Are KiwiRail’s Electric Trains Really Uneconomic?

Just before Christmas, KiwiRail announced that they would be withdrawing electric freight train services in two years. Their decision is not only at odds with other railways around the globe, but also with global environmental direction.

The timing of the withdrawal will coincide with their newest diesel locomotives arriving from China; but the official rhetoric is that they will not replace the electric locomotives.

The full KiwiRail press release and some commentary is here, but I’d like to expand and break down some of the points in that press release. KiwiRail’s words are in Blue

How many new diesel locomotives will be bought and how much will they cost?

Eight locomotives will be required to replace the EF fleet. The cost is commercially sensitive.

They cost $3.8 million each, 2012 money. (ODT) The first 40 locos were plagued with reliability problems and then asbestos contamination which cost a whopping $12 million to clean up. The asbestos added $300,000 to the cost of each loco, nudging the price to $4.1 million each. You could then add the opportunity cost of the trains not working, and the resulting loss of business, but that would mean facing their real issues.

A big, beefy american train costs about $3 million US dollars or $4.3 million NZD (quick interweb search).

Clearly, buying Chinese means good quality, and also good value. 

Why doesn’t KiwiRail buy new electric locomotives?

They would be more expensive and would take longer to get into service. Simply replacing the existing locomotives also would not address the difficulties caused by operating both electric and diesel locomotives on one network, which creates a railway within a railway. It is equivalent to an airline requiring those flying from Auckland to Wellington to change planes at Hamilton and again at Palmerston North.

Balking a the term ‘expensive’ without qualifying it is a cheap shot. A new electric locomotive would cost slightly more than the Chinese-made DL loco, but would be much cheaper to operate over it’s life. 

As to this changing planes at Hamilton and Palmy – you’re only changing the pilot/driver, who normally gets out at Hamilton and drives a different train back to Auckland anyway. KiwiRail is making a big deal over the changeover time at Hamilton and Palmerston North, while actively adding hours to the journey time by ditching their road ferries and not maintaining tracks for higher speeds.

Why don’t you electrify the whole North Island system?

It would be very expensive. The cost estimate is $2.5 million per kilometre of single track. Electrifying the parts of the North Island Main Trunk currently not electrified would cost at least $1 billion for the infrastructure alone and feeder lines would still require diesel trains. There are additional complications in that the Wellington electric network uses a different power system to the Auckland electric network.

‘Complications’ between the different overhead wire voltages are fictitious; again KiwiRail are trying to put up a smokescreen. Trains in Europe and Japan commonly operate between two or three different power supplies. Its just not an issue.

The term ‘very expensive’ is Donald Trump rhetoric, and misleading; no infrastructure project is ever cheap. Lets have a look at a few recent transport infrastructure projects – unsurprisingly, roads get the lion’s share.

  • Waterview Connection: $1300 million
  • Auckland CRL $1200 million
  • Christchurch Motorway Projects $800 million
  • Kapiti Expressway $660 million
  • Transmission Gully $640 million
  • New Auckland Trains (Depot, Trains, Electrify) $550 million
  • Waikato Expressway$500 million
  • Nelson Street Tunnel $240 million
  • Dowse to Petone $90 million
  • Wellington ‘smart’ motorway $50 million
  • Wellington Railway Throat $40 million

So, how would adding electric trains between Hamilton and Auckland fit in that list?

The Auckland Electrification project cost $80 million for 200 km of electrified tracks and supporting infrastructure – a cost of $0.4 million per km of track. So electrifying the mostly double-track, 80 km between Hamilton and Papakura would cost $64 million for 160 km of overhead wire. Seems reasonable given the Auckland Electrification Project was installed in a busier and more constrained environment, with a lot of work on weekends and Christmas shutdowns.

KiwiRail estimate $400 million, we reckon $64 million. Even if it were $100 million, the KiwiRail estimate is four times more.

So if the Hamilton to Papakura electrification costs $100 million, it would fit somewhere at the lower end of the new infrastructure scale; somewhere between the Wellington’s ‘smart’ motorway and the Nelson Street Tunnel project.

Not bad for what would bring a step-change to the transport network, and set the stage for electrifying through the Kaimai Tunnel to Tauranga – when complete, the line will serve 40% of the country’s population and the two largest export ports.

 

What was the difference in cost between buying new electric or diesel locomotives?

The exact cost of locomotives is commercially sensitive. However the overall costing of the diesel option was estimated at 20% – 30% lower than the overall cost of the electric option over its operational life.

So how much are KiwiRail paying for some Chinese rubbish their diesel trains? When they say “commercially sensitive” they really mean ‘we’re embarrassed to be paying this much for such crap’. KiwiRail locomotives are costing $3.8 million each (as above, ODT) which is a low-ballpark cost for a trains bought from established suppliers in the US or Japan. The cost of KiwiRail’s Chinese locomotives has probably increased since the South African Railways have placed orders with China,  but also, and very smartly, hedging their bets with American and European trains too.

After the asbestos was removed from each Chinese loco at a total cost of $12 million, or $400,000 each, the price of each locomotive rises to $4.1 million. A bitter pill when compared with a modern electric loco from Japan cost (yen)400 million or $5 million NZD. The key benefit is that the Japanese locomotive is a mature design while incorporating new-generation technology and systems. The locomotive is plug-and-play for New Zealand.

Claiming that electric trains are more expensive is an ‘interesting’ claim; my guess is that the rubbish Chinese trains only have a 10 – 15 life expectancy, and the lifetime cost of electric trains have been calculated over the same period; making the Chinese locos look cheaper.

Key benefits of electric trains are:

  • Fewer moving parts compared with a diesel train – the still have wheels, brakes and a few cooling fans though
  • More powerful and faster acceleration
  • Chinese trains have a ten year service life, electric trains last 30 years+.
  • No exhaust fumes are emitted; good for passenger trains
  • Power is cheap, renewable and resilient to oil price shocks, especially in NZ
  • In NZ, renewable power is used for electric trains and the price of power is insulated against oil shocks, whereas diesel carries a full-exposure to international fuel prices.

 

What part in the decision did environmental issues play?

Environmental factors were considered as part of the overall decision, which also looked at operational efficiency and economic viability. When KiwiRail delivers a more consistent and reliable service it encourages more freight to move by rail. Emissions from rail are less than 1% of all transport emissions, with transport accounting for 17% of New Zealand’s overall emissions. A shift to diesel on the NIMT will increase the emission factor for freight carried by rail in New Zealand from 30.80 gms per Net Tonne Kilometre to approximately 34 gms per NTK (The sum of the tonnes carried multiplied by the distance travelled). There is no comparable figure for road freight in New Zealand but the United Kingdom produces an annual figure for Heavy Goods Vehicle. This is currently 114 gms per NTK.

And almost none by electric train.

 

What will happen to the old electric trains?

They will be decommissioned over a two year period

Not if a Labour-led government is formed “Regional and long distance rail”

 

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2 Comments

  1. Well whatever you do; don’t ever pretend that this blog is impartial. Nor factual.

    In your second sentence you state: “Their decision is not only at odds with other railways around the globe” (which is not true, Diesel-electric power is easily the most common form of rail traction across the world). Yet you seem oblivious to the reality that Kiwirail is not in the same financial position as other railways around the globe. in case nobody told you: Kiwirail has been operating under restrictive financial constraints since the 2008 NZ general election (called “the turnaround plan”) where it was left to generate its own profits with little to no financial assistance with its inherited ageing assets and infrastructure. No subsidies and deferred maintenance. Something that’s also “at odds with other railways around the world”.

    The tender for new locomotives was begun back in 2005, when NZ’s railways were owned by Australian company Toll Holdings. The evaluations for bids was close to completion by mid 2009 when the NZ government bought the railway network back (and changed the name to “Kiwirail”). It was the evaluation of this private company Toll holdings that placed the CNR/Dalian bid well ahead of the other 6 in terms of value for money. I don’t know where you source this claim that US locomotives could’ve been obtained for less money, but the fact is that the CNR bid was considerably less expensive than the other 5 options. And the fact is that with the change of government a few months later; the new transport minister Stephen Joyce basically instructed now state-owned Kiwirail to take this cheapest offer regardless.

    Yes the DL locomotives had some teething troubles (which is not unusual for new locomotives) and were found to contain asbestos insulation that is illegal in NZ. As part of the contract; CNR/Dalian paid for ratifying those issues, so your additional costing of these locomotives is utter nonsense. If you knew the history of NZ diesel and diesel-electric locomotives you’d know that these teething issues were actually overall less than many classes purchased in the past from the USA and UK. If you talk to any Kiwirail employee you’d know that now they’re broken-in, the DL’s are generally regarded as easily the best locomotives in the country.

    Electric locomotives are considerably more expensive than diesel-electric locomotives. Last year Morrocco’s national rail company ordered 30 DC locomotives for what was considered a bargain price of $130 million euros (~NZ$221 million, or NZ$7.35 million for each locomotive). And generally speaking; AC locomotives cost more than DC locomotives.
    Furthermore; the “dual mode” types of locomotives you’ve advocated are even more expensive. Not only do they require carrying both needed sets of expensive power electronics (which also makes them much less efficient due to dual redundancy) but their specialised applications mean much lower, specialised production runs.

    Electric rail traction makes the most economic sense on corridors where there are a high number of services and with any topographical inclines along the corridor adding to the economic benefits. Whilst the NIMT between Te Rapa and Palmerston North was the busiest (and most lucrative) rail corridor in NZ 40 years ago when PM Muldoon decided to electrify the section and looking like only ever increasing; sadly whats actually happened is that its traffic has steadily declined since the mid 1980’s mainly due to closure of the Abattoirs & the ending of production of the Dairy factory at Longburn (Palmerston North), the slow decline of the carpet factory in Fielding and the general decline of the ovine farming industries across NZ. That’s why only 15 of the EF’s have been retained for operations ad why only 8 D’s could replace them. For over 15 years now; the actual revenues from the electrified section of the NIMT wasn’t making much profit beyond the cost of maintaining and applying power to the actual electric traction infrastructure. The most lucrative rail corridor in New Zealand has long ago become by far the route between Auckland and Tauranga, only a short stretch of which passes through the NIMT electrification (te Rapa to Franklin Junction)
    Furthermore; Toll Holding’s new locomotives tender, which the DL locomotives eventually won, was for engines that produce 2,700 kW of motive power, which is enough to handle the steeper inclines of the NIMT to the same timetable as that managed by the EF’s with their 3,000kW of motive power.

    So not only could Kiwirail simply not afford to replace the EF locomotives, they plainly could not justify it either.

    As for the rest of this blog’s fictional post; it is filled with claims that simply are too absurd to be true. Have you got a single source for the claim that the DL’s only have a 15 year service life ? Because if that wasn’t a load of hilarious rubbish; the first batch would already be more than halfway through their service life. somehow I don’t think so.
    Oh and BTW; as diesel-Electric locomotives are also electric traction (albeit via a portable diesel generator); the acceleration benefits of purely electric locomotives is not actually very much. Furthermore it’s hardly of any importance in long-haul operations anyway, unless the rail corridor has a very volume of traffic (a problem the NIMT certainly does not suffer).

    As for your hopes of a Labour-led government: I wouldn’t hold your breath. I’m expecting the turnaround plan to be (somewhat) scrapped and Kiwirail to get much-needed grants for re-opening mothballed lines in Northland and the Gisborne line, but the credit for that should probably go Labour’s coalition partner the NZ first party.

    I know it’s sad that the NIMT is going to be dieselised. But by blaming Kiwirail; you’re blaming the victim and not the cause. Railways have been mismanaged and neglected in NZ for over 30 years, and by both the National and Labour party governments. The circumstances that have led Kiwirail to make this decision happened a long time ago.

    Reply

  2. NB: I don’t pretend to be impartial, nor do I claim to be. I try to back my claims with links, where I can’t, I rely on first-hand info. There is a lot to reply to – some I agree with, and a lot I can rebut.
    Long story short, electric is good and must be kept, cheap and poor quality is bad but KiwiRail are somewhat stuck with it.

    Reply

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