[Global Times reporter Yang Shuyu, Global Times special correspondent Ren Zhong] New Zealand’s Minister of Rail Winston Peters confirmed on the 14th that the New Zealand government has awarded the order to build two large ferries to Guangzhou Shipyard International Company Limited (GSI), a subsidiary of China State Shipbuilding Corporation Limited (CSSC), to replace the previously canceled iReX project which was to be built by South Korea’s Hyundai Mipo Dockyard. According to a report by The Post of New Zealand on the 14th, the iRex project, led by the previous Labour government, was originally planned to be built by Hyundai Mipo Dockyard. However, due to soaring port infrastructure costs, the New Zealand government canceled the original contract in December 2023. Peters stated on the 14th that this procurement will save taxpayers “billions of New Zealand dollars” (1 NZD is approximately 4.1 Chinese Yuan).
Simultaneous Infrastructure Upgrade
For years, replacing the aging inter-island ferries has been a political focus in New Zealand. According to a previous report by the Australian media website “The Conversation”, in July this year, the Cook Strait ferry connecting New Zealand’s North and South Islands broke down again. Currently, the average age of the country’s ferry fleet is as high as 28 years, with frequent breakdowns and “sail cancellations” becoming the norm. As travel between the North and South Islands heavily relies on ferries, aging hulls and high maintenance costs are forcing authorities to seek new cross-strait transportation solutions.
New Zealand media revealed that the two newly announced 200-meter-long ferries can each accommodate 1,500 passengers and provide 2.4 kilometers of lane space (for trucks, cars, and 40 railway wagons). They are expected to be delivered to New Zealand in 2029.
Alongside the introduction of the new vessels, a major infrastructure upgrade plan is being advanced simultaneously. A new wharf and ferry access bridge will be built at Picton Port in the South Island, while the existing wharf at Wellington Port in the North Island is also planned for extension and expansion.
The final agreement details are still confidential, and Peters stated that more project progress will be announced within this year.
Cost NZD 671 Million but Didn’t Build Any Ships
To address the transportation issues between the North and South Islands, in 2020, New Zealand’s state-owned rail company KiwiRail officially launched the Inter-island Resilient Connection (iReX) project. It aimed to replace the aging inter-island ferry fleet with two large rail ferries and also included large-scale upgrades to the port infrastructure in Wellington and Picton to accommodate the new ships. Through an international tender, KiwiRail ultimately selected South Korea’s Hyundai Mipo Dockyard as the shipbuilding partner.
However, in December 2023, the contract was halted by the newly elected government, citing warnings from the New Zealand Treasury that the ferries and the required port upgrades and expansions would lead to a cost overrun of NZD 3 billion. According to comprehensive New Zealand media reports, the project’s budget was NZD 1.45 billion when approved in 2021, but the final total cost soared to NZD 4 billion. Finance Minister Nicola Willis stated: “The previous government signed an agreement to purchase two large new ferries without fully considering the port infrastructure needed to support the larger vessels.” By the time the project was canceled, its cost had “almost tripled.”
In August this year, New Zealand’s KiwiRail reached a settlement agreement with Hyundai Mipo Dockyard regarding the cancellation of the iReX project, paying the South Korean company NZD 144 million as a settlement fee for the project’s termination. This brought the total cost of the scrapped iReX ferry project to NZD 671 million. This includes NZD 449 million spent on land-side infrastructure construction, project management, and shutdown costs, plus a total of NZD 222 million paid to Hyundai Mipo Dockyard, which includes previous deposits and the settlement payment. According to a report by Television New Zealand (TVNZ), this project, costing NZD 671 million, did not result in the construction of any ships.
The current government blamed the previous Labour government for the project’s costs spiraling out of control and stated it could complete the project at a lower cost. Subsequently, Peters began a global tender process, hoping to find a new builder for the two rail ferries by the end of March, with the ferries entering operation in 2029.
“The Best Deal”
Peters stated in a press release that although the shipbuilding contracts for the two new ferries to be delivered in 2029 have not yet been announced, consultations with shipbuilders are progressing well: “We have brought the cost of this project back within the range set in 2020, which is what New Zealanders have always expected.” He also stated that “by canceling the iReX project, we can save taxpayers billions of dollars.”
New Zealand media are paying close attention to the project announced by the government, especially against the backdrop of severe fluctuations in the global shipbuilding industry influenced by US policies.
The Post reported that the US government had previously imposed investment restrictions on China State Shipbuilding Corporation Limited and its subsidiaries, requiring US capital to divest, but did not restrict trade with the shipbuilding company. The newspaper cited data from the US think tank Center for Strategic and International Studies (CSIS), reporting that China is currently the world’s largest shipbuilder, with its shipbuilding output exceeding the combined total of all other countries.
“We are seeking the best deal for New Zealand taxpayers,” Peters said when announcing the news, “GSI’s professional capability, technical strength, and production scale reinforce our high confidence in a pragmatic ferry replacement plan.” Currently, China’s shipbuilding industry still holds a significant advantage globally. The latest data from the China Association of the National Shipbuilding Industry (CANSI) shows that in the first half of 2025, China’s shipbuilding completion volume, new orders received, and order book, measured in compensated gross tons (CGT), accounted for 47.2%, 64%, and 57.6% of the world’s total respectively, maintaining the global top position. The maritime industry media “The Maritime Executive” website reported on the 13th, citing data from the UK’s Clarksons, that the global order backlog is close to 166 million CGT, with China accounting for 61% of the global order book, while South Korea accounts for 20%.
