Rail is playing an increasing role in moving freight in and out of Whanganui, with the Government's $3 million investment in the Whanganui-Castlecliff rail line signalling its importance to the regional economy.

Regional Development Minister Shane Jones announced in February that the rail line upgrade would receive $3m from the Provincial Growth Fund.

"KiwiRail estimates that each year the project will keep 6250 trucks off the road and 563 tonnes of carbon dioxide out of the atmosphere by enabling freight to travel by rail," Jones said.

Read more: KiwiRail to upgrade Whanganui-Castlecliff rail line with $3 million from Government's Provincial Growth Fund
Economic confidence for Whanganui improves on back of Government funding support

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After being dormant for more than 20 years, the Whanganui-Castlecliff rail line reopened eight years ago and is now used by trains transporting containers between Whanganui's inland port at Gilberd St and CentrePort in Wellington. The upgrade of the line is due to start in late 2018.

KiwiRail is upgrading the Whanganui-Castlecliff line to ensure it can cope with increasing loads of freight.
KiwiRail is upgrading the Whanganui-Castlecliff line to ensure it can cope with increasing loads of freight.

About 60 per cent of the Whanganui rail traffic is due to Open Country Dairy's milk powder production but about 30 customers, some regular and some infrequent, use the rail service, Brendon Bartley of Ali Arc Logistics says.

Bartley worked with KiwiRail to revive the rail line and his company has set up a warehouse facility and the Direct Connect Container Services terminal at Gilberd St. Ali Arc Logistics provides independent warehousing and has three warehouses set up around the container yard.

Direct Connect is a joint venture with CentrePort where the trains deposit and collect freight. As well as the Whanganui service, Direct Connect also operates at New Plymouth port.

"When we started in Whanganui it was 10 wagons a day; now it's up to 30 a day," Bartley said.

"The loads they are carrying are now heavier and they're pulling more wagons out of here now than they ever used to.

"All Open Country product goes out on rail and Affco and other companies also use it. It's not just the big players - a lot of other businesses in Whanganui are using rail for import and export.

"It comes mainly from CentrePort but also other New Zealand ports, mainly through CentreRail which is quite a cheap freight rate compared with road and trucking.

"It's a same day service. If we load up at 2.30pm, it's at the port in Wellington by 11pm. The benefit of using a train is that it can transport more quantity than if you use a truck. A truck would get there faster but it can't carry as much.

"The CentrePort agreement means more people are using it as freight costs are so cheap and it's a pretty easy process. But you have to have a balance of rail and trucks working together because either rail lines or roads can be closed in an emergency."

Brendon Bartley, of Ali Arc Logistics and Direct Connect Container Services, says rail is crucial for Whanganui businesses.
Brendon Bartley, of Ali Arc Logistics and Direct Connect Container Services, says rail is crucial for Whanganui businesses.

A CentreRail train carrying logs and container freight travels from Wellington to Whanganui every day. It drops off logs at Eastown and the wagons go to the Gilberd St terminal, arriving between 7am and 8am. It departs by 2.30pm from Gilberd St, collects logs from Eastown and returns to CentrePort for distribution.

In the peak season of October to March, an average of 32 wagons a day, carrying 26-27 tonnes, leaves Whanganui. In the off-season April to September there are around 25 wagons a day.

"There are 30 different customers at least using it," Bartley said.

"Some of them might use it only a couple of times a year or someone might import some parts and then not need to use it again for another two years. There are also customers from Hawera down to Whanganui. There's a lot of road bridging coming here from different companies.

"We handle 13,000 TEU [20-foot equivalent unit] or 6500 40-foot containers. Chilled boxes are freighted out as well. They're used by companies like Affco to freight meat."

Bartley welcomes the investment in upgrading the rail line.

"The line was in reasonable nick when we opened it eight years ago but it's important that KiwiRail gets the infrastructure right as loads are getting heavier. It's great that they are future-proofing the line.

"The next step for Ali Arc Logistics is to set up a biosecurity hub. You have to be licensed to be able to open containers from overseas. We are already doing it but the requirements from MPI are becoming stricter.

"We're aiming for growth in the Whanganui and New Plymouth container yards with some add-ons we're working on."

Bartley says client confidentiality means he cannot talk about who uses the rail service and the types of products that are going through the terminal. According to a CentrePort annual report, imported goods coming from CentrePort include raw materials, packaging and machinery. Export goods leaving the Whanganui terminal include meat, dairy, wood products and other finished goods.

It's not just Whanganui major industries that use the Direct Connect service.
It's not just Whanganui major industries that use the Direct Connect service.

CentrePort chief executive Derek Nind says the port has been actively involved in supporting regional development across central New Zealand.

"For the past five years, we have provided a vital link between Whanganui exporters and importers and international markets, via our daily CentreRail service," Nind said.

"We're very aware of the important economic connection between Wellington and the provinces, and the Berl report highlights the significance of that connection.

"It's very important that we protect and grow this relationship by building the infrastructure that our customers need to compete internationally."

An independent study by Berl found that CentrePort, its customers and service providers support 21,350 fulltime equivalent (FTE) jobs, demonstrating the interdependency between the port company and businesses in the hinterland. The study also shows that CentrePort contributed some $2.5 billion to central New Zealand GDP.

The May 2016 Berl report says since the Whanganui inland port was set up, the volume of exports going to CentrePort on CentreRail grew from about 30,000 tonnes to around 105,000 tonnes.

"The success of this inland port partnership has seen total freight to CentrePort from Whanganui increase, as customers of CentrePort have redirected cargo previously going out through other ports to CentrePort," the report says.

Alan Piper, KiwiRail group general manager of sales and commercial, said most of the import and export volumes moving by rail to and from Whanganui were part of a long-term partnership with CentrePort.

"This arrangement makes the most of our capacity and provides supply chain efficiency and economies of scale for individual exporters and importers in the Whanganui region," Piper said.

"We also move import-export goods on occasion to and from other ports such as Napier and have a log hub at Eastown which moves export logs to lower North Island ports."

Distribution and transport is one of four elements critical to the success of Accelerate25's Manawatū-Whanganui Economic Action Plan, Accelerate25 spokesman Michael McCartney said.

"The Castlecliff to Whanganui rail line and its associated industries are incredibly important in moving products through central New Zealand," McCartney said.

"The investment made by central government will improve resilience, increase connectivity and enable these distribution channels to become more efficient and effective. That in turn contributes to GDP as a whole."