Welcome to a transport revolution.
Should we rush to celebrate or run for cover?
Toll Holdings looks to have finally offered a price which will see it swallow up Tranz Rail.
If that happens the transport sector will never be the same again.
At one bound Toll will become our most significant freight operator.
Its
monopoly access to the rail system, ownership of the country's biggest fleet of trucks, existing stevedoring and warehousing operations, logistics know-how and strong transtasman connections will dwarf other players (even a merger of Mainfreight and Owens Group).
Such dominance is rarely beneficial to customers.
Certainly Toll can be expected to significantly increase the amount of freight carried by rail. Almost any new owner would have smartened up Tranz Rail's performance and boosted business as a result.
It would be no great surprise if Toll matched its Australian target of doubling rail freight in five years.
Indeed, you could say this is rail's last chance in this country.
If a company like Toll cannot run rail profitably then chances are that (as the Treasury suggested at the time Railways was privatised) the country simply cannot support a rail system. But, let's be clear, Toll has not come to New Zealand out of the goodness of its heart, but to make money.
There is nothing wrong with that as long as its pursuit of profit is restrained by effective competition.
The worry is that Toll's purchase of Tranz Rail may give it an unhealthy dominance in the transport sector.
If that is the case it will be in a position to push up freight rates and dictate services and the economy will suffer as a result.
It is a risk the country did not have to face.
The Government could have encouraged a rail-only operator to buy the company. Or it could have insisted on other operators having access to the network.
Instead, it cooked up a sweetheart monopoly deal with Toll, which gave the Australian logistics operator the inside running.
That is a $250 million gamble which we now have to hope will pay off.
Still, it could have been worse.
The Government's original proposal to buy a controlling interest in Tranz Rail might have succeeded.
That would have been a sure-fire recipe for disaster.
