The funding will come from the government’s provincial growth fund (PGF), which is designed to assist economic development outside the country's three main centres.

KiwiRail acting chief executive, Mr Todd Moyle, says the new site on the outskirts of the city will cover up to 60 hectares, and will provide leased space for freight forwarding companies to establish their own freight terminals to maximise the efficiency of multi-modal freight. The facility will cater for freight trains up to 1000m long, and will also provide space for maintenance facilities and materials storage.

While KiwiRail was already planning to build a new freight terminal in the city, the government funding will allow construction to start sooner than expected. “The PGF focus on the regions allowed us to move the freight hub right up our priority list,” Moyle says. “Without the possibility of PGF funding it would have remained a low priority.”

Planning and land purchasing is expected to take three years, with construction taking a further two. The current terminal, developed in 1964, handles around 2.4 million tonnes of freight annually and this is expected to grow by at least 60% over the next 20 years.