KiwiRail and the Korean shipbuilder Hyundai Mipo Dockyard (one of the world's largest shipbuilding companies) have mutually agreed to terminate the 2021 construction contract for two large ferries aimed at modernizing New Zealand's inter-island transport service.
The contract's termination follows the NZ government's decision in December 2023 to withdraw funding for the project, casting uncertainty over the future of the ferry service.
Currently, KiwiRail operates three ferries, with the oldest dating back to 1988 and the others built in 1995 and 1998. These Ro-Ro vessels facilitate 4000+ crossings between NZ's North and South islands annually, transporting ~US$8.5 billion worth of freight.
Annually, KiwiRail's ferries carry ~800,000 passengers and 250,000 cars, with one vessel capable of transporting rail cars.
The Ulsan-based Hyundai Mipo reported the cancellation of the US$313 million contract to build two ferries at KiwiRail's request. Discussions are underway regarding potential claims for design costs. KiwiRail has initiated talks with Hyundai Mipo regarding the termination and is exploring alternatives, including sourcing replacement ferries through international shipbrokers.
In light of the project's discontinuation, the government plans to establish an advisory group to assess options for the Cook Strait ferry service, reviewing long-term inter-island service requirements.
The proposed ferries, scheduled for service in 2025 and 2026, were designed with volume 50,000 GT-tons, max capacity 1900+ passengers and 650 cars, a hybrid electric propulsion system (zero emissions capabilities). Key suppliers included Kawasaki Heavy Industries and Mitsubishi Heavy Industries for essential components and Siemens Energy for the Electric Propulsion System.
Without government funding, KiwiRail announced the project's wind-down in December 2023 and initiated a review of the Cook Strait route services.
Recent regulatory scrutiny over the company's operational and maintenance practices, stemming from a 2023 ferry blackout incident, has further complicated the ship replacement program's future.