They tried frantically to free it before it was wiped out by a JNL log train travelling south.
Nobody was injured.
KiwiRail and the Transport Accident Investigation Commission are investigating the incident and the woodchipper incident is still under investigation.
"No-one was injured [on Monday] - however, we are taking this matter very seriously," a Kiwirail spokeswoman said.
She would not comment on a suggestion to the NZ Herald by an industry source that an official had declared the Wairarapa tracks clear for trains prematurely on Monday.
Although nobody was hurt, and the train driver managed to stop in time, the near miss echoed a more serious incident in which a digger driver did not escape injury.
He was critically injured when hit by a train at the southern end of the Raurimu Spiral near Tongariro National Park in June.
Rail and Maritime Transport Union acting general secretary Todd Valster said he was aware of a "block of line" closure of a section of the Wairarapa railway line at the weekend, for contractors to replace sleepers.
He was confident the investigations would find the causes of the mishap, given the deep concern about the Raurimu incident.
Trains take a long time to stop because of their mass and research shows many people cannot accurately gauge how fast trains are travelling, said TrackSAFE Manager Megan Drayton.
KiwiRail Chief Executive Peter Reidy said a train hauling 1500 tonnes takes up to a kilometre to stop.
Rail Safety Week was launched yesterday with a focus on minimising the number of near misses experienced by train drivers at level crossings.
For the year to date, there were 16 collisions with vehicles and cyclists, with five fatalities in four separate incidents.
'DRIVE' A TRAIN
See exactly what it takes to drive and stop a locomotive in a virtual reality train simulator in Masterton this Saturday.
As part of Rail Safety Week, KiwiRail and TrackSAFE NZ developed the simulator in an effort to show people what its like to be a train driver.
Participants will don Occulus Rift Headsets to test their train driving skills.
The simulator will be at Queen St, Masterton on Saturday, August 16, next to Paper Plus from 9.30am-4pm.
It is also online at www.railsafety.org.nz
Additional reporting by NZ Herald.