News & Events

KiwiRail’s Central New Zealand Freight Hub a boon for Palmerston North economic growth

Thursday July 2 2020

Palmerston North Mayor Grant Smith has welcomed today's announcement of the preferred site for KiwiRail's Central New Zealand Regional Freight Hub.

"This is a significant investment into the city with long-term economic benefits for the region and New Zealand. The site will contribute substantially towards New Zealand’s economic growth, connectivity, and resilience, and now more than ever we see the city’s strategic importance in freight distribution, especially in an emergency.”

Regional Economic Development Minister Shane Jones announced the preferred site for the 2.5km long inter-modal freight hub is between Palmerston North Airport and Bunnythorpe. The freight hub will integrate rail and road transport, creating greater efficiency for moving goods between rail and road as well as taking advantage of the proximity to the airport, creating a fully integrated multi-modal rail, road and air hub – the only one of its kind in New Zealand.

"Council, the wider region and all its key stakeholders are fully behind and supportive of KiwiRail's development," says Mayor Smith. "The city is eager to plan and contribute in consultation with KiwiRail, to enhance the KiwiRail offering to maximise benefits locally, regionally, across the lower North Island, and nationally.

"The city and the region have a cohesive vision and strategy focused on its natural advantages as a logistics hub, given our unique position with access to State Highway 1 and airfreight connectivity in adjacent developments. KiwiRail’s development is a key part of that, but equally important is the Regional Freight Ring Road, which the New Zealand Transport Agency previously committed to delivering alongside the replacement Manawatū Gorge highway. With the freight hub now tangibly taking shape, we look forward to working with NZTA to advance the connecting ring road, to enable the realisation of the region’s strategy, and unlock significant benefit not only for the region but also for the wider New Zealand economy.

“The freight hub construction project alone will directly create more than 300 jobs in Palmerston North. We're expecting it will unlock other significant opportunities for economic development, through more distribution and logistics companies relocating here, and an increase in associated trades and services to support them. These will lead to housing development and job security that will enhance Palmerston North as a secure and inviting place to live, work and invest. The city is already preparing Council's long-term planning for this level of growth."

The expanding northeast industrial zone on the main trunk railway line and near Palmerston North Airport is designed to accommodate large footprint industrial activities. This is proving to be a destination of choice for distribution and logistics businesses in a unique multi-modal hub.

"With other major projects in the city such as Te Ahu a Turanga – the Manawatū-Tararua Highway, Mercury Energy's windfarm construction and record values in building consents, the city is on a trajectory of significant growth,” says Heather Shotter, PNCC Chief Executive.

“Following the Covid-19 pandemic, these labour and trades intensive developments will showcase Palmerston North as a leader in New Zealand's economic recovery. This development brings enormous long-term benefits to the wellbeing of the city and its residents, which Council fully supports.

"One of the benefits of moving more freight by rail is the alignment with our city’s vision of reducing carbon emissions.”

Mayor Smith said, “I also want to acknowledge the cooperation of those living within or near the proposed site, and the individuals and organisations who have assisted KiwiRail with their investigations into their preferred site.


Palmerston North is a long-time natural distribution hub due to the city's central location and flat land, with strong road, rail and domestic airfreight hubs, affordability and labour force supply.

Palmerston North is the lower North Island's freight hub and KiwiRail’s second largest freight node in the country outside of Auckland.

More than $333 million is earned by city residents working in the logistics sector annually. Our logistics earnings in the city increased by more than 177% since 2000. Well ahead of the 121% national increase.

The region has three major ports to the east, west and south, and is on the main rail trunk line and at the centre of five major state highways. Leading companies such as Toyota, Norwood and Motor Truck Distributors have placed their national distribution centres here. The city has attracted numerous major distribution facilities. Companies taking advantage of Palmerston North for distribution centres include Foodstuffs, Countdown, DKSH New Zealand and EziBuy.

Freight volume is predicted to at least double over the next 20 years. From 2020, hundreds of millions of dollars in Covid-19 government recovery investment is earmarked for rail networks and interisland ferries.

Design, consenting, and acquisition of land for the regional freight hub is funded through a $40 million investment from the government's Provincial Growth Fund.

KiwiRail will finalise the design of the regional freight hub and expects to begin the process to have the land designated for rail use, which is similar to a resource consent process, from about September 2020.