KiwiRail Intermodal Freight Hub Master Plan announced and presented by Regional Economic Development minister and NZ First List MP Shane Jones at Te Manawa in Palmerston North.

​KiwiRail's planned regional freight centre could attract $2 to $4 billion of investment into Palmerston North, chief executive Greg Miller said after the unveiling of master plans for the facility.

Regional Economic Development Minister Shane Jones was in Manawatū on Tuesday for the launch of KiwiRail's proposals.

Plans for the centre for road and rail freight distribution have been developed following a $40 million investment from the Provincial Growth Fund.

Jones welcomed it as a major development for freight distribution across the lower North Island, fulfilling the Labour-led coalition Government's promises to rejuvenate rail.

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"It will allow for greater use of rail... efficiently link rail and road freight together, and create a focal point that will help draw more distribution businesses to the Manawatū."

Miller said the Government's backing was a catalyst for a "bold" venture, which was likely to attract investment from customers keen to locate their facilities at the new site.

"We have infrastructure investors at our door who want to locate or co-locate. It does not need to be us paying for it all."

SUPPLIED KiwiRail has released images of its proposed rail freight complex in Palmerston North.

He said the investment had potential to release an enormous amount of value.

Miller said Palmerston North was an ideal location given it was already the largest freight destination outside Auckland, was home to many distribution centres, had plenty of available flat land, and reliable weather.

The presence of Massey University and an educated workforce was also important.

WARWICK SMITH/STUFF Regional Economic Development Minister Shane Jones welcomes progress to rejuvenate rail with a new centre in Palmerston North.

But where the likely 3-kilometre stretch of railway sidings, warehouses, log yards, container terminal and freight-forwarding facilities will be created has not been decided.

KiwiRail was considering several potential sites and would consult the public early next year before moving into the formal process of designating its preferred piece of land.

Palmerston North mayor Grant Smith said the hi-tech centre would integrate road, rail and air freight in the central North Island, and the progress on the master plan was "fantastic".

The development would free up land along Tremaine Ave used for rail freight so it could be used for other purposes, possibly including much-needed housing.

SUPPLIED KiwiRail's proposed rail freight facility could cover a 3-kilometre stretch of land.

Along with development of a regional freight ring road around the outskirts of Palmerston North, it would help move large trucks off some of the city's urban and residential streets.

Smith said KiwiRail's plans recognised and built on Palmerston North's prime location as a distribution centre and to a large extent revived its history as an important rail centre.

"It has an element of back to the future, to a time when our prosperity rode the rails.

"Our region is well placed, with three major ports to the east, west and south, the main rail trunk line and New Zealand's main state highway leading through it."

SUPPLIED The master plan for KiwiRail's rail centre in Palmerston North would include warehousing and freight-forwarding facilities.

Smith said it would improve efficiency in moving freight and support Palmerston North's eco-city aspirations, as each tonne of rail freight produced 66 per cent fewer carbon emissions compared with road.

It also supported the Accelerate25 goal of Accessing Central New Zealand, providing better links for exporters from the region to domestic and international markets.