The road remains closed and police continue to investigate.
A resident, who lives about 1km from the crash site, said he heard a loud bang and saw a car burst into flames.
“I can see a Fonterra milk tanker down there,” he said.
“There was quite a loud bang when we were sitting at the table [at home] so we stood up and saw the smoke coming from the front of the tanker.”
A Fonterra tanker was involved in the crash, a spokesman for the company confirmed to the Herald.
The tanker driver was moderately injured, he said, and Fonterra was supporting him.
“Emergency services are in attendance, and we are assisting police with their enquiries,” the spokesman said. “One of our tankers was involved in a crash with another vehicle north of Shannon this afternoon.”
The man continued, “There was smoke coming from the car too. Then it burst into flames. The flames were as high as the tanker.”
A farmer, who works east of Shannon, also told the Herald he saw a plume of black smoke.
Police have also asked KiwiRail to close the railway track around Shannon, a spokesman for police confirmed to the Herald.
KiwiRail said it has closed a section of the North Island Main Trunk line north of Shannon due to the crash.
The 5.15pm Capital Connection is “unlikely to be able to travel to Palmerston North”, KiwiRail’s Lower North Island regional operations manager James House said.
“Passengers will be transferred to buses to complete their journey,” House said.
House expected the railway line would remain closed “for some hours”.
Waka Kotahi said the crash on SH57 was near Kara Rd.
“[The serious crash unit] is attending the scene and will take several hours to complete their investigations,” the transport agency said.
“Please avoid the area of use an alternative route.”
Mayor of Horowhenua Bernie Wanden called the crash a “serious and tragic accident”.
”It’s been quite a very serious accident,” he said.
”The impact on families is pretty significant here. It’s tragic that they’re going to be impacted forever.
“We hate seeing events like this.”
The Horowhenua District Council said they were “thinking of all involved” in the crash.
“Please be mindful of this area when traveling today,” the council said on Facebook.
Fire and Emergency NZ said “police are the lead agency” and there is no further comment they wish to make.