KiwiRail is reaping the benefits of an innovative growth strategy for its forestry business designed to make the best use of its wagon fleet. Source: Timberbiz
Its financial result released recently shows an 8% revenue increase in its overall forestry business in just the six months to December. That is being driven by strong growth in the volume of logs.
“We have been working closely with the industry to maximise our ability to meet the wall of wood now coming on stream, as the result of the large volume of trees planted in early 1990s,” says KiwiRail Chief Executive Peter Reidy.
“Our log wagon fleet has grown by 40% since 2011. We have some very clever thinkers on our team and have been able to do this in an innovative and cost-efficient way by converting wagons retired from our container fleet.
“This is happening as fast as possible, and we are running trains up to seven days a week in all our key forestry routes. However current demand is so strong we could be doing more.
“There are more than 130 additional log wagon conversions coming on stream over the next six months, which will allow us to meet further demand this year; and a further 200 wagon conversions are planned for the 2019 financial year.
“In the Bay of Plenty alone KiwiRail runs 60 forestry trains each week to the Port of Tauranga, from Murupara-Kawerau and Kinleith.
“Those trains are taking the equivalent of up to 340 trucks a day off eastern Bay of Plenty roads.
“KiwiRail is continuing to work with the industry to identify further opportunities to take more logs off the road and onto rail.
“We have already worked successfully with industry to develop log hubs in key locations on the network where local forests are not directly served by rail.
“This sees significant volumes of logs now moving to Napier Port and CentrePort from log hubs in Masterton, Whanganui and Palmerston North, rather than travelling by road.
“Consolidating volumes and running to export ports by train is a cost-effective option for forestry owners/harvesters.
“We bring benefits of economies of scale, particularly where forests are a long way from an export sea port. In addition our trains mean fewer trucks on the road, and lower carbon emissions.
“Rail generates 66% fewer carbon emissions compared to heavy trucks for every tonne of freight moved.
“This strong forestry result comes from KiwiRail’s proactive approach to helping New Zealand shift its exports as sustainably and efficiently as possible.”