Freight next to go on main trunk line?

The closure of the Overlander service was announced last week. Picture / Reuters

The body blow the main trunk line took with the axing of Auckland-Wellington passenger services last week could soon be followed up with a knock-out punch of freight services, industry sources have said.

Rail operator Toll New Zealand's board meets tomorrow amid speculation in the transport industry that more closures of rail services are in the offing - including the backbone main trunk link.

The Australian-owned company last week announced the closure of the Overlander passenger service between Wellington and Auckland from the end of September.

The passenger service was losing money and the Government decided not to subsidise it.

Industry observers said some freight services are also uneconomic and that even the future of freight on the main trunk line used by the Overlander is not secure.

"The reality for New Zealand is that there is a nightmare scenario in which Toll just puts railfreight on trucks," said Brian Cronin of the Rail and Maritime Transport Union.

A crunch time will come in long-running negotiations between Toll and the Government over access fees to the Government-owned track, an industry observer said. Toll could pull services.

Toll NZ chief executive David Jackson said he could not comment on which lines were uneconomic or what would happen to them.

Industry observers said the coal line between Lyttelton and the West Coast and the route between Tauranga and Auckland used by Port of Tauranga to get freight into Auckland are economic, as are milk trains used by Fonterra in the lower North Island.

Beyond that, it is debatable. It is not clear that the main trunk itself is economic and will survive with Toll as the long-term operator at the current fee level.

However, Toll may be painting a bleaker picture than necessary behind the scenes to increase pressure on the Government to contribute to the network upkeep.

Toll is understood to have briefed major customers. The bleak picture may simply be a negotiating tactic.

While Toll will be hurting from higher fuel prices, it should be gaining a competitive advantage over road because of rail's innate greater fuel efficiency.

One of the issues with the Overlander service was the poor state of the network as well as the carriages.

Speed restrictions operating on tracks because of their poor standard added as much as an hour to the journ ey.

There are many legal complexities involved but in the long term other passenger operators can come in.

In the case of freight lines, another operator can come in immediately if Toll gives up a line.

Queensland Rail, the operator that has emerged as Toll Holdings' only real competition in Australia, is seen as the only potential new operator in New Zealand. It has been on the acquisition trail.

The Government recovers all of the expenses of the network from the operators in access fees after investing $200 million in the track when Toll took control of Tranz Rail following its financial collapse in 2003 .

Toll operates most rail services in New Zealand except the Auckland passenger network.

- NZPA