Douglas Owens: Diverting rail to bright future calls for industry co-operation

My background in transport in New Zealand has spanned my lifetime - 50 years - and you could say I have seen it all.

I spent my formative years and beyond under the influence of New Zealand's pre-eminent transport entrepreneur, Bob Owens. It was his longstanding and pure belief that the future of New Zealand transport should remain in the hands of New Zealanders.

It is, therefore, consistent that I continue to sing this song and do so in the face of speculation by all sorts of people who realise an opportunity exists for significant change in the industry.

What is true is that transport in this country has indeed reached a crossroads. The question is, where do we go from here?

The Tranz Rail debacle has fuelled this speculation, particularly about the big three, Tranz Rail (Tranz Link), Owens and Mainfreight, whose shareholders are mostly New Zealanders.

We have all listened to the vitriolic comments levelled at Tranz Rail management as a result of the plunging share price and profit downgrades.

It can be argued that Tranz Rail management have done well to maintain their position as long as they have after the balance sheet was plundered and the new board received a hospital pass. This is public knowledge, but the detail remains mysterious and vexing to the present shareholders, who purchased the Wisconsin and Fay Richwhite stakes in good faith.

However, ironically, the company and the rail infrastructure was back in the hands of New Zealanders and shortly shareholders will decide if they want it to stay this way.

The vision is simple. The Government should own the tracks, Tranz Rail should run the trains under specific contracts to existing bulk clients and feed freight in and out of an independent distributor network that is linked to all ports and rail heads.

In this way it would be possible to achieve transparency of service and costs at all levels and clearly address the needs of the existing client base as well as expand the business in favour of rail.

It is true that Owens wants to be part of this as it is a natural progression for the company. Additionally, this restructuring would not necessarily preclude others from being involved. The aim in the short term is to immediately create critical mass, increase efficiency within the New Zealand transport base and fully integrate existing rail, road, shipping, air and warehousing services.

Enter the spectre of Toll Holdings. For all the bluster and big talk, Toll Holdings simply cannot immediately achieve what I have suggested. If it took over Tranz Rail, status quo would be the immediate outcome, unless of course it could take over Owens and/or Mainfreight. From where I sit, that is very unlikely.

Tranz Rail is fundamental to the health of New Zealand business. Unfortunately, Tranz Rail's duplication of road and general freight services was a flaw in its business plan and has cost the transport industry dearly through inefficiency and lost profits. However, at this critical stage it would be imprudent for New Zealanders to again sell themselves short and exit Tranz Rail when the future looks so bright.

Rail is on the way back and undoubtedly will evolve into the most important and valuable transport asset this country will ever have.

Tranz Rail shareholders are on the ground floor of a new era and, provided the Government remains true and stakeholders in all areas of industry co-operate on this, the problems will be simply eliminated.

Yes, there appear to be some debt issues but these can be resolved over time, especially in the present situation where, in my view, the transport assets in this country are undervalued.

Clearly, we have before us a very rare opportunity and, in the short term, the future rests in the hands of Tranz Rail shareholders, who I hope are realising how they can help both themselves and the country.

* Douglas Owens is a cornerstone shareholder of Owens Group.