Bluebridge's Cook Strait ferry Connemara carries up to 500 passengers and has dog-friendly cabins for overnight sailings.
As a big question mark hovers over the future shape of KiwiRail’s Cook Strait ferry service, independent competitor Bluebridge is playing its cards close to its chest.
Shane McMahon, chief executive of logistics company StraitNZ, owner of the Bluebridge brand, will only say the company will continue to invest in the business and capacity, and if it gets the basics right - safety, reliability and punctuality - it will “do well”.
He even has some kind words for the state-owned competitor facing uncertainty after the axeing of a major new ferry and terminal infrastructure renewal project due to ballooning costs, and stuck with three aged ferries and multiple official eyes on its future.
“We do have respect for the job [they do]. I know there’s a discussion going on about a future strategy but when you look at it as a competitor, they still have a larger percentage of the passenger market... if you look at their punctuality, it’s operating better than an airline.”
Bluebridge tends to quietly go about its business of carrying passengers, vehicles and freight across one of the world’s most risky stretches of water up to 50 times a week.
Operating two ferries, the Strait Feronia and the Connemara, it carries about 35 per cent of all Cook Strait passengers, and 55-57 per cent of road freight, McMahon says. (KiwiRail’s three vessels, Kaitaki, the rail-enabled Aratere and Kaiarahi between them carry nearly 800,00 passengers and 250,000 vehicles a year.)
At the moment the company’s not considering adding a third vessel, he says.
“It’s not out of the question but when we bought the Connemara we increased capacity by 30 per cent, so we have sufficient capacity to meet the demand profile. We have a bit of time.”
All he’ll say about the price of the Connemara is that a second-hand vessel is about half the cost of a new one, and that at $550 million for two new rail-enabled ferries, KiwiRail got “a very good price” in its now-cancelled deal with South Korea’s Hyundai shipyard.
Bluebridge and its parent StraitNZ keep a low profile but the story of how they started is a testament to a certain commercial grittiness and staying power.
As McMahon tells it, what has become StraitNZ started in 1992 when Ōtorohanga-based transport operator Jim Barker was trying to move a lot of livestock between the North and South Islands via monopoly NZ Rail-operated Cook Strait ferries. It was a time-critical process and ferry schedules weren’t always obliging. So Barker asked NZR if he could charter a ferry. The answer was no. So Barker got his own cargo ship, the Straitsman, and Strait Shipping set sail. The freight-only service started taking passengers in 2002 under the brand Bluebridge.
In 2016, the Barker family sold their group, Strait Shipping/Bluebridge, Freight Lines and Streamline Freight, to an Australian equity fund and in 2018 StraitNZ was formed to provide an integrated transport service.
Today, StraitNZ is owned by global fund Morgan Stanley Infrastructure Partners, which bought it in 2022. The company doesn’t receive government funding. It operates and maintains its own terminals in Wellington and Picton through leases with the port companies there.
McMahon says Morgan Stanley is “very dedicated to the business” and six months after taking over bought the Connemara, which came into service last year.
The new owners also make the company jump through a lot of auditing hoops.
“Globally they like to benchmark where the organisations in their funds sit on a safety, environmental and governance scale,” says McMahon.
StraitNZ was subjected to a year-long, “incredibly onerous” external audit, he says. Out of 681 companies audited globally, it came 40th and of eight transport companies audited, it came in first.
McMahon declined to share Bluebridge’s annual revenue. KiwiRail’s Interislander operating revenue in 2022-2023 was $151m.
Asked what it takes to be profitable on Cook Strait, he says: “It may sound overly-simplistic, but you run a safe business and focus on what customers want.”
Safety, resilience and reliability are the cornerstones of StraitNZ’s business strategy, he says.
“The market’s been recessionary since Easter last year but we are quietly confident. We’ve done well to hold market share. We’re looking to acquire new trucks and we have capacity on the marine side. We’re looking at what we can do with the vessels and portside infrastructure to ensure we stay ahead of demand.”
“On reliability... we run 2600 sailings a year and we measure the number of sailings where we achieve the scheduled timetable, excluding weather events. We set ourselves a target of 98 per cent reliability and over the last five years, excluding weather events, we are at 99 per cent. That’s not to say we won’t have engineering or staff issues which result in cancellations.” (KiwiRail did 3320 sailings in the 2022-2023 year.)
McMahon, who joined the company a year ago from the helicopter and bus service sectors, says punctuality is a newer focus.
“We asked ourselves does the ship depart within 15 minutes of scheduled times? It was patchy. We’d have a good month and a bad month. This is a critical area for passengers and freight customers. Passengers have to make connections and with worktime rules, it’s critical truck drivers aren’t sitting on a wharf chewing into their work time.
“We set a target of 90 per cent punctuality and in the last six months we’ve achieved that. Through the peak months of December, January and February it was 95, 96 and 93 per cent [respectively].”
KiwiRail’s Interislander ferries had a horror run of breakdowns and delays last year. Bluebridge didn’t escape the travelling public’s wrath either.
The Connemara, bought from a European ferry operator after a “very thorough maintenance schedule”, was knocked out of action by an issue with its turbo-charger in February last year shortly after coming into service, says McMahon.
That was also the time the Interislander ferries were having a bad run of problems. McMahon says normally Bluebridge would work with KiwiRail when issues crop up and both operators having problems at the same time was “quite unique”.
The Connemara can carry up to 500 passengers and has dog-friendly cabins, a first for a Cook Strait service. Built in 2007, it has plenty of service life yet.
Not so much the Strait Feronia, which joined Bluebridge in 2015.
The Italian-designed ferry, which carries 350 passengers, 60 trucks and 140 other vehicles, is 27 years old, and Bluebridge is looking at its options for a replacement.
McMahon says it is working with Northern Hemisphere consultants on zero-carbon emission and alternative fuel options.
It won’t be electric-powered and probably won’t be much bigger than Bluebridge’s current vessels at just under 190m.
McMahon says it could take up to 3.5 hours to charge a vessel which means it is confined to port too long, and overseas experience suggests infrastructure complications and the need to make any electric vessel a hybrid for powering purposes.
While the abandoned new KiwiRail ferries were to be 40m longer than the current Interislanders, McMahon’s “not convinced” Bluebridge should go much bigger.
“We find about 187m works well for our infrastructure at both ports and for the characteristics of a Cook Strait crossing. We might go marginally bigger but I’m not convinced we need to be significantly bigger.”
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
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