Competition Essential For The Cook Strait Connection

Road freight peak body Ia Ara Aotearoa Transporting New Zealand has emphasised the benefit of a competitive and resilient Cook Strait connection to businesses and consumers in a recent meeting with Ministry of Transport.

Following the cancellation of KiwiRail’s Project iRex following repeated cost blow-outs, Ministry of Transport has flagged the risk that KiwiRail may exit the inter-island business unless their operation receives a subsidy from government [in a recently released briefing dated 26 January 2024].

The Ministry is currently undertaking an assessment of the long term requirements for a resilient Cook Strait connection, and exploring the market dynamics underpinning inter-island services.

Transporting New Zealand Interim chief executive Dom Kalasih has welcomed the assessment, and says that subsidising an inter-island connection service could be a practical way to maintain route competition and a good variety of sailings and services.

"Having KiwiRail exit the Cook Strait market without another resilient competitor present could see service levels decline and freight rates increase. That could leave our members having to deal with justifiably unhappy customers, and facing increased risks of delay and fatigue."

"The cost of any potential subsidy or other support from government needs to be considered against these serious negative implications. While a commercial solution would be our preference, we need to be pragmatic when it comes to keeping our growing freight task moving."

"The assessment also needs to take into account the pressure the Cook Strait connection is under from aging boats, terminals and inadequate vehicle parking facilities. Transporting New Zealand will be keeping a watching brief on the assessment and providing practical input where we can."

About Ia Ara Aotearoa Transporting New Zealand

Ia Ara Aotearoa Transporting New Zealand is the peak national membership association representing the road freight transport industry. Our members operate urban, rural and inter- regional commercial freight transport services throughout the country.

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