Prebble out of step with Mainfreight board

Written By: - Date published: 3:39 pm, May 6th, 2008 - 23 comments
Categories: act, assets - Tags: , , , ,

This morning on Breakfast Prebble called the government buy-back of trains and ferries “loony”.

What’s alarming is that Prebble is on Mainfreight’s board of directors. His comments appear to put him seriously out of step with Mainfreight’s chief executive Don Braid, who commented:

Provided the Government manages it [the rail operations] in a commercial way and puts a commercial board in place there’s an opportunity to see far improved rail infrastructure, which would be good for everybody including Mainfreight.

Not only does Prebble seem to be lacking a sense of what might be good for the country he lives in, he seems also to lack a firm grasp on what’s good for the company he works for.

(Hat-tip: Conor Roberts)

23 comments on “Prebble out of step with Mainfreight board ”

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  1. higherstandard 1
    6 May 2008 at 3:48 pm

    Interesting clip I’d recommend everyone watches and listens gets more information and then makes up their own minds.

    Prebble does certainly make some good points.

  2. Phil 2
    6 May 2008 at 3:54 pm

    Note that Braid begins with “Provided the… ” indicating that benefit to Mainfreight is the dependant variable – it’s not a given and relys on the govt acting in a certain manner… which, clearly, Prebble doesn’t think is going to be the case.

  3. Steve Pierson 3
    6 May 2008 at 4:10 pm

    I see that Fonterra is looking at putting most of its freight on rail and Mainfreight is also looking at big expansion in the area.

    Prebble’s comments on the book value are just a distraction – the value of a company as a going concern is not the book value of its assets.

  4. higherstandard 4
    6 May 2008 at 4:22 pm

    I’m not sure Steve but I would think that most of Fonterra’s freight would be from farm gate to factory for processing.

  5. Steve Pierson 5
    6 May 2008 at 4:33 pm

    Does the milk just stay at the factory after processing?

    factory to export port and city distribution.

  6. Patrick 6
    6 May 2008 at 4:51 pm

    You might find this interesting hs:

    http://www.radionz.co.nz/news/latest/200805060535/32bc9c53

    Dairy cooperative Fonterra says it moves about half of its 2 million tonnes worth of annual export stock by rail and wants to up that to 80 or 90%.

    It says rail is greener, safer and potentially cheaper than road freight and says the whole country stands to benefit from a better system.

  7. randal 7
    6 May 2008 at 5:23 pm

    now that the deal has gone ahead it shows how inadequate, shallow and basically gutless the douglas policy prescriptions were in the first place and now prebble has egg all over his face…serves him right for wanting to eat his fish and chips, read the paper and drive his car all at the same time…hehehehehe

  8. Luke C 8
    6 May 2008 at 6:30 pm

    Prebble has several false statements in this interview.

    He says the rail fery business, together with the trucks is valued at $430 million. This is completely wrong as Tolls statement ponits out here http://www.toll.com.au/media/2008/594467.pdf. The $430 million is the value of the asset sold to the govt.

    Prebble also claims Rail is is no more environmentally friendly than road. This is completely wrong. The estimates do vary alot but rails carbon footprint always comes up much lower.
    An extra couple of km’s of truck journey and transfer from road to rail only makes very minor difference to the emissions.

    Another claim is that all rail rail journeys need a truck at both ends. This is true in somey cases, however in many other cases rail is used straight from factory to port, with no road transfer.
    Many truck journeys also require transfers between trucks. When was the last time you saw a B-Train turn up to deliver your mail, or deliver milk to the dairy?

  9. Tane 9
    6 May 2008 at 7:17 pm

    Heaven forbid, Prebs, a trade unionist on a company board. What ever is the world coming to?

  10. Phil 10
    6 May 2008 at 8:19 pm

    “Prebble also claims Rail is no more environmentally friendly than road. This is completely wrong. The estimates do vary alot but rails carbon footprint always comes up much lower”

    Actually, your the one with the false statement.

    In both the US and the UK it has been shown (in the case of passenger transport, at least that I know of) that road journeys have smaller carbon footprints than the equivalent train journey.

    Whether or not this is the case for freight is conceptually more debatable, as there is generally a more efficient use of space in both transport methods.

  11. libertyscott 11
    6 May 2008 at 11:12 pm

    Mainfreight is a major rail user, you think it’s going to say no to a subsidised business that keeps it from paying the full costs of maintaining the track and replacing rolling stock? Sheesh – find any business that wont say yes to the state making others give it something below cost.

    The environmental friendliness of rail vs road for freight is entirely route/load/quantity dependent. Most road freight is short to medium haul relatively small loads. In many cases road beats rail – it’s not as simple as the rail worshippers think it is.

  12. Luke C 12
    7 May 2008 at 12:22 am

    I was thinking in terms of freight transport.
    Passenger transport is a little more debateable. Public transport defintely beats cars, the argument is between rail & buses.
    Rail freight definitely has advantages, especially over long distances.
    EECA figures give rail freight energy efiiciency of 200 Watt hours epr tonne km, with a figure for trucking of 810.
    However short haul can also be more environmentally friendly where competing road network is gridlocked.

  13. roger nome 13
    7 May 2008 at 12:42 am

    Scott:

    “you think it’s going to say no to a subsidised business that keeps it from paying the full costs of maintaining the track and replacing rolling stock?”

    You’re making unfounded assumptions. You don’t know the detail of the policy to be used.

    “The environmental friendliness of rail vs road for freight is entirely route/load/quantity dependent.”

    Rail is on average 3-4 times more fuel efficient. So far I haven’t seen any officially produced figures that contradict this.

    I don’t doubt that short-haul trips are more efficiently done by truck though.

    Philbest:

    Those studies were done when oil was one-fifth of its current price, and public transport was shunned as a result of it. Cars were so cheep to drive around, so for the convenience it was worth paying a little extra – so public transport wasn’t more environmentally friendly then. That won’t be the case in the future though

  14. bobrien 14
    7 May 2008 at 12:58 am

    So the logic is what is good for Mainfreight is good for New Zealand.

    So is Cullen instep with the Mainfreight Board on all other issues, what influence does the Mainfreight Board have on the Government?

    I there a secret agenda at work here?

  15. Phil 15
    7 May 2008 at 9:42 am

    Roger,

    Call me pedantic, but I don’t think that the price of the petrol in my car changes how environmentally friendly it’s emmisions per-trip are…
    you’re also making an assumption about price elasticity of demand which, judging by the commute I make each morning not taking any less time than it did last year, doesn’t hold true.

    What these studies tend to forget (in the case of passenger transport at least) is that the car isn’t producing any more emmissions when you step out of it. The public bus/train however, keeps on chugging along, and in peak times is often totally empty heading back out of the city. If you’re going to calculate carbon footprint, you simply have to include that part of the equation too.

    “Rail is on average 3-4 times more fuel efficient. So far I haven’t seen any officially produced figures that contradict this”
    So far, I haven’t seen any figures to back you up either. However, happy to be proven wrong if you can link a couple of studies.

  16. Dim (was dime) 16
    7 May 2008 at 11:26 am

    of course the guy from mainfreight is gonna say that!!!

    he knows the govt will sink billions into the rail system which will give his company more profit.

    tll wouldnt spend the money cause they are business people.. they actually have to consider the people that invest in their company..

    where as this govt just takes what hey want

  19. Higherstandard 19
    10 May 2008 at 12:00 pm

    Gaynor’s history is an interesting read r0b and evenly slates the public and private sector you don’t have to immediately jump to the governments defense.

  20. r0b 20
    10 May 2008 at 3:10 pm

    Sorry HS, force of habit. Also contrasting one person’s view with a strong consensus.

  21. Libertyscott 21
    10 May 2008 at 9:41 pm

    Rogernome, please, Mainfreight is making the reasonable assumption that state owned rail will want a lower rate of return (zero according to the PM “we aren’t in this to make money”) than a private owner, so of course it is a subsidy.

    Your three to four times more fuel efficient measure is a tired old figure that comes from a test the Railways Department did in the early 1980s, it does NOT take into account the total environmental costs. It is repeated like some sort of biblical mantra and roads and trucks have moved on a lot more since then. The marginal environmental costs of road vs rail freight are reported in the MOT’s Surface Transport Costs and Charges study. If you read the four freight case studies, you’ll find rail is only substantially more environmentally friendly in one example, borderline with two and trucks beat rail on another – they are route dependent.

    It is an article of faith that railfreight is “better” than road, frankly for most of the country the costs of maintaining a duplicate transport network for services that run only a handful of times a day isn’t worth it when the parallel highways in most instances are two lane only with plenty of spare capacity.

    If you really want to address what freight should go on rail vs road then you need to take RUC and modernise it to charge trucks by actual weight and vary charges by route to reflect actual costs. It’s easy, the technology is used today in Germany – but that would mean using economics instead of just throwing money at rail on the basis of blind faith.

  22. roger nome 22
    11 May 2008 at 12:49 am

    Phil:

    “but I don’t think that the price of the petrol in my car changes how environmentally friendly it’s emmisions per-trip are ”

    My point was that the studies were done when cars were far more economical to run, so people used them. In the era of $20 a barrel oil, public transport was empty and we got the rediculous scenario of cars in auckland averaging 1.2 people per journey. Oil is now at $120 a barel, and it won’t be long before it’s $200 a barrel. That’s 20 time it’s average inflation-adjusted 20th century price. At that point public transport is swamped, and buses are all of a sudden is averaging 10 passenger miles per mile traveled. At the moment it’s only about 2 passanger miles per mile traveled (in Auckland) – which is why studies of 20th century public transport show that it’s inefficient. Not that it’s inefficient per se, but becuase cheap oil meant buses weren’t as packed as they will be in the age of expensive liquid fuel.

    And you’re partially right about demand elasticity. It’s a medium to long term thing. For various reasons things take time to change. i.e. if the infrastructure and service is poor people are less likely to use it (in Auckland investment and planning have been poor since the 50s, but that’s changing now), people are creatures of habbit, etc ….

    Oh, and I’ve read several studies showing that rail is 3-4 times more efficient per-unit-carried (for frieght). One was buy a professional and independant consultancy firm – so pretty solid stuff.

    In fuel efficiency, rail transport is much superior to road transport. Recently, a study sponsored by the U.S. Federal Railroad Administration into the relative fuel efficiency of truck versus railway freight operations was concluded.1 The study’s objective was to identify the circumstances in which rail freight service offers a fuel efficiency advantage over alternative truckload options, and to estimate the fuel savings associated with using rail service. The findings were based on computer simulations of rail and truck freight movements between the same origins and destinations. The simulation input assumptions and data were based on actual rail and truck operations. Input data were provided by U.S. regional and Class I railroads and by large truck fleet operators.

    The study noted that design improvements have been incorporated into successive series of locomotives, with each new model containing greater levels of fuel economy improvement. These design changes are made on an evolutionary basis and work in concert to improve overall locomotive fuel efficiency. Locomotive fuel economy improvements have been added in the areas of the engine, auxiliary systems and rail lubrication.

    Because of the many variables involved with the simulations, and the resultant “best/worse case scenarios,” the study shows a wide range of savings in rail transport over road transport (Table 3). On average, however, the study shows that, in ton-miles per gallon of fuel, railways are about 4.5 times as fuel efficient when compared to trucks.

    http://www.tdri.or.th/library/quarterly/text/s93_4.htm

  23. roger nome 23
    11 May 2008 at 12:54 am

    Sorry about the poor grammar BTW. Time to go to bed.