KiwiRail under price pressure

03:37, Jun 15 2009

KiwiRail is under renewed pressure from logistics companies to charge its former trucking business the same rate as everyone else.

Toll Holdings of Australia kept the trucks when it sold rail back to the Government and added to the freight forwarding business with acquisitions.

Toll NZ now operates 960 company and owner-driver trucks when all of its brands are counted. It is KiwiRail's largest freight forwarder customer.

Listed logistics company Mainfreight said it had evidence that Toll NZ gets as much as a 30 percent discount when putting its freight on rail and ferries operated by KiwiRail.

The discount was supposed to end on December 31, as was cheap, or lack of rent, on premises Toll NZ has on KiwiRail land.

Mainfreight managing director Don Braid said KiwiRail was asking for money from the Government when it could be earning more by charging a major customer the same as other customers.


"KiwiRail needs every cent it can get and here it is with poor negotiation abilities. They are missing out on valuable revenue that should be being paid by an Australian transport provider."

The TranzLink freight business owned by Tranz Rail and then Toll Holdings had always had cheap rent and subsidised rate structures.

Mainfreight said Toll NZ quoted rates in the marketplace below Mainfreight's costs.

Mainfreight is a major customer of rail and has long lobbied for improved rail services.

"What is the KiwiRail board doing? I think that board is lacking in gumption," Mr Braid said.

Toll NZ group general manager Greg Miller said the situation was complex and both parties were addressing it constructively.

Asked if Toll had threatened to take its business away from rail as a negotiating tactic, Mr Miller said "that's the last thing we want to do". "We won't talk out of school until we have found a place where everyone can work together," he said.

"It is not a subsidy situation but it is really complex," he said.

"We have a good team of people on both sides working hard on the best outcome," he said.

KiwiRail said it did not comment on individual customer rates but anomalies were identified during the Crown's due diligence prior to the purchase of rail.

It was taking longer than expected to implement a new pricing approach, KiwiRail said.