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Business Case Study

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Turning Northland Rail into a Self-Sustaining Business

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Turning the Northland Rail Network into a  Sustainable Business

With acknowledgement to Kelvin Taylor

Edited Reduced Version from G. Bonetti (Far North Transport Lobby)

Introduction
Since the 1980’s, the amount of freight carried, nationally, by rail has fallen from 30% to 16%. In Northland the rate is currently only 2%.

According to the National Freight Demand Survey (2008), the amount of freight generated in Northland is expected to double by 2031. This will have a significant effect upon the roads and the quality of life in Northland.

Currently the Northland rail network is underutilised and is at risk of being closed according to the “Rail Turn Around Plan” (Kiwirail, 2010) unless freight volumes increase.

By identifying the requirements of businesses that are likely to freight by rail, Kiwirail and political leaders will be able to develop and implement strategies to overcome the deficiencies.

Statement of the Problem
What are the factors that prevent Northland businesses from using more rail, for their freighting requirements?

Northland businesses are using a 33% of the national rail freight average at only 2%. The Waikato region has 17% of their freight on rail. (ref) This is despite the Waikato roads being of a higher quality than Northland roads.

The expected increases in freight volumes( predicted Double in next Decade) are going to have a significant effect upon the quality of Northland roads. By moving the freight onto rail, the damage done to the roads will be reduced,accidents will also reduce enabling the funds to be used elsewhere.
                              
          p.1

Purpose
The goal of this study is to prevent the closure of the Northland rail network by facilitating the transfer of freight onto rail. This will be achieved by discovering what is preventing Northland businesses from using more rail, for their freight and determine what can be done by Kiwirail, Local Government and Central Government to address the issues raised.
Significance of this Study
The Northland rail network could have an important part to play in the infrastructure of Northland as well as protecting the provinces Productivity from the ramifications  of future Oil spikes.or unpredicted National or Global Crisis.If it is able to be used efficiently ,Northland Rail could also assist the region to earn Credits through the ETS.Emission trading scheme.

Kiwirail indicated in its submission to NRC’s 30 year transport plan, that the estimated cost of upgrading the North Auckland would be $200 million.REF

If Northland rail is closed, then significant amounts of capital would need to be spent upgrading State highway 1 to cope with the potential increased number of trucks needed to transport the freight in and out of Northland. It has been indicated that to turn State highway 1 from Whangarei to Ruakaka into a 4 lane highway would cost $500,000 per kilometre. REF
The research carried out, will identify what Northland businesses require from Kiwirail and the rail network to enable more of their freight to be carried by rail. From the information collected, Kiwirail will be able to prioritise which projects need to be completed first and attach a cost to each project. 
Research Questions
1. What are the perceived limitations of the Northland rail network by Northland businesses
2. What are the perceived limitations of Kiwirail by Northland businesses
3. What will it cost to overcome the perceived limitations
4. What will the saving be, that are associated with road damage to State highway 1, from Whangarei to Auckland
5. How can the Northland Regional council (and Central Government) aid the transfer of freight onto rail
                                  P.2
Current Situation

Kiwirail has indicated that they only see Northland rail viable if the Marsden point line is built, at a cost of $100 million, in conjunction with upgrading of the railway network, at a cost of $10 million per year. (McElwain 2009).
At the same time the current rail network has not received adequate maintenance and upgrading to enable the rail to cope with the current increased loads required to be carried (submission 2008). Technology has also moved on. The hi-cubed containers that are now being used for shipping are higher by 50cm than the previous containers. This means that there are 6 tunnels on the Northland line that are too small.
In the submission by Kiwirail to NRC titled “Rail, funding and future routes” it was stated that “We support a strategy which encourages the locating of industries near the strategic rail or road network, and discouragement of them elsewhere. However we submit that it should also, more specifically emphasize location near rail, both for ease of transfer by road, and for the potential for direct private sidings” (van Drogenbrock 2009).
This statement was made by senior management, but the same enthusiasm is not shared by the rest of the Kiwirail employees. In the report by McElwain 2009, several of the businesses interviewed describe rail as having the following problems.
 Very unreliable
 Load restrictions
 Slow
 Preferential treatment given to bigger businesses
 Lack of suitable wagon
 Poor logistics
 Apathy
Golden Bay cement has approached the rail operators on different occasions and note that every time the response was “apathetic”.
A selection of the current freight volumes being shipped by road that could be immediately transferred to rail are shown in table 2
Business    Truck/day    Trucks/ year
Golden Bay Cement
  Hikurangi to Portland   
100     
25,000
Fonterra    Need figures    Need figures
General containers
 To Auckland   
65   
15,000
Total       
                               
                                             p.3
All of the business or activities (in table 2) are located near or on rail facilities and most have used rail in the past.
As part of “The rail turn-around plan” announced by Kiwirail, it was indicated that major users had to be found to make the line viable. Three potential customers were identified as Fonterra, Golden Bay Cement and Carter Holt Harvey.
Rail is a very cost efficient means of freighting good, but only if double handling is avoided. This is indicated in that Rail incurs a cost of $0.088 per tonne/km compared to road which stands at $0.129 per tonne/km. Rail incurs greater costs at the loading/unloading stage but is cheaper once the goods are being transported (NRC 2010).
The West Auckland line was also a limiting factor in the Northland rail network. The Ministry of Economic development stated that “Auckland Regional Council Passenger services and freight access agreements are likely constraints to freight services from Northland especially during peak passenger times on the West Line (MED 2005).”
Since the deregulation of long distance freighting in the 1980’s, rail has been unable to compete in a non monopolist environment. To generate a profit rail has had to cut costs which has impacted on maintenance of the rail network over the last 25 years and generated the current situation.

Extra
After the Port of Whangarei (where there was rail access) moved to Marsden Point (in 2007) where there is no rail access, the volumes of goods travelling by rail in Northland has fallen significantly from nearly 1 million tons in 2000 to less than 300,000 tons in 2008 (submission 2008).
Some of the current freight and volumes being freighted by road that could be transferred to the Marsden Point line are shown in table 1
Business    Truck/day    Trucks/ year
Golden Bay Cement
  Marsden Pt to Portland        10,900
Fertilizer
  Port to Whangarei   
   
5,700
Marsumi (wood chip)
 Portland to Marsden Pt    35    8,700
Carter Holt Harvey LVL
 Marsden Pt to Auckland   
  7   
1,700
Juken Nissho Kaitaia
 Kaitaia to Marsden Pt   
 11   
2,800
Export Logs
 To Marsden Pt   
60   
14,300
Total    113    44,100
Table 1 Volumes of freight on Northland Roads (NRC 2007).
All of the business or activities (in table 1) are located near or on rail facilities and most have used rail in past

                                         p.4
The whole 281km of the Northland line as the logical extension to the Main trunk,could be called a feeder network and is the longest banch line under threat .There is very little product imported into Northland and a lot of product exported out of Northland.  Golden Bay Cement imports coal from Australia by ship and truck. They used to source their coal from Huntly and freight it by rail (McElwain 2009).
Road Damage
Road planners use the “Fourth-power” rule of road wear. According to the rule, if you double the load on an axle, the road damage is increased by a factor of 16. This implies that a standard 44 tonne 8 axle truck does 20,000 times more damage than a car. Therefore the larger 53 tonne trucks that the government is talking about allowing on the roads will do 42,000 times more damage than a car.
There is  also the possibility that increased traffic congestion on State Highway 1 may result in slower travel times and declining productivity. Especially if the  Northland railway was closed the increased truck volume would equal the increase in damage sustained by the roads. This means if the numbers of trucks increased by 10% then 10% more damage would be done to the roads.

Congestion 

 State Highway 1 from Whangarei to Auckland has many hilly,windy sections of road which slow heavy, truck&trailer Rigs, limit passing opportunities and so cause accidents.In 2009 NZ.transport Agency figures
Published in NZ.Herald stated there were 54 Deaths( more than 1per/week or 16% national Road toll) and1,133 injuries (22 p/wk) caused through truck-related accidents! Should Govt. close Northland Rail the Regional Council( NRC).have estimated approximately 10,000 more truck movements would be necessary next year.Considering Govt.Statics indicate that total NZ. Freight tonnages are predicted to DOUBLE over the next decade,it is a logical consequence that Double the amount of truck
Accidents will occur.So the repercussions of any short-sighted Closure of Northland Rail would appear DIRE for Northland’s future Road Toll.

Government Support

There are three methods of support that have been used in the past in different countries. They are
 Direct funding of rail
 Direct supports to remove freight from the road
 Grant to producer to develop rail capabilities
 
The current New Zealand Government has indicated that it will no longer directly fund Kiwirail. The business has to be self-supporting. Direct subsidies lead to an inefficient rail system that becomes more dependent on subsidies (Oum 1994).This is because there is little incentive to improve productivity.
                                                p.5
The main reason for the grants was related to the high capital costs for new rail facilities, which often cannot be justified by companies on a purely commercial basis, certainly not in the short- to medium-term (Woodburn, 2007). Also indicated was that continued government support of grants was required to continue the investment in rail. Lack of Government grants appear to have prevented some companies from investing in rail since it is seen as being too high a risk, despite those companies having suitable flows that could switch from road (Woodburn, 2007).

Subsidy policies must encourage rail ways to use normal market mechanisms to improve their cost recovery while using the subsidies for improving services (Oum 1994).
Potential Government Supports
Consequently, some local governments have been trying to find ways to maintain or redevelop rail services. Some experience with regional policies (Dablanc, 2009) led us to categorize the potential ways of considering freight within regional transport policies:
 Investment in rail infrastructure (mixed or dedicated to freight) including track rehabilitation, electrification, signalling modernization, and track doubling.
 Investment in intermodal terminals.
 Investment in conventional facilities dedicated to freight services including specialized stations such as for lumber.
 Part ownership of freight companies. In Germany, many Lander (federal states) acquired part ownership of regional rail companies in the past, but today the cost of this ownership is making it controversial, especially for freight activities.
 Provision of grants to companies wishing to invest in elements such as rail sidings, handling equipment, intermodal trailers, and wharfs.
 Provision of direct subsidies to freight operators. All French regions subsidize regional passenger rail transport, which is considered a public service. For freight, European competition laws make such subsidies more difficult.
 Financial aid to shippers’ feasibility studies assessing the relevance of a rail option. 
 Setting up of regional logistic master plans dedicated to alternative transport modes. 
 Setting up of consultation, communication and partnership programs. In these cases, the regions act as intermediaries between local shippers and transport operators in order to promote rail freight transport. (Dablanc, 2009)

Rolling Stock
The average locomotive age is now 30 years; the youngest having been built in 1988 (KiwiRail, 2008). One-third of the fleet was built in 1965 and is considered underpowered and obsolete by today’s standards. New locomotives( ClassDL) which have been bought from China are now 100% more efficient than the current locomotive stocks.
                                               p.6
Rolling stock is on average 25 years old. KiwiRail has around 4,400 wagons. Around half the fleet are container flat wagons, the rest made up of specialised wagons for specific commodities – eg coal, fertilizer, refrigerated, milk. The specialised wagons are newer and 18 tonne axle load. Around 70 percent of the container fleet is made 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. The age of this stock also makes them prone to structural failure. The Northland line is current unable to take the 18 tonne capacity wagons, but if the Northland could, due to the low priory of the Northland line, it is unlikely that there will be any 18 tonne capacity wagon available in Northland until most of the old stock has been replaced.
Business Structure
The current structure of NZ rail is shown below;
There have been many different structures tried throughout the world. The current trend is to separate the rail operating business, the rail maintenance and the logistics.

Management Autonomy
   Overseas research has shown efficiency to improve when Local management was given more autonomy for making quick,logical strategic and operational decisions, rather than those made  “Blind”by Distant centralised or national offices. Higher degrees of managerial autonomy enable local management to respond quicker to new opportunities and, circumstances,through their direct knowledge of the situation.This indicates that probably a Northland managed Provincial Rail operation would be more proactive ,more responsive to local market needs ,hence more efficient,so a more profitable freight operation than a national 0800 telephone business model.
A Proposed Strategic Direction
Woodburn (2003) indicated that the strategy that Kiwi rail and any worthwhile business interested in growing their business should adopt has, three elements:
1. A focus on markets and customers, to ensure rail offers a competitive edge in a context which is mainly one of growth
2. A technical strategy to tackle the cost base and system performance.
3. Delivery processes that span the public sector specification/private sector delivery modal which is mainly Door to Door delivery.

So, how has the recent past Kiwirail operation done? They have only focused on bulk products generally with a lot of pushing from the customer. The cost base has increased due to wear and new technologies. There is no real Door to Door operations ,since the Govt failed to purchase the TranzLink modal transfer company back from Toll.
                                                 p.7

With the turnaround plan there is a slightly more focus on customers and a major move to reduce the cost base, but no real Door to Door operations. Generally, only a slight improvement.
Factor analysis of transport supply characteristics
Research has indicated that businesses consider the following attributes important. They are given here in descending order of importance:
 service level of customer
 reliability of transport mode
 ready availability of transport when required
 avoidance of damage to goods when in transit
 control over delivery time
 control over despatch
 security of goods in transit
 transit time
 minimum transport cost
 length of haul
 size of consignment

Generally speaking, speed of freight transport is less important for Rail than the prompt despatch of goods at the required time and the guaranteed predictability of the transit time. To ensure a good transport service to the customer, the degree of control has been found to be a crucial parameter, especially over delivery. Control over delivery is often the over-riding criterion for choice of a particular mode. Persistently erratic delivery times will prompt the decision-maker to look for alternatives.
Required investments
KiwiRail indicated to hearing, in connection with NRC’s 30 year transport plan, that the estimates the cost of upgrading the North Auckland line would be $200 million and it would cost $80 million to build the Marsden Point rail line. KiwiRail told the council it would be better to build the Marsden Point line first and get a significant volume of Northland freight back onto rail. KiwiRail indicated to the council that if this occurred, it would then be economically viable to operate and maintain the rail line within Northland, Then as soon as possible upgrade the Northland line.
      There is no indication of what the standard of the upgrade will be. It may be feasible to work on one limiting factor at a time. This would require a plan of action that would be followed once funds became available. The result of this would be the breaking down of the big project into a lot of smaller projects.

KiwiRail should intend to grow revenues through targeting investments to achieve ‘quick wins’, so that early investment decisions result in tangible returns by way of increased revenue. It is also likely that under the turnaround plan, emphasis will be placed on the main trunk routes and projects that are likely to have a high return on investment. Because the Northland line is so run down, it is very unlikely that any expenditure would generate a quick return.         P.8

As indicated by Kiwirail, it may be more feasible to develop the Marsden point rail link, resulting in the Northland Network becoming a viable business. This would result in an economic stimulus and a change in attitude of the businesses that freight to seriously consider rail.

It has been continuously mentioned in the literature that there is a lack of rolling stock to the extent that it is preventing current customers from fully utilising rail to their requirements. In 2008 100 new flat deck wagons were put into service. Most of them are now used to service the ports of Auckland and Tauranga. They have an estimated cost of $10,000 each.

In the 2009,Budget KiwiRail received an operating subsidy of $90 million as well as grants and loans for capital expenditure totalling $250 Million. When compared to the $21 Billion allocated to build new Highways and Motorways this amount pales into insignificance.It demonstrates The Government’s illogical wish to stop supporting rail. In the end, growing volumes is likely to be the best method to reduce subsidisation of freight.

Container Forklift

 Otiria rail yard does not have container facilities because the previous owners Toll removed the Gantry crane. All that is required is container forklift. The maximum weight of a container is 30 tonnes. This means a forklift has to be rated for 30 tonnes. They can be purchased used in Australia for between AUS$200,000 to $350,000.
Strengths and Weaknesses of Rail
Kiwirail has become less cost efficient, there has been a natural move to road for the non bulk of freight. Rail has retained some of the bulk freight.

Rail incurs a cost of $0.088 per tonne/km compared to road which is $0.129 per tonne/km. A handling charge of $7.00 per tonne applies to rail, a cost which is covered in the tonne/km rate for road. There is also a transfer fee for goods that are transported to the railhead by road which works out at a standard rate of $120-$140 per container regardless of distance. Rail therefore incurs greater costs at the loading/unloading stage but is cheaper once the goods are being transported. This is the based on 2000/2001 data (the information is being updated in Dec 2010), (NRC 2010a).

The efficiency of the rail network is limited by inadequate infrastructure (such as low clearances and single tracking), a lack of wagons and locomotives, and a relatively long route (at least compared to road alternatives) with speed restrictions north of Auckland (NRC 2010a).

The Northland rail link from Whangarei to Auckland is 213 km long and takes 5 ½ hours. The road is 166km long and takes loaded trucks 3-3.5hrs hours. The rail’s longer distance reduces the efficiency of rail therefore making road more completive.
.                                                 p.9

Due to the lack of capital investment over a long period of time, the rolling stock is old and there is a shortage. Rolling stock is on average 25 years old. KiwiRail has around 4,400 wagons. Around half the fleet are container flat wagons, the rest made up of specialised wagons for specific commodities eg coal, fertilizer, refrigerated, milk. The specialised wagons are newer and 18 tonne axle load. Around 70 percent of the container fleet is made 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. The Northland line is currently unable to take the 18 tonne capacity wagons, but if it could, due to its low priority, it is unlikely that there would be any 18 tonne capacity wagon available in Northland until most of the old stock has been replaced.



It is estimated that to repair and upgrade the North Auckland line would cost $200 million (REF). This is due to three reasons:
1. A long period of deferred maintenance
2. A long period of limited capital investment
3. The need to carry higher containers (tunnels to small)
The first two factors have increased the travelling time. The deferred maintenance has reduced the speed that trains can travel. This is due to old bridges and sleepers in need of replacing. The lack of capital invested mean that the line follows the original route.

In the submission by KiwiRail to NRC’s 30 year transport plan, Kiwirail indicated that it would cost $200 million to upgrade the Northland line and $80 million to build the Marsden Point line. It was proposed that Marsden Point line be built first in order to ensure that rail within Northland is economic to operate and maintain. Then as soon as possible, upgrade the North Auckland Line (REF).

In the report by McElwain 2009, “Northland inland Port/Distribution Hub: Pre-feasibility Study”, several of the businesses interviewed describe rail as having the following problems.
 Very unreliable
 Load restrictions
 Slow
 Preferential treatment given to bigger businesses
 Lack of suitable wagon
 Poor logistics
 Apathy
Golden Bay cement has approached the rail operators on different occasions and note that every time the response was “apathetic”. Both the reports, Woodburn 2004 and McElwain 2009, indicate that Kiwirail is not alone in their business practices or internal issues. In fact, the conclusion from Woodburn could be directly applied to Kiwirail.
Containers                            p. 10
Size    40 foot std    40 foot HiCubed    20 foot
Capacity cargo    26,500 kg    26,330 kg    21,600 kg
  Road    24,020 kg    23,850 kg    21,600 kg
  Rail current (14t axel)    24,020 kg    23,850 kg    21,600 kg
  Rail (18 t axel)    26,500 kg    26,330 kg    21,600 kg
           

A full 40 foot container, fully loaded can weigh 30.5 tonnes. Trucks can legally only carry 28 tonnes. The 14 tonne axel rail wagon also only carries 28 tonnes. The weight of the container is included in the weight of the load. This means that the current carrying capacity of the rail and road is 2,500kg less than the carrying capability of the container. The new rail wagons have an 18 tonne axel capacity which will enable rail to carry containers at their maximum capacity. This will provide a cost advantage to rail. By being able to freight full 40 foot containers, by rail, in the future, the freighting costs will reduce by 10%.

There are two businesses (CHH Woodproducts and CHH Futurebuild) that have freighted products to Auckland by truck, then loaded into containers in Auckland. This is one of the possible reasons.

It is unlikely that the heavier trucks will be allowed to operate in Northland due to the poor quality of the roads and the increased damage that will result to the roads.
Current Rail Users
Currently there are three businesses that use rail for some of their freight requirements. They are:
1. Fonterra 110,000 tonnes/year Refrigerated and general containers
2. Imerys   15,000 tonnes/year Containers
3. Marusumi Logs in Unknown

Fonterra freights 110,000 tonnes per year by rail. The product is packed into containers, loaded onto wagons and then freighted to the port of export. Some is packed at Kauri and the other is packed at Northport.

Imerys freight all their containers from Doubtless Bay to Whangarei by road because there are no container facilities on the rail from Otiria to Whangarei. The containers are them loaded onto rail for the rest of the trip. Imerys would use container facilities at Otiria if they were present.

Marusumi freight some of their log by rail to their site at Portland. They consider rail to be an important part of their operation, both from Otiria and South of Whangarei.
General Containers
Two surveyed businesses use rail for general containers. They are Fonterra and Imerys. The businesses that have general containers are:
1. Fonterra            45,000 tonnes/year
2. Imerys            15,000 tonnes/year
3. CHH Woodproducts    Unknown                    p.11
4. CHH Futurebuild        Unknown

Fonterra freights 45,000 tonnes per year in general containers. The product is packed into containers at the Kauri site, loaded onto rail wagons and then transported to the port of export.

CHH Woodproducts would need a rail siding before containers were considered. The volumes are unknown and variable. It is currently more economical to freight to Auckland and load the containers there.

CHH Futurebuild is no close enough to the rail to make rail a viable option, but would be if the Marsden point line was built.
Refrigerated freight
Currently Fonterra is the only surveyed business that has refrigerated containers transported by rail. The businesses that have refrigerated containers are:
1. Fonterra             65,000 tonnes/year
2. Affco                13,000 tonnes/year est
3. Silver Fern Farms        17,000 tonnes/year est

Fonterra freights 65,000 tonnes per year is refrigerated product which goes to Northport cool store at the end of Port road, Whangarei, by truck. The product is then transported by rail to the export port.

Affco has a cool store. The product is freighted to the port, of export by road. Affco is about 2km from the rails end at Otiria. The rails were removed, in the past. Affco would consider using rail again if they had a siding again.

Silver Fern Farms has a small cool store which has to be emptied daily. The product is transferred to Northport’s cool store in Whangarei, then transported by road to the port for export.
Bulk
Currently there are no bulk goods transported by rail,apart fromwoodchip. The businesses that have bulk goods that could be transported by rail are:

1. Golden Bay Cement    300,000 tonnes/year of Limestone rock from
                 Hikurangi to Portland
2. CHH Woodproducts    180,000 m3/year of wood chip from
                Whangarei to Tokoroa
3. Marusumi            210,000 m3/year of wood chip from
                Portland to Marsden Point
Golden Bay Cement currently transports 100 truck and trailer loads of limestone rock per day from Hikurangi to Portland, a distance of about 35 km. This is 300,000 tonnes per year. In the past Golden Bay Cement has expressed an interest in using rail for transporting the limestone rock, but have been met with apathy from the railways.
                                                      
                                                p.12
CHH Woodproducts transports 180,000 m3 of wood chip per year, from Whangarei to CHH Kinleith, outside Tokoroa. Rail has been tried in the past, but produced a very poor result. Currently a very small volume of chip goes by rail. The chip is loaded into containers with no tops and then loaded onto a flat decked wagon.

Marusumi would need the Marsden Point rail built before rail freight may become an option. Currently Marusumi produces 210,000 m3 of wood chip per year. The chip would travel from Portland to Marsden Point, by rail, a distance of about 25 km.
Potential rail freight gains
The following is a list of the businesses that have freight that could potentially be carried by rail.

Business    Trip    Tonnes    Distance    Tonne km
Imerys    Otiria to Whangarei    15,000    74    1,110,000
Affco    Otiria to Auckland    13,000    287    3,731,000
Silver fern Farms    Whangarei to Auckland    17,000    213    3,621,000
Golden Bay Cement    Hikurangi to Portland    300,000    35    10,500,000
CHH Woodproducts    Whangarei to Tokoroa    180,000    667    120,060,000
Dargaville
The Dargaville line is the line that is most likely to close in Northland for two reasons
1. The high cost to bring the line up to the desired standards
2. Very low usage and potential usage

There is potential for a log hub point at Tangowahine, if the Marsden point line is built, but this still leaves the last 20 km to Dargaville at highest risk of closure.

The largest potential user of rail from Dargaville is PPCS, but they only have half a day’s storage capacity in their onsite freezers. For PPCS to use rail they would need to be increased storage capacity, possibly up to ten times the current size. Once this occurred, then the Kiwirail would have to meet PPCS’s requirements which include, a secure Dargaville yard, being able to carry heavier HiCubed refrigerated containers, quicker freighting times and more scheduled trains.
       One solution could be the use of modular freight. This involves goods being loaded into a 20 foot container (or similar) at a central distribution point, then transported by rail, taken to the business by truck, left there, then the empty container picked up latter. This would be suitable for businesses that have a central distribution point like The Warehouse, New
World and RD1.                                     
                                                    p.13
Kumuras could also be freighted this way to businesses with a central distribution point like Progressive and Foodstuffs.

Other goods that could be moved by rail are bulky single items like new and used cars, tractors and other farm machinery.

Dargaville follow up
Since there are not large volumes of freight that could easily and quickly transferred to rail, more creative solutions need to be found.

There needs to be a follow up survey to determine the volumes of freight that are entering and leaving Dargaville every week. Below is a list of businesses that could be surveyed.

 Dargaville Motors
 Delta
 Kaihu Valley Sawmill
 Mitre 10
 New World
 Northland Farm Machinery
 PPCS
 Ravensdown
 RD 1
 The Warehouse
Wade concrete
Marsden Point
Marsden Point is the port of Whangarei which is located at the entrance of Whangarei harbour. It was established in 2002 when it was realised that the previous location was inappropriate for the potential freighting demands. Unfortunately the rail was not included in the redevelopment. There is potential to enable the port the caterer for the new generation, larger vessels by dredging the harbour.

The current production of log is 1.5 million tonnes. By 2015 the volume is expected to be about 4 million tonnes (There will some increase in processing demand, but most of the logs will be exported out of Marsden Point. The volumes of logging trucks on the road to Marsden Point could be up to 270 per day. It has been proposed to develop log collection points at Otiria (North), Tangowahine (West), an unknown place to the south and then freight the logs by rail to Marsden Point. This will remove a significant amount of logging truck traffic of the roads.
It is estimated that it will cost $80 million to build the Marsden Point line. There would also need to be a significant investment in locomotives and wagon to cater for the demands, possibly about $10 million.From the businesses surveyed, the current usage of Marsden Point is limited to some non containerised wood products from CHH Futurebuild.

                                                 p.14

From the survey seven out of eight respondents indicated that they would consider Marsden Point, more, for exporting, if able to meet all their requirements. The two main provisos that required were container facilities and a shipping schedule that would meet their requirements. Northport has estimated the cost to provide container facilities at $100 million. The regular shipping schedule is totally in under the control of the shipping companies who have been reducing the number of ships coming to New Zealand.

There is only one business (CHH Woodproducts) that would only use road to freight to Marsden Point and only one business (Fonterra) that would only use rail. The other five businesses would consider either option.

CHH Futurebuild would consider rail for freighting logs to their plant. There is another business (Biofuels Pacific) that may be building a plant at Marsden Point and would also consider freighting logs by rail.
The businesses that freight export logs were not covered in this survey, but these businesses would be a major consideration in construction of the Marsden Point rail line.

Refrigerated freight

Currently Fonterra is the only surveyed business that has refrigerated containers transported by rail. The businesses that have refrigerated containers are:
1. Fonterra             65,000 tonnes/year
2. Affco                13,000 tonnes/year est
3. Silver Fern Farms        17,000 tonnes/year est

Fonterra freights 65,000 tonnes per year is refrigerated product which goes to Northport cool store at the end of Port road, Whangarei, by truck. The product is then transported by rail to the export port.
      Affco has a cool store. The product is freighted to the port, of export by road. Affco is about 2km from the rails end at Otiria. The rails were removed, in the past. Affco would consider using rail if they had a rail siding again.
       Silver Fern Farms has a cool store capable of holding 2000 tonnes. The product is dispatched to export by truck as the sales are made. Silver Fern Farms would consider using rail if their requirements were met.
Otiria
Recommendations Affco

1. Investigate the relaying of the rail into Affco Moerewa
2. Investigate using Affco as the secure area for the Otiria siding
3. Investigate using Affco to load and unload containers
4. Share a container forklift between rail/Affco
5. Will be able to have a gate across the rail for security into Affco
This will allow logs to use the Otiria siding totally.
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North Auckland Line,
26 Jun 2012 23:39
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