Brief Rail History
The New Zealand rail system grew from separate beginnings made by individual provinces or entrepreneurs from the 1860s onwards. Colonial Treasurer and later Premier Sir Julius Vogel made rail a major plank in his programme to develop the colony in 1870.
By 1880 New Zealand Railways (NZR) was operating more than 1,900 kilometres of track, and carrying almost 3 million passengers and 830,000 tonnes of freight a year. The first half of the twentieth century was a ‘golden age’ for rail.
By 1953 the rail network reached its peak in terms of network reach – 5,689 kilometres. But advances in air and road transport began to cut into its competitive advantage. In 1936 a system of transport licensing had been introduced to protect rail from competition. Initially, road was limited to carrying loads no more than 30 miles but this gradually increased, reaching 150 kilometres in 1977.
The Railways Department was reorganised in 1982 to become a government-owned corporation with a commercial mandate. The same year, the government began deregulation of the transport industry, removing statutory protections for rail against competition by road. In 1980, rail carried approximately 30 percent of all goods, but following deregulation, its market share dropped significantly.
In 1990, the operating assets of the Railways Corporation were transferred to a limited liability company under government ownership, New Zealand Rail Ltd. In 1993, the company was sold to a private consortium comprising Wisconsin Central Transportation Corporation and two investment groups. Three years later, the new owners made a public offering of shares in Tranz Rail Holdings, listing the company on the New Zealand Stock Exchange and the NASDAQ market in the United States.
The process of deregulation, commercialisation and privatisation saw a reduction in the number of employees, from 21,000 with the Railways Department in 1982 to 3,757 with Tranz Rail in 2002. After the sale in 1993, the New Zealand Railways Corporation continued as a residual government body with two principal activities: to manage all known litigation, contingent issues and statutory obligations; and to manage the rail corridor lease with Tranz Rail and the lease of other Crown land held for operational rail purposes.
During the 1990s, Tranz Rail expanded into new markets, including the movement of bulk milk to dairy processing plants and establishment of New Zealand’s first inland port south of Auckland. The new port, a joint development with the Port of Tauranga, is connected by train with Tauranga and created a significant new line of containerised freight business.
In 2003, Toll Holdings Limited, an Australian-based transportation and logistics operator, acquired approximately 85 percent of the shares in Tranz Rail. As a result of Toll’s offer for shares in Tranz Rail becoming unconditional, an agreement between Toll and the Crown was triggered, a key feature of which was the buy-back of track and associated infrastructure by the Crown.
The Crown undertook to invest $200 million in improving rail infrastructure while Toll undertook to invest $100 million in new rolling stock. In September 2004, ownership and management of the network and its assets was vested in the existing Railway Corporation of New Zealand which adopted the trading name, KiwiRail Network (ONTRACK). Under the agreement, Toll retained exclusive rights to the network for freight purposes, subject to meeting minimum tonnage levels annually.
A chronological history of New Zealand rail1862 First railway opens - a horse-drawn tramway from Dun Mountain copper mine to Port Nelson.
1863 First steam railway opened on the Christchurch-Lyttelton line, via the Lyttelton tunnel.
1870 With less than 100km of track operating, Prime Minister Julius Vogel calls for railways to aid economic development, and a narrow gauge is chosen to save money.
1873 First train in North Island, Auckland-Onehunga.
1878 First express trains Christchurch-Dunedin cover 370km in 11 hours.
1879 Possible to travel 600km from Christchurch to Invercargill by train.
1880 Almost 1900km of railway open.
1886 Wellington and Manawatu Railway Company opens line to Longburn, near Palmerston North, introducing gas lighting and dining cars. It was profitable for 22 years, until taken over by Government.
1908 North Island main trunk line completed after 23 years work - the crowning achievement of the "railway age". First train carried MPs on a junket to Auckland, in August.
1923 West Coast line opens - its Otira tunnel, at 8.55km the longest in the British Empire and containing the nation's first electric railway.
1930 Rotorua Limited introduced for tourists from Auckland, with observation car.
1936 First successful railcars, Wairarapa route.
1945 South Island main trunk from Christchurch to Picton completed.
1953 The length of railway line operating hits its all-time peak - 5656km. Christmas Eve crash at Tangiwai kills 151 rail passengers.
1955 Rimutaka tunnel opens, eclipsing Otira as the longest at 8.8km and Nelson railway closes.
1959 – 1971 Numerous country branch lines closures across country as steam era comes to end as re-equipping lines with modern locomotives and updated infrastructure not considered viable.
1971 Last regular steam train in New Zealand signal completion of dieselisation of railway network.
1978 Completion of the Kaimai tunnel signals more direct freight link between Waikato and Bay Of Plenty.
1982 Railways Corporation created as statutory corporation from Railways Department.
1983 Start of deregulation of "distance limits" on trucking companies opens railways to road-based competition. Rail employs 21,000 workers.
1984 Electrification of North Island main trunk starts. Completed in 1988 at a cost of $250 million.
1986 Labour government makes railways a state-owned enterprise. In six years the workforce is cut from 21,000 to 5000, while productivity of the land-based workforce is lifted 300 per cent.
1990 Finance Minister says Railways Corporation has accumulated debt of $1.1 billion, and the Government is considering restructuring it.
1990 Limited liability company New Zealand Rail (NZR) is formed.
1993 Government announces sale of NZR to a consortium of Wisconsin Central Transportation Corp and Berkshire Partners (60 per cent stake) and Fay Richwhite (40 per cent) for $328.3m.
1995 Company re-named Tranz Rail.
1996 Wisconsin Central and Fay Richwhite float 31 million shares to the public at $6.19/share.
1997 Tranz Rail share price peaks at $9.
2003 Stock plunges towards 30c/share, details emerge of how the company needs to sell assets to meet lease payments and repayments of debt required by bankers.
2003 Tranz Rail taken over on market by Toll with Toll will also assume debt and lease obligations. Track to be sold back to Crown.
2004 Government assumes ownership of national rail network and ONTRACK formed to run it. National Rail Access Agreement (NRAA) with Toll comes into effect with Toll exclusive operator and ONTRACK network provider.
2006 Toll NZ threatens to slash services on much of the national rail network including the main trunk line unless it gets a long-term agreement from the Government on its track-access fee.
2007 Toll Holdings buys another 10 per cent of railway shares, triggering a compulsory takeover for the remaining shares at the same price of $3 each. Toll could finally take full control of its New Zealand assets and "grow the business more quickly", it said.
2008, July 1 The Government buys back Toll's rail and ferry business for $665m, after several months of negotiations.
2008, October 1 ONTRACK and KiwiRail form a single integrated above and below rail business under New Zealand Railways Corporation banner.
2009, March 23 KiwiRail brings the maintenance of locomotives and wagons in-house by purchasing United Group Ltd.