The Government has established a new company to procure replacement ships for KiwiRail’s ageing Interislander ferries today. Video / Mark Mitchell
Analysis by Georgina Campbell
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
A year after the Government cancelled the increasingly expensive mega-ferry project to replace Interislander’s ageing fleet, that question is yet to be answered.
But first, what does “rail-enabled” actually mean?
Former KiwiRail chairman David McLean retired early this year. Photo / Mark Mitchell
Put simply, it means that trains can drive directly onto the ferries and off again making for a seamless transition for freight across Cook Strait.
Prime Minister Christopher Luxon has talked about the new ferries being “rail-compatible”.
This is usually a reference to RoPax ferries or road-bridging. This is where containers are removed from the rail wagons by a vehicle that then loads them onto the ferries.
CentrePort chairman Lachie Johnstone has previously explained the intricacies of these two models.
“To berth a rail ship, the landside linkspan needs to be joined to the back of the ship.
“The reason it has to be pinned to the ship is because you’ve got about 25 mils of tolerance to get a wagon from the linkspan onto the ship.”
The Aratere was attached to the linkspan at the time of the 2016 Kaikōura earthquake and it snapped off due to the movement, Johnstone said.
“It’s not like a RoPax ferry where you simply put a ramp down and a vehicle drives across from the land onto the ramp and any movement with the wind or the tide is soaked up with the movement of the ramp.
“It’s much more complex and as a consequence of that, there is additional expense and there’s additional risk around resilience.”
CentrePort board chairman Lachie Johnstone. Photo / Mark Mitchell
This is a key point. The landside infrastructure needed for rail-enabled ferries is generally more expensive and is what drove the mega-ferry project’s eyewatering cost escalations.
That’s not to say rail-enablement is flat-out too expensive.
Remember, Interislander’s Aratere ferry is operating as a rail-enabled ship across Cook Strait currently but it is significantly smaller than what the mega-ferries would have been.
Let’s return to McLean’s comments about the country’s rail network being broken in two.
KiwiRail has previously insisted two large rail-enabled ships were the only option.
Losing rail enablement would have “major adverse impacts” on ship turnaround times, McLean has said.
“The implication for KiwiRail’s freight business is that freight customers are likely to prefer to load the freight on a truck for the whole journey, rather than on rail, to avoid the slower loading/offloading times.”
McLean also voiced concerns about the health and safety risks involved with the double handling required for bridging freight.
The two rail-enabled mega-ferries were due in 2026 but have now been cancelled. Image / KiwiRail
Ministry of Transport officials addressed this debate in an aide memoir to Transport Minister Simeon Brown in December 2023 and were not so convinced.
Officials did not consider that the absence of rail-enabled ferries would make a material difference to the overall amount of freight that would move from road to rail.
Only about 5% of total freight moved by rail crosses Cook Strait, they said.
“Almost all rail freight can still be carried across Cook Straight through road bridging (which is invisible to KiwiRail customers, and who are likely to be indifferent about how their goods are moved onto the ferry).”
On quicker turnaround times, officials said an independent assessment concluded there would only be “marginal advantages” with rail-enabled ferries, although operating costs would be higher.
Willis has pointed out that, across Interislander and its competitor Bluebridge, four of the five ferries currently servicing Cook Strait are not rail-enabled, an arrangement which seems to be working fine.
It also means that when Aratere is taken out of service, sometimes for as long as one month, there are no rail-enabled ferries servicing the strait during that time.
Given all of this commentary on rail enablement, it was particularly interesting when KiwiRail changed its tune earlier this month.
During a select committee appearance, KiwiRail bosses were asked directly whether they could cope with rail-compatible ships rather than rail-enabled ones.
The answer was: “Yes.”
KiwiRail chief executive Peter Reidy, left, and acting chairman Rob Jager during their appearance at a select committee earlier this month. Photo / Mark Mitchell
Interislander executive general manager Duncan Roy said operational changes would be required but he was confident they could do it “easily”.
It’s estimated the additional annual operating costs from double handling the freight would be $5 million.
KiwiRail chief executive Peter Reidy said there would be implications for the wider network including some customers who couldn’t use the rail system.
“For example, if we wanted to bring scrap steel from the lower South Island up the North Island, it would have to go to Port Lyttelton and be [coastal shipped] out.”
KiwiRail has also worked out potential revenue spillage if that was the case, Reidy said. He did not provide further details.
Committee members were keen to understand whether prices would increase for freight customers.
KiwiRail chief customer and growth officer Adele Wilson said it was too early to tell.
“The way we’re looking at that at the moment is rail in a way competes with road pricing so, we’re looking at the additional costs as a hit to our margin primarily.
“We’re not assuming that we’re going to be able to increase costs necessarily but it’s just far too early to be moving any sort of modelling to pricing because the other key piece of this of course is port operating costs.”
There is also the issue of maintaining KiwiRail’s assets.
KiwiRail has its major overhaul workshop in Woburn, Lower Hutt.
It also has a new rail mechanical facility in Waltham, Christchurch.
Hillside Workshops in Dunedin have also undergone major reconstruction and this is where wagons can be assembled and maintained.
Finance Minister Nicola Willis and newly appointed Minister for Rail Winston Peters. Photo / Mark Mitchell
Currently, KiwiRail uses the Aratere to move heavy maintenance equipment and wagons between the two islands to get to and from these locations.
Alternative options could include special trucks or coastal shipping, KiwiRail bosses said.
This week Willis announced a new company is being set up to procure two new ferries – larger than Interislander’s current ones but smaller than the mega-ferries − that will begin operating in 2029.
The Government is also inviting the private sector to submit alternative proposals for a ferry service that will be assessed alongside the procurement process in March.
There’s also a new person in charge of the ferry dilemma – freshly appointed Minister for Rail Winston Peters.
He essentially has three months to come up with a better solution than the one waiting in the wings.
Peters has left the door open for rail-enabled ships.
Reidy welcomed these latest developments in the Cook Strait saga.
“We note that rail-enabled ships are still an option. However, if the new ships are not rail-enabled, we will be able to continue to efficiently move rail freight across Cook Strait in the same way we do now when our only rail-enabled ship, Aratere, is unavailable.”
Georgina Campbell is a Wellington-based reporter who has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.
