August has signaled a potential turning point for New Zealand’s KiwiRail and its interisland ferry service. The company has concluded its iReX ferry program with a final settlement to the shipyard and has retired its oldest vessel, marking the beginning of a modernization initiative. KiwiRail plays a crucial role in transporting both passengers and freight between the North and South islands, moving approximately US$8.5 billion in freight annually and carrying around 800,000 passengers and 250,000 cars.
In 2020, with government backing, KiwiRail announced plans for two larger hybrid ferries to enter service in 2025 and 2026. However, a newly elected government criticized the project, citing escalating costs, leading KiwiRail to cancel the order with Hyundai Mipo Dockyard. A settlement was reached at NZ$144 million (US$84.6 million), bringing the total costs related to the contract to NZ$222 million (US$130 million).
KiwiRail aims to collaborate with Ferry Holdings Limited and port companies to develop two new rail-enabled ferries and necessary infrastructure upgrades by 2029. Meanwhile, the service has faced maintenance issues, prompting regulatory scrutiny. The recent retirement of the Aratere, the company’s only rail-enabled ferry, is intended to facilitate new port infrastructure, with plans for larger vessels that will reintroduce rail freight capabilities by 2029.
