CentrePort Waingawa log hub cost savings

Shifting logs from road to rail found reductions in costs to the environment, the forests and the communities of about one half.

The Ministry of Transport is keen to ensure transport in New Zealand is “Mode Neutral” so that the investments and decisions on the various modes of road, rail, air, sea and active modes are based on the merits of each to deliver positive social, economic and environmental outcomes.  

BERL has completed a case study to estimate the range of effects of shifting logs from road mode to rail mode in the haul from Wairarapa to CentrePort.  We found that shifting logs from road across the Remutaka Hill, to rail from the Waingawa log hub reduces the range of costs to the environment, the forests and the communities by about one half.  The case study coefficients we used are largely based on those in a similar study in the southern South Island.  We therefore think that ours are conservative for the impacts of taking logs off the Remutaka hill road.

For shifting 250,000 tonnes of logs a year from road to rail, the savings would be $3.7 million a year.  KiwiRail announced their capacity expansion to carry 370,000 tonnes a year, which can be expected to save $5.5 million a year.  These savings include $4.1 million in direct transport costs which is over 7% of the export value of the logs to improve the forest economics.

To estimate the monetary equivalent of the benefits to the people, their communities, and the environment, we use the accepted processes of monetising these social and other costs and benefits.  The estimates of these ‘externality’ monetary benefits are about $200,000 in reduced emissions and other environmental costs, over $700,000 in reduced costs to other road users from accidents and congestion, and over $400,000 reduced costs of damage to the road unmet from the amount of Road User Charges (RUCs) paid.  The latter is almost certainly an underestimate of the benefit given the nature of the large log rigs and the nature of the road.

The volume of logs handled by CentrePort in 2018-19 was over 1.7 million tonnes and will be higher this year.  CentrePort has planned log hubs for Woodville and Marton.  These will require more KiwiRail capacity, and our case study benefit numbers show that as soon as possible KiwiRail should ‘bring it on’!

To read the full report please download the pdf here