Picton retailers say it could be disastrous for the town if KiwiRail pulls its ferry services out of Picton.
Transport Minister Steven Joyce has asked for a fresh evaluation of the proposal to build a new South Island port at Clifford Bay, near Blenheim.
Richard Briggs of the Cruise into Picton business group says Picton people thought that idea had been shelved a decade ago.
Mr Briggs says an estimated 90,000 ferry travellers a year spend money in Picton and losing them could have a huge impact on the small tourist town.
"I don't have the faith, to be honest, in the council and the Government to put everything in place that would be needed to stop huge job and business loss in Picton," Mr Briggs says.
"I think it would be disastrous if it wasn't done properly."
Could it be the making of Picton?
Other businesspeople also express concern but Mark Baxter of Sounds Connection, which operates wine tours and fishing trips, says that without the ferries Picton could come into its own as a tourist destination and in his words "go from strength to strength".
"The ferries going south could be, I think, in actual fact the making of the town," Mr Baxter says.
Mr Joyce agrees, saying Picton has many natural advantages, and it has been suggested to him that losing the ferry terminal could free it up to develop into another Queenstown.
The minister says the impact on Picton will be assessed as part of an evaluation of the Clifford Bay project.
Picton tourism operator Sarah Archdale predicts however that Clifford Bay will be ruled out again because it's too exposed to rough weather.
Sailing time would be cut by 30 minutes
The idea of building a terminal at Clifford Bay as an alternative to Picton has been around since the 1990s.
A port there would cut 30 minutes off the current sailing time between the North and South islands and 50 minutes off the road journey from the Picton terminal to Christchurch.
"In transport," Mr Joyce says, "time is very much money, and if you look at it from a point of view of increased economic efficiency, better productivity - those sorts of things over a period of time are significantly beneficial to the country."
KiwiRail is backing the move to Clifford Bay, saying the economic arguments make sense. Chief executive Jim Quinn says however that some passenger services could still go to Picton and the Marlborough Sounds.
Public-private partnership an option
Mr Joyce says the Transport Ministry will look at the potential economic benefits and report back to him in a couple of months.
He says KiwiRail would not have the resources on its own to build and operate the facility, so if it goes ahead, other investors could be involved through a public-private partnership.
Federated Farmers transport spokesperson Don Aubrey says a terminal at Clifford Bay would make it easier to move livestock and other goods between the islands, and he welcomes the latest development.
Road Transport Forum chief executive Ken Shirley says it makes perfect economic sense and should have happened years ago.
Tourism industry advises caution
The Tourism Industry Association says careful analysis must be done before any move is made.
The association's chief executive, Tim Cossar, says cutting the time between the islands sounds good for tourism, but moving the terminal may have a detrimental impact on Picton.
Mr Cossar says the case for moving the ferry facilities seems to be based on freight, not tourism.
If given the green light, the terminal would take two and a half years to build once funding and consent processes had been gone through.