Thursday, 15 May 2014

Operational Length Reduction for Kiwirail

Two numbers have been bandied about in recent years as a length reduction is likely to be implemented within the next few years for Kiwirail.
The network has been at 4000 km for a number of years. This is likely to be dropped to around 2700 km as Kiwirail needs to address its very poor financial performance and this adjustment is long overdue.
Where would the 1300 km to be dropped come from? Possibly the following (this list is not completely informed as I do not have access to all review information). All lengths are rounded.
  • Dargaville 50 km (mothballed in 2014)
  • North Auckland line to Otiria 200 km (depending on where the line from Auckland needs to end) – already under review
  • Marton-New Plymouth 210 km (current review status unknown) OR Palmerston North-Napier 180 km (current review status unknown)
  • Stratford Okahukura Line 140 km (mothballed)
  • Napier-Gisborne Line 200 km (mothballed since 2012)
  • Wairarapa Line 170 km (already under review)
  • Christchurch-Picton 350 km (current review status unknown)
Christchurch-Picton is very significant as it has long been considered part of the South Island Main Trunk and if implemented will mean the end of the rail ferry service. However it has been flagged for a number of years due to the high cost of a replacement rail ferry for the Arahura (cited recently as around $300 million) and there is strong competition for Kiwirail’s ferry services from the Bluebridge operations. As Kiwirail has recently demonstrated their ability to road bridge containers on the Stena Allegra and have opted to replace the Arahura with this ship, the need for a full rail ferry service has been diminished. Since the Kaitaki was leased in 2007 for the first time the fleet had a member with no rail capability and now there will be two ferries without rail capability.

As sea transport between Wellington and Christchurch would be cost competitive with rail operations (over longer distances the cost of shipping containers is cheaper albeit slower) and takes only a few hours longer than the journey by road and Cook Strait ferry, sending containers by sea to Wellington is operationally feasible and could attract a dedicated coastal shipping service running daily between the two ports. The only knowledge I have relevant to this is the timetable of the old overnight ferries which stopped running in 1976. These took about 11 hours for the trip. A daily overnight service with a sailing each way per day required two ferries to operate so two container ships would be needed if their speed was similar. Ship A leaves Christchurch in the evening on Day 1 while Ship B leaves Wellington at the same time. The ships reach their respective destinations on Day 2 in the morning, unload and then load for the return trip the other way in the evening.
Sea transport between Christchurch and Auckland is currently quite slow compared to road and rail operations. This is partly because there is no direct sea service. The main service is currently provided by Pacifica Shipping which calls in to a number of ports in each direction. With two ships on the run it is currently about a 6 day service to get a container from Auckland to Wellington. However the cost of doing so is about 66% of the cost of sending a container by rail albeit taking about two-three times as long. Road transport is slightly faster than rail and about four times as fast as by sea but more than double the price of going by sea. Since Port of Tauranga already has a coastal service of their own operating through Timaru they could be well placed to pick up some container traffic to Christchurch or points south of Christchurch and it would be interesting to see how fast their service is with a direct run between the ports. Although with the lifting of cabotage restrictions in the mid 1990s allowing foreign owned container ships to move freight between NZ ports has brought some competition on the coastal operations, at present Pacifica has this all to themselves as there is only very limited use of foreign ships; due to the difficulty of scheduling their operations to be reliable for customers.
It would be as well to acknowledge that a rationalisation of NZ container ports is long overdue and could result as an outcome of the mothballing of some lines as those which are more dependent on the rail services, especially where rail is being used to feed traffic through a port that is in competition with one that is closer, could be more affected by mothballing.