frame layer - plant
and equipment – tamper.
Daylighted
Converted from a tunnel into a cutting.
DEMU
Diesel electric multiple unit; a two passenger car set in which one car is diesel
electric powered.
Density
A measure of the level of operating activity on a particular line (or a group of lines)
expressed as millions of gross or net tonne kilometres per route kilometre per year.
Derailment
A derailment of a train that has been made up, tested and departed from the
originating station.
Destressing
Heating and refastening of rail.
DMU
Diesel multiple unit; a two passenger car set in which one car is diesel powered.
Drawgear
Equipment used to connect wagons together.
E band
A private nationwide VHG radio network for trackside communication.
EAP
Employee Assistance Programme.
ECMT
East Coast Main Trunk line between Hamilton and Kawerau.
EM80
Rail vehicle that automatically records track geometry and notes exceedances.
EMU
Electric multiple unit; a two or three passenger car set in which one car is
electrically powered.
External
Notifiable
Events that are required by law to be notified to one of our regulators.
Flash butt welder
Welding machine used to weld lengths of rail together in situ.
FLB
Flashing lights and bells.
Formation
The earthworks on which the track is laid.
Freight
forwarding
Freight forwarding companies contract with the shipper for the complete transport
task, but subcontract the line haul, after consolidation where appropriate.
Gauge (track
gauge)
The distance between the rails on the railway track (1067mm or 3ft 6in on NZRL,
1435mm or 4ft 8½ in USA).
Gross Tonne
Kilometres (GTK)
The sum of the total train weight multiplied by the distance travelled: frequently
used to mean GTK trailing.
GTK trailing
Gross tonne kilometres excluding the locomotive.
HAB
Half arm barriers.
Harmonic filter
An electronic filter to recover unwanted frequencies from the power supply.
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Heat buckling
Distortion of track alignment under high temperature condition, resulting from
improper rail installation.
Heritage Charter
Services
A “one-off” train service organised for or by rail heritage enthusiasts, and “Heritage
Operator” means rail enthusiasts organising and operating such a service.
Hi-Rail Vehicle
(HRV)
A road vehicle fitted with retractable rail trolleys such that it can be driven along the
track and can also be driven on or off track at level crossings or other suitable
places.
Hours worked
Hours as calculated from timesheets.
Incident
An undesired, unplanned, uncontrolled event, which under different circumstances,
could lead to an accident.
Infrastructure
Works Controller
(IWC)
A person in charge of an infrastructure work area on the National Rail System.
Injury downtime
rate
The time lost to injuries as a percentage of total hours worked.
Line haul
That part of the transport task that is between terminals (distinguishing from the
aggregation and distribution at each end of the journey).
LINZ
Land Information New Zealand. Successor to Department of Survey and Land
Information (DOSLI). Government Department now disposing of surplus NZRC
property.
LIV
Light Inspection Vehicle (hi-rail).
Lost time
A period in which an employee is unable to work.
Lost time injury
An injury which causes an employee to miss at least one shift or results in the
employee being away from work for at least one full working day.
LTIFR (Lost Time
Injury Frequency
Rate)
The total number of Lost Time injuries per million hours worked.
LTNZ
Land Transport NZ, the regulator for the rail industry (formerly Land Transport
Safety Authority).
Marshalling
Arranging wagons in the correct order form making up trains.
Midland Line
The East-West rail line between Greymouth and Rolleston (South of Christchurch).
Mobile Track
Maintenance
Vehicle (MTMV)
Tampers, Regulators, Spot Resleepering Group, Ballast Cleaner, Track Evaluation
Car, Self-Propelled Cranes and heavy Hi-Rail Vehicles exceeding an unladen
weight of 20 tonne.
MRL
Manukau Rail Link.
MTkm
Million train kilometres.
N.D.T.
Non-destructive testing.
Narrow Gauge
Distance between rails of less than 1.435 metres; in the case of the company, a
gauge of 1.067 metres
National gangs
Special purpose track gangs managed by Engineering HQ eg tamping, welding,
spot re-sleepering gangs.
National Rail
System
The rail network comprising the Controlled Network an Operator Controlled
Territory. It includes all Track unless specifically defined as unavailable for rail
activity, owned or managed by INFRASTRUCTURE & ENGINEERING (including
private sidings) and all retained track.
National Rail
System
Standards
(NRSS)
Standards adopted by INFRASTRUCTURE & ENGINEERING and all operators
using the National Rail System.
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Net tonnekilometres (NTK)
The sum of the tonnes carried multiplied by the distance travelled.
Network
Controller
The party who is delegated by INFRASTRUCTURE & ENGINEERING to authorise
the occupancy and movement of trains and other Rail Service Vehicles, including
notification of special conditions in respect of the whole or part of the Controlled
Network. This includes, where the context so requires all Network Control
Managers, Train Controllers, Signalbox Controllers and Network Controllers
(Authorities).
NIMT
North Island Main Truck: the main Auckland – Wellington line.
OCC Log
The description of an event in the company’s occurrence management system.
Operator
Controlled
Territory
Means all track outside the Controlled Network and forming a part of the National
Rail system where an operator or other designated party is responsible for the
occupancy and movement of Rail Service Vehicles.
PTF
Planning Task Force.
Power Van
A railcar carrying diesel powered generators to provide lighting and heating or
cooling power to a passenger train.
Production gangs
Track gangs which carry out (or assist National gangs with) renewal/replacement
programmes and major maintenance work. 8 staff, 2 trucks.
Rail lubricator
A track mounted device actuated by passing wagons to lubricate rails in order to
reduce rail wear.
Railcar
A self-propelled carriage. The term is generally only used in Toll to apply to the
three Silver Fern railcars (and earlier vehicles since withdrawn).
Regulator
A track machine used to ensure an even distribution of ballast.
Renewal
The replacement of an asset on a like-for-like basis.
Retained Track
Track owned by Toll NZ forming a part of the National Rail System, but specifically
excluding any Track forming a part of the Controlled Network.
Revenue tonne
kilometre
The weight of freight carried for hire in tonnes multiplied by the distance travelled in
kilometres.
RMTU
Rail and Maritime Transport Union.
Rolling stock
All locomotives, railcars, wagons and carriages.
RoRo
Roll on roll off vessel that enables through traffic when boarding and disembarking.
ROPAX
Roll on roll off vessel that enables through traffic when boarding and disembarking
and also carries passengers.
Route kilometre
One kilometre length of rail route, excluding sidings, without adjustment for double
track.
RTK
Revenue Tonne Kilometres used interchangeably with NTK.
S & I Diagrams
Signalling and interlocking diagrams issued by INFRASTRUCTURE &
ENGINEERING detailing signalling and interlocking arrangements for each station,
and/or segment of the Controlled Network.
Safety
Observations
Practical assessments of employees to observe the application of practical skills for
the activities specified on their License to Operate.
Siding, Terminal
or Depot
Controller
A person responsible for the co-ordination of Rail Service Vehicle movements in a
designated siding, terminal or depot outside the Controlled Network.
SIFR (Serious
Injury Frequency
Rate)
1,000,000 divided by the number of hours worked, then multiplied by the number of
serious injuries. Injury requiring medical attention, even if no lost time!
Single manning
Driver only operation of freight trains.
Page 64 of 66
Single track
A rail route with one track, allowing traffic to move in only one direction at a time.
SPAD (Signal
Passed at
Danger)
Any signal, which has been passed without the correct authority or where the safe
working authority has been exceeded.
SPAD A’s
A category “A” SPAD is a SPAD where a stop signal indication (and any associated
preceding cautionary indications) was displayed correctly, in sufficient time for the
train to be stopped safety at the signal. Note that a “Stop Signal” also includes
points indicators, notice boards (those requiring a train to stop), and Track Warrant
limit over-runs.
Star fault
Most serious track geometry exceedance.
Structure gauge
The maximum permitted dimensions of the rail vehicle and load.
TAIC
Transport Accident Investigation Commission – Crown investigation agency
(separate from LTNZ).
Tamper
Mechanised rail vehicle which lifts and straightens track.
TQI
Track quality index, representing a weighted sum of geometry exceedances.
Train
A single unit.
Train kilometres
Total train kilometres consist of kilometres travelled by Freight Services, Passenger
Services and Infrastructure Services.
Trespasser
A person unlawfully on railway property (ie without proper authorisation).
TWACS
Track Warrant Control System.
TWC
Track Warrant Control.
Unit train
Any train which operates in a fixed formation between loading and unloading points,
usually carrying bulk commodities such as coal, forestry or grain.
WRRP
Wellington Region Rail Programme.
Working
Timetable (WTT)
A document incorporating specific general and local operating instructions and/or
conditions for the operation of trains on the National Rail System. (Note:
Instructions for Operator Controlled Territory and an Operators specific requirement
for vehicle operations on the Controlled Network are prescribed in the Rail
Operating Code managed by the Operator concerned.)
Wrong side
failure
The failure of a signal such that the indication shows “safe to proceed” when this is
not necessarily correct.
WSF
Signalling wrong side failure.
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Appendix 4 - Contact Details
Board of Directors
Mr John Spencer
Chairman, KiwiRail
KiwiRail
Mr Peter Reidy
Chief Executive Officer, KiwiRail
Corporate & Finance
Mr David Walsh
General Manager, Corporate & Finance
Freight
Mr Iain Hill
General Manager, KiwiRail Freight
Interislander
Mr Thomas Davis
General Manager, Interislander
Passenger
Dr Deborah Hume
General Manager, Passenger and External Relations
Infrastructure &
Engineering
Mr Rick van Barneveld
General Manager, Infrastructure & Engineering
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