TAURANGA TRANSPORT & LOGISTICS FORUM

16 NOVEMBER 2012

• 1150 Staff (28% of KiwiRail group) • 423 Locomotive Engineers (inc trainees)• 495 Terminal Staff• 80 CT Staff• 69 Service Centre Staff

• 19 Terminals

• 4,000 Wagons (64 different classes)

• 163 Mainline Locomotives

• 17.5 m tonnes of Freight per annum• 7 customers make up 50% by tonnes• 10 customers make up 80% by tonnes

• $458 m FY12 Revenue from 120 Customers• 8 customers make up 50% by revenue• 14 customers make up 80% by revenue

Key Statistics for Freight

So – What’s The Plan ?• Turnaround Plan ( TAP )

- Organisation self-sustaining within a decade

• Customer / Market engagement

- What do our customers want ?

- What do the various markets need ?

• Targeted investment

- Below Track

- Above Track : Loco’s / Wagons / Intermodal Equipment / Systems

• Staff development

- Recruit and retain

• Services redevelopment

Strategic Change to the Way the Business Operates

Network

Engineering

Inter Islander

Corporate Functions, IT,

CUSTOMERSServices

Overnight

2-3 Day Inter Island

Economy

Dedicated

Products

Wagons

Containers

New Locomotives

•20 in service for peak season 2011 •20 in service in 2013

New Heavy Rated CFT Wagon

• IA Type wagon 56 tonne capable wagon

• 400-500 per year over next 5 years

• 535 in service for the 2011/12 Peak

Containers - Intermodal 48 foot • 80 available for peak 2011- Akl – Pmr - Wlg• Gates and curtains• 26 pallet foot print - 90M3 capacity • 22 tonne intermodal lifting capacity • 80 -100 per year over next 3 years

Containers - Intermodal 25 foot

• 180 available for peak 2011 / 60 with Mezzanine decks • Gates and curtains• 14 pallet foot print - 46M3 capacity • 19 tonne intermodal lifting capacity• Nationwide capability• 80 -100 per year over next 3 years

Growth Performance • Revenue increased by 25% over the past two years.• 19% increase in TEU moved 2012 v 2011.• 30% of the country’s export goods have a rail involvement.• 10% increase in net tonnes conveyed (to 17.5m tonne).• 10% growth in domestic business.

Rail Mode – Long Distance Focus Only ?

Fact or Fallacy ?

Key Metrics• 4.5 b Net Tonne Kilometre (NTK).• 263 km – Average distance travelled: units conveyed. Reflects the fact

that for the IMEX business unit in particular most moves are relatively ‘short-haul’.

• Approx 900 Freight services per week.

It is often considered that the rail mode is unviable and non-competitive over short hauls ………

this isn’t the case.

Case Study # 1 – McDonald’s Lime• Lime manufacturer located at Otorohanga• Existing rail infrastructure (industrial Lime movements – Pods).• Export ~ 2,600 containers of Lime Otorohanga – Mount Maunganui.• Distance 156 km• Historically serviced via road ~ 5,200 trips p.a.• Heavy containers – roaded as singles.

The Solution• McDonald’s Lime upgraded their on-site plant capability.

• KiwiRail :

- Deployed 5 Heavy rated wagons into a fixed circuit

- Reinstated existing on-site rail infrastructure

- Utilised existing ‘shunt’ capacity to ‘bridge’ Otorohanga – Hamilton

- Upgraded locomotive capacity on mainline service Hamilton – Mount Maunganui to accommodate increased trade (+ 350 tonne / day).

- Negotiated with third party port stevedore to establish a stand alone shift to discharge fulls and reload empties at Mount Maunganui.

- A key component to the competitiveness of the offering was the ability to achieve a 24 hour turn on the assets.

Outcomes• An alternative sustainable export supply chain was created for

McDonald’s Lime.• This supply chain solution was able to encapsulate the key requirements

of all parties e.g – a dedicated port stevedoring night shift to turn around the wagons thus providing for optimum asset utilisation.

• Both parties were able to saturate existing infrastructure and resources. • 5,200 containers were able to be conveyed (Fulls & Empties) via the

introduction into a circuit of only 5 wagons.• In excess of 5,200 truck movements per annum were taken off a number

of busy State Highways• McDonald’s Lime saved money.• KiwiRail improved the profitability on existing services that were further

‘optimised’.

Case Study # 2 – Lyttelton Port Company to City Depot Shuttle.• Operates – LPC Terminal to LPC City Depot facility, Woolston.• Distance – approximately 7 km.• Demand to ‘shuttle’ fulls and empties between depot facility and

container terminal primarily driven by a requirement to optimise valuable port land and to a degree smooth out terminal activity peaks and troughs.

• As City Depot concept (inland hub) was being developed it was naturally considered that shuttle activity would be undertaken via road.

• Rail opportunity came about due to there being downtime ‘windows’ on existing port shunts, due to a desire to better manage activity levels at the container terminal and due to 2nd tier (non mainline) wagons being available to commit to circuits.

The Solution• LPC :

- Developed port rail infrastructure

- Structured labour patterns to fit in with rail shuttle programme

• KiwiRail :

- Deployed 20 wagons into a fixed circuit - operating 5 days per week.

- Reconfigured existing shunt programmes to accommodate demands.

- One new shunt crew hired to operate night shift whereas otherwise locomotive and wagons would have been idle.

- Solution is ‘scalable’ – weekends / additional wagons / increased ‘turns’.

Outcomes• An alternative sustainable supply chain was created for LPC.• Annual theoretical capacity of ~ 60,000 TEU provided.• Smoothed road traffic flows at container terminal.• More optimised labour and plant deployment at container terminal.• KiwiRail was able to further saturate asset utilisation for part of the

solution by utilising a shunt locomotive and wagons that otherwise would have been laying over for 6 – 8 hours per day (night).

Full Plan

* * At the end of each day the Green Rake will become Yellow and the vice versa.

0:0020:00 21:00 22:00 23:0016:00 17:00 18:00 19:0012:00 13:00 14:00 15:008:00 9:00 10:00 11:004:00 5:00 6:00 7:000:00 1:00 2:00 3:00

0:00

Middleton

Woolston

Lyttelton

20:00 21:00 22:00 23:0016:00 17:00 18:00 19:0012:00 13:00 14:00 15:0010:00 11:004:00 5:00 6:00 7:000:00 1:00 2:00 3:00 8:00 9:00

Train LCS 1 LCS 2 LCS 3 Light Loco

General 1

S2

S2

S3

S1

IMPT

CL74

951A

922B

951B

952A 952B 922A

937

S3

CL76

S1

923

Common Themes• In both cases all parties were committed to understanding each others’ core

drivers and capabilities.

• Any mutual preconceptions were either set aside or addressed as appropriate.

• Some mutual levels of investment were required.

• From KiwiRail’s perspective key factors in providing viable, sustainable and cost effective solutions were the utilisation of ‘surplus’ capacity and the ‘sweating’ of the assets deployed.

• There was sufficient volume, consistently available to underpin the ultimate operating models.

• All parties fully appreciated and brought into the plans and their respected obligations under such.

• In both cases cost savings over the alternative options were able to be secured.

ConclusionWith a commitment to wanting to understand how the best value can be extracted from a relationship with KiwiRail coupled with a willingness to invest for the outcome – the rail mode can be absolutely relevant over short distances.

There are a number of key drivers’ that have to exist to underpin the deployments – but when they do the value outcomes can be exceptional.

QUESTIONS ?