The new ferry joining the Interislander fleet has been named Kaiarahi, which means 'to lead'.

The ship's actually the Stena Allegra which helped out when the Aratere ferry was out of action last year.

She replaces the Arahura which is being retired after 31 years.

Kiwirail chief executive Peter Reidy says the name came from a staff competition, and was then considered by local iwi, and KiwiRail's Maori staff network.

"Kaiarahi is a word that a lot of our iwi use...to lead, to guide - it's very fitting for the purpose of the ship."

The Kaiarahi will begin carrying freight across the Strait in August, and passengers will get on board in September.