Kiwirail has confirmed plans to replace its Interislander fleet with two new larger, rail-enabled ferries.
The new ships will carry more freight, cars and passengers than the current three fleets: Kaitaki, Kaiarahi and the Aratere. At this stage, Interislander will still make up to six sailings a day.
Kiwirail acting chief executive Todd Moyle told Newshub the move comes after a two-year consultation process looking at different theories that would provide a service for passengers, truck and cars and the rail market.
"It's a super important decision for New Zealand," Mr Moyle says.
"They're effectively the State Highway 1 across the Cook Strait which looks at taking passengers, trucks and cars and rail freight.
"We had to take the option to deliver to all three markets."
Kiwirail says having a secure and resilient transport link across Cook Strait is critical for freight flows, tourism and for communities.
The current fleet is around 30 years-old and only one ferry, the Aratere, can currently take rail.
The Kaitaki and Kaiarahi have a system where containers are loaded off railway wagons onto trailers, then driven onto the ferries.
The new ferries are estimated to cost upwards of around $200 million each.
KiwiRail is aiming to have the new ships up and running by 2024.