Summer and the rapidly approaching school break means only one thing – the holiday season. Any tourist based business thrives in the summer season, and the passenger ferry market is no different. What is good for the passenger market however, has downsides for the freight ferry industry.
Passenger and freight generally form two very distinct divisions of the same ferry company, both with targets to meet and space to sell. From a ferry company perspective passengers are a far more lucrative proposition. Per metre, several cars will fit into the same space as a 16.5m truck, generating varying levels of increased revenue depending on the route and time of crossing. As an example, an average rate for a Dover – Calais crossing would be £180 for a 16.5m cargo unit. Four cars would fit into this space (assuming not loaded on mezzanine decks) at an estimate of £90 per unit, generating £360 in revenue! Passengers don’t get free meals or cabins, they buy drinks, spend money in the shops and use many of the facilities. And above all, passenger prices can be determined by supply and demand. Peak season prices are often double or even more, while freight prices remain constant all year round.
Come the holiday season, the lucrative passenger market means only one thing for the freight department operating Ropax ships…less space. And less space can mean letting down loyal freight customers which support the service 365-days per year. As an example, in the height of the holiday season the most popular tourist sailings on the Western Channel may only have as little as two or three freight spaces to sell! Someone is going to lose out.
Recent years had seen a decrease in passenger numbers, brought on by the rise of budget holidays and cheap package deals. Passenger traffic through the Scottish ports of Cairnryan and Stranraer was down 32 per cent in the 10 years up to 2008. However, the recession and the volcanic ash crisis have meant a swing back in the ferry operators’ favour. All the operators have launched deals and advertising campaigns to bring in the tourist traffic and in May this year Brittany Ferries reported a five fold increase in passenger numbers compared to 2009. Another example, new Irish Sea operator Fastnet Line, operating Swansea to Cork, claimed that due to collaboration with organisations such as Visit Wales and Tourism Ireland, passenger numbers were twice as high as expected.
So what does this mean for the freight ferry market? Even with the traditional summer shutdown in manufacturing, demand for freight space remains high and freight ferry customers need to think ahead and be prepared.
Ferries say ‘Goodbye freight, hello passengers’ in the summer holiday period!
July 1st, 2010Too many ships / too many routes / not enough customers?
June 28th, 2010The Western European ferry market is having to contend with testing trading conditions at present, and there are a number of things happening that are not making it easy for ferry operators to turn a profit. From environmental compliance, the generally high cost of marine fuel and the introduction of ultra low sulphur fuel in areas such as the North Sea and Baltic Sea, these are all issues impacting on the bottom line of ferry companies over which they have very little direct control. In a weak freight transport market, ferry operators are chasing fewer customers to support their respective services which causes a “price war” on some routes where only the end user (aka the customer) benefits. With ships to fill and schedules to operate, ferry companies have little choice but to drop rates to attract new traffic and to try and keep hold of what they have already got. And so the circle of margin and profit erosion continues……
So, what can the industry do to combat these negative issues. Well, taking out some capacity would be a start, but this is easier said than done. What is stopping consolidation is not the ferry companies’ lack of money to buy their peers, but the European Commission’s competition rules. Both the MD’s of Stena Ro-ro and Norfolkline have recently claimed that these rules made it very difficult to tale over a competitor which had services on the same route. The general view from the ferry industry is that a softening of competition rules would actually help to create a more stable market through consolidation.
Take, for example, the Irish Sea market.
All the operators who have services on the Irish Sea would agree that the market has been tough now for nearly two years. However in this time, a draft of new tonnage has been introduced by companies such as Norfolkline, Seatruck and Stena Line. There has even been a new entrant to the market, Fastnet Line. Carriers such as Norfolkline and Seatruck have replaced older, smaller ships with bigger, newer vessels and Stena Line took the decision to remove their HSS high speed craft from year round use (due to fuel costs) and replace with a freight vessel offering more freight space, and more daily departures than when the HSS was operating full time.
Now, this is a market that is crying out for consolidation. There is not one company who is operating to capacity, and the major players would dearly love to be able to rationalise and consolidate. Indeed at a recent conference in Bremen, Germany the MD of Stena Ro-ro Bo Severed said “On the Irish Sea, there is intense competition, but from a competition rule point of view it is impossible to do something and we really need [consolidation], not only because we want a more stable market and more stable prices, but from an environmental point of view this is crucial. We need to look at ways soften competition rules to get this going”
Consolidation in other industries, such as air travel, is happening now as a direct impact of the global economic downturn and high fuel costs. Companies such as British Airways & Iberia, Untied Airlines & Delta have joined together in consolidating and combining their businesses to offer customers a network of services but to also benefit from “economies of scale”. There are many similarities between the aviation industry and the marine industry. The ferry industry needs “economies of scale”. I wonder how soon it will be before some of the “house hold” names of today’s ferry industry disappear through consolidation and become redundant brand names such as Sealink, Sally Lines and Ferryways?. Only time (and our leaders in Brussels) will tell!
Hazardous Goods and Ferry Travel – why all the paperwork…..
May 27th, 2010The carriage of hazardous goods is a necessary requirement of manufacturing industries across Europe. UK and Irish industry is reliant on ferry operators carrying these goods as part of manufacturing supply chains. Hazardous goods are usually carried 
as part loads or groupage, but some carriers do specialise in full load movements.
There appears to be a lack of understanding by a number of transport operators of the legal requirements for the movement of hazardous goods by sea. What makes this so frustrating is the fact that as we live on an island, so how do people expect to get here if not by sea? Eurotunnel cannot take all the various types of hazardous cargo there are, and not every operator uses this service. There are also no tunnel or road connections from the UK to Ireland.
There are different legal requirements for the transportation of hazardous goods by road to those by sea. For example, a truck operator has to run with “orange plates” – the square plates displayed at the front and rear of a vehicle, when a truck is loaded with hazardous goods and operating by road in the UK. However, when the same vehicle wants to travel on a ferry, arrangements need to be made by the ferry operator to stow the vehicle in a particular location on board the ship (depending on the nature of the hazard of the goods on board the vehicle), and dangerous goods placards (haz triangles for those of a particular age) must be affixed to the bulkhead and each side of the trailer (or lorry), the load needs to have been checked by a DGSA (Dangerous Goods Safety Advisor) of the relevant ferry company to ensure the goods can be carried (as not all dangerous goods can be carried on ferries). Oh, and when you arrive at the ferry port if the ADR (Dangerous Goods) paperwork is not correctly completed and signed then you aren’t going anywhere anyway! All of this work is undertaken to ensure that in the event of an incident, such as a fire on board ship (which is probably the most dangerous thing that can occur onboard ship, particularly if the ship is at sea), then the ships crew and emergency teams know exactly what potential hazards they have onboard.
A product that can be carried as “limited quantities” by road, and not require ADR paperwork or “orange plates”, could be classed as hazardous by sea. This is where the help of the DGSA or dispatch department of the consignor company can assist the transport operator to fully understand their legal obligations, and thus help to ensure compliance. Freightlink can also offer help and advice to customers by discussing the product types and quantities to be shipped with ferry operators to check the goods can be accepted for shipment. No operator wants to be sat on the quayside with a load that can’t be shipped and start incurring delays: if the wheels aren’t turning, the vehicle isn’t earning!
Whilst in this country we often bemoan the amount of “red tape” encompassing UK industry in support of health and safety legislation, no one wants to star in their own disaster movie! In the UK we have a government department called the Maritime and Coastguard Agency (MCA), who police and support our shipping industry and ensure compliance with maritime law. The MCA recently held a seminar in the North West of England for the shipping, transport and logistics industries to discuss, amongst other things, the issue of hazardous cargo shipments in UK territorial waters. Freightlink attended this seminar and heard from various MCA, Police and Environment Agency representatives about the damage that can be done to ships, road infrastructure and peoples lives if the carriage of hazardous goods is not undertaken correctly and goes wrong. We left the seminar with one story that will prove that if you get the carriage of dangerous goods wrong, you will need very deep pockets…….
On the 20th November 2008, at Dunkirk, Janusz Gauden, a 56 year old Polish lorry driver arrived and attempted to board a British ferry bound for Dover. He declared that he had 383Kg of dangerous goods (Methyl Methacrylate Monomer Stabilized) on his load but the ferry operator identified that the driver did not have the correct documentation and refused permission to board.
Mr. Gauden then went to Calais where he managed to board a Sea France ferry carrying 228 persons without declaring the goods. The Dunkirk ferry operator had sent an alert to Sea France to be on the look out for the driver but this information arrived after the vessel sailed with the undeclared dangerous goods on board.
The ferry operators informed the Maritime & Coastguard Agency enforcement unit who immediately alerted the Police at Dover Port. The driver was stopped and arrested as the vehicle disembarked from the ferry at Dover. He was later charged with contravening the Merchant Shipping (Dangerous Goods and Marine Pollutants) Regulations 1997 and was bailed to appear at Folkestone Magistrates Court.
On the 27th January 2009, at Folkestone Magistrates Court Janusz Gauden pleaded guilty to the above offences and was fined £2000 and order to pay £3757.98 costs.
In passing sentence the Magistrates said; “This Court takes the safety of the public very seriously. You are an experienced driver and did a deliberate act. You endangered the crew and everyone on board and the potential for disaster was driven by monetary reasons”.
I hope that none of the readers of this blog ever have a visit from the MCA or the Police to explain their companies’ actions in relation to the carriage of hazardous goods by sea.
Seafrance in stormy waters
April 8th, 2010What does the future hold for Seafrance as the operator and parent company SNCF continue to make huge losses?
SNCF made substantial losses of € 14 million in first 4 months of 2009. It is reported that Seafrance had a negative cash flow of € 41 million during 2009. Seafrance originally declared a recapitalisation plan of € 60 million in February this year, but recent reports suggest this is now closer to € 100 million.
Details of the plan to recapitalise are unclear other than reports to move 400+ Seafrance employees to other posts within SNCF and the potential sale of 2 ferries. Seafrance has applied to Brussels for funds, but any decision is likely to take considerable time. In the mean time, losses continue to mount on a daily basis. Last weekend’s strike action cost Seafrance over € 1 million in lost revenue alone!
How will this affect the market ?
Freightlink has seen a sharp increase in the number of enquiries from current Seafrance clients. Perhaps more importantly, we have seen a distinct pattern of new clients making sound business decisions by splitting volume and securing rates at today’s competitive prices rather than risk not having a second option should Seafrance suffer from further strike action, or even worse.
As Freightlink witnessed in 2007 when Ferryways was purchased by Cobelfret, the Ferryways ferry services disappeared within weeks, with many clients struggling to find space at competitive prices. It was a simple case of ferry economics, less space = price increase.
One thing is for sure, in the current unstable climate, none of the Dover operators are doing deals to encourage new traffic. Why cut rate, when the traffic could come at a much higher rate ?
Freightlink is able to offer highly competitive rates now for clients who commit support and volume. Please contact Steve Lonsdale – Sales Manager +44 (0) 7738 767 136 or our Customer Service Team 0844 847 9000 or visit freightlink.co.uk for our service information.
Brittany Ferries Invest in Direct Routes to Spain
March 25th, 2010With effect from 23rd March Brittany Ferries will significantly increase both frequency and freight capacity on their direct services to Northern Spain.
The introduction of the ‘Cap Finistere’, which will operate between Portsmouth and Santander, will give an additional two roundtrips per week.
This will give a total of five crossings per week in each direction with the following schedule; arrivals are the following day at local time:
From the UK
==========
Tuesday – Depart Portsmouth 11.15 arriving 12.15
Wednesday – Depart Portsmouth 11.00 arriving 12.00
Friday – Depart Portsmouth 11.15 arriving 12.15
Saturday – Depart Poole 08.00 arriving 12.15
Sunday – Depart Plymouth 16.30 arriving 13.30
From Santander
============
Monday – Depart 16.30 arriving Portsmouth 17.00
Wednesday – Depart 15.15 arriving Portsmouth at 14.15
Thursday – Depart 15.00 arriving Plymouth at 09.30
Saturday – Depart 15.15 arriving Portsmouth at 14.15
Sunday – depart 15.15 arriving Poole at 17.00
The year round freight capacity of 70+ units on the “Cap Finistere”, 120+ on the “Cotentin” and 30 to 40 on the “Pont Aven” together with this level of frequency and a transit time of 24 to 26 hours, is something that the industry has needed for years.
In the past service levels service into Spain have not always supported the haulier.
Acciona started a service that lasted about 6 months. During that time, the rates went from a special introductory offer for a month or two, and then rates promptly doubled with 24 hours notice. Other services have attempted to operate between the UK and Portugal, all of which have been huge loss making failures.
At the moment P&O operate Portsmouth/Bilbao but this service will cease in September when they have opted not to renew the charter. One of the main reasons this service has not succeeded when it should have done is due to a complete lack of consistency with the scheduling. Success is difficult when a service has varying departure days, a 32 hours crossing from Portsmouth and extreme fluctuations variances in freight capacities.
It is little wonder that hauliers and operators become frustrated and revert to the easy option of a relatively cheap ferry between Dover and Calais and then the long slog through France with all its associated costs.
The smart haulier?
Any operator running their own fleet to and from Iberia has got to see long terms cost benefits in using longer ferry crossings. Whether this is through saving wear and tear on the vehicle, saving fuel costs and tolls, avoiding driving bans over weekends and bank holidays or being able to schedule a 24 hour break for your driver. If not for all, it must make sense for some of your traffic ?
Mounting pressure on the Irish Sea “shoulder” ferry services.
February 22nd, 2010As one of the “PIGS” of Europe, the Irish economy is clearly suffering. The headline figures say it all:-
- Retail sales index down 7.5% (Dec 09 v Dec 08)
- GDP down 7.4% (Q3 09 v Q3 08)
- Unemployment up by 13K (Jan 10 v Dec 09)
- Interestingly, the Retail Sales index is down 7.5% but transport costs are up 3.5% (over the last 12 months) ?
So how does the Irish ferry industry cut its cloth during this recession ?
First of all went the “extra” weekend services. Most long sea ferry operators such as Stena Line, Norfolk Line (awaiting competition commission approval to be bought by DFDS), Seatruck and P&O cut these services 18 months ago. In simple terms, there was sufficient ferry space to cope with the demands during mid week, without a requirement to have “extra weekend” sailings.
Secondly, 12 months ago weekend schedules were cut, removing Sunday and Monday morning long sea departures (with the exception of Norfolk Line Heysham routes). Ferries operating on these routes were allowed much needed maintenance downtime whilst also allowing the ferry operators to cut the fuel costs. Its worth noting at this point that most other costs such as charter costs, manning levels, berthing costs, generator fuel costs, water charges & sewage pumping costs continue even if a ship is berthed !
Some operators such as Norfolk Line and Seatruck were fortunate enough last year to shed some of the old unreliable costly freight tonnage, and replace it with newer larger, more economical ships. Ships like the Saga Moon capable of carrying 50 unaccompanied trailers and 12 driver accompanied units, made way for the Maersk Exporter / Maersk Importer and Maersk Anglia capable of carrying 110 unaccompanied units plus 12 drivers. Case example Norfolk Line Heysham to Dublin route, 1 vessel took the place of 2 !
What next ?
There are still 3 “shoulder” services (dep to Ireland 0100hrs to 0400hrs / dep from Ireland 1300hrs to 1600hrs) in play on the long sea rotes as we speak. Stena Line’s Fleetwood to Larne 0300hrs, Seatruck’s Heysham to Warrenpoint 0100hrs, and P&O’s Liverpool to Dublin 0300hrs.
These ships operate roughly the same schedule circa 8 crossings per week Tuesday to Friday, 1 crossing per day in each direction. However, as the demand for consumer goods in Ireland continues to slow, how long will these services continue ?
Seatruck’s Heysham to Warenpoint can be almost discounted as a serious contender. With the ship charter market at a low, there simply is not the demand for this ship in the market place. It would appear the 3rd ship is in service rather than sit on a berth, costing almost the same to operate, less the fuel costs. If a sensible charter arrived for the Arrow it would make good business sense to remove the service. With 1 or 2 extra sailings, the existing 2 new 120 unit ships the Clipper Point & Clipper Panorama are more than capable of carrying current cargo levels.
However, P&O’s Liverpool to Dublin (Celtic Star) and Stena Line’s Fleetwood to Larne (Stena Seafarer) 3rd ship, is a very different proposition. Both companies have aggressively sold their respective services over the last few years, making a big sales feature of their respective 0300hrs west bound & 1400hrs east bound departure. Both operators have said the service is here for the long term. These appear to be bold statements to make in a shrinking market.
Will these 2 services last the distance ?
Volume is vanity, profit is sanity ! It all depends how desperate P&O and Stena Line are to maintain volumes in these extra ordinary times when 2 ships can probably carry the volume of 3 ships !
If the services were removed, with so much spare ferry capacity in the market place, the average haulage contractor wouldn’t notice a difference in service levels. It could well also benefit the ferry operators directly and maybe even other ferry operators as this would surely “sure up” rates across all Irish long sea ferry services.
Like most things in life, time will tell.
Stena HSS…..sailing into the history books ?
February 1st, 2010On 14/11/1994, a little over 15 years ago the I.F.W. announced, “Stena to Launch HSS Sea Monster.” Stena Line freight sales manager at that time was quoted as stating “The HSS will revolutionise ferry travel.” The question is……..Did It ?
Stena HSS - revolutionary engineering
Amid a wave of publicity and on the back of a multi million pound investment program Stena launched its purpose built High Speed Service (HSS) super crafts. Each HSS1500 was powered by four water jets. With a service speed of 40 knots (a record of 51 knots unladen) and deck space equivalent to a full size football pitch they aimed to attract both tourist and freight carryings. The HSS 1500 have a capacity to carry 1520 passengers and 375 cars or 120 cars and 50 freight units. The Stena Explorer, Stena Voyager and Stena Discovery not only looked like a ferry from the future but they were designed to be the future of the ferry industry. At a cost of £65m each and the requirement of significant infrastructure development at all the port locations serving the roués of Holyhead – Dun Laoghaire, Stranraer – Belfast and Harwich – Hoek van Holland the of HSS entered service in 1996.
After 15 years what impact has the HSS had ?
In terms of passenger travel and in the eyes of the tourist the HSS provides a service and experience that is un-rivalled. Crossing times, that are comparable to airlines when you take into account the ever lengthening requirement for earlier check in times. On board facilities that range from first class lounges to fast food outlets. All in all an airline experience with the added benefit of having your car with you. From a passenger paying perspective competition from low cost airlines ensured that the HSS remained price competitive. As we all know however tourism is seasonal and as a result Ro-Pax operators must have a freight offering to. So how did freight and the HSS get on ?
With the faster crossing times and quicker loading and discharge Stena perceived the HSS to be a premium freight service and therefore applied a premium rate policy. This premium pricing model was sustained on the Holyhead – DunLaoghaire route but a mixture of competition and wave height restrictions eroded the ability to charge a premium on the Stranraer – Belfast and Harwich – Hoek van Holland routes.
The above is history as they say. The HSS were operating in the water that surround the UK but how successful are they? Lets fast forward from their inception in 1996 to 2007.
On January 8th 2007 the Stena Discovery left Harwich at 1040 hours to return to its home port Hoek van Holland. This was its final in service trip in European waters. The newly named HSS Discovery now plies her trade in the waters off the coast of Venezuela.
Over the last 10 years the HSS schedules were over time reduced in terms of crossing time and frequency of sailing. Most significantly over the last 12 months Stena have increased their conventional ferry capacity on the Irish Sea in line with the reduction in HSS sailings. On January 7th 2010 Stean Line announced that the Stena Explorer service on the Holyhead – Dun Laoghaire route would operate during the peak tourist season only (June 28th to September 5th) and a smaller 600 passenger, no freight, Stena Express, would operate out of season.
It would appear therefore that the days of the HSS are numbered. It could be argued that in terms of a freight carrying service Stena passed up the market in favour of their conventional ferry offerings. So what has gone wrong ?
The biggest factor of what is no doubt a more complex reason comes down to the HSS operating costs and the most significant of those costs being the cost of a barrel of oil. It is understood that the breakeven price for operating an HSS is around $45 per barrel. When HSS services were launched the cost of a barrel was $25 and continued to trade under the perceived $45 benchmark until mid 2004. Oil prices may well have settled back at $75 a barrel but the spiral of 2008 when they hit $147 certainly began to prepare the nails for the HSS coffin.!!!!!!! Just a thought. Where does the HSS Discovery sail now? Off the coast of Venezuela…… an oil producing country.
Has the HSS therefore become Stena Lines white elephant or has it become another victim of the rise in oil prices and general world economic decline. It would suggest that anything over $45 a barrel meant that the HSS continuation on its original conception was always going to be a problem. As a concept the HSS was revolutionary, as a service it is excellent but as a viable business proposition in today’s economic climate it’s nothing more than inefficient and uneconomical. When they arrived on the scene the HSS looked like something from the future and who knows in the future their concept may be the way forward but unfortunately for now it would appear that the HSS is looking like being consigned to the history books of European ferries.
The smart haulier doesn’t dismiss the freight ferry routes !
January 22nd, 2010
In the increasing competitive arena of European transports & distribution, hauliers should consider all the ferry options !
With the economy receding or at best stagnating, manufacturers continue to be under extreme pressure to cut costs everywhere. In January I was with one UK manufacturer talking about ferries. He had told his procurement team to reduce costs by 4% to 7% across the board ! Easier said than done. For the haulier, the main areas for any squeeze are labour costs, fuel costs, vehicle costs and any fixed costs the business may have. For the international haulier, there may be opportunities to squeeze the ferry bills.
Any good business doesn’t permanently close the door on any supplier…you never know when you might need them. Purchasing ferry space is no different. By maintaining volumes on core routes, the relationship with the ferry company remains in tact. However, by utilising the excellent range of long sea freight services that are available, the smart operator can save money in all the right areas.
These freight services were once considered a last resort by many hauliers, with many drivers influencing the decision maker with all sort of excuses and reasons why not to travel. In the main, those days have long since gone. Looking at the Irish Sea as an example, Norfolk Line and Seatruck provide daily departures to Warrenpoint, Dublin & Belfast (Norfolk Line operate Heysham – Dublin & Heysham – Belfast / Seatruck operate Heysham – Warrenpoint & Liverpool – Dublin). These services are provided by ships that have the ability to keep to schedule, even in poor weather conditions. So the hauliers transport team can relax safe in the knowledge the driver will arrive on schedule (obviously there is no guarantee of any ship keeping schedule to the minute).
Drivers can relax as on board services have dramatically improved when new tonnage has replaced older tonnage. Most of the vessels have single cabins for the 12 drivers (which cannot be guaranteed on any over night Ropax* vessel), T.V.s & DVD players in the cabins. The catering staff only has to look after the dietary requirements of the ship staff, so as a general rule the freight drivers have a good selection of food cooked to order.
Destinations of freight ferries include:-
- Heysham
- Liverpool
- Belfast
- Warrenpoint
- Dublin
- Killingholme
- Zeebrugge
- Rotterdam
- Ostend
- Purfleet
- Goteborg
- Esbjerg
- Ipswich
When considering ferry routing options, what should tip the scales for any haulier is the fact that when compared to conventional Ropax routes where drivers often share facilities with the passenger market, these routes offer incredible value for money. By the very nature of roll on roll off and passenger carrying ships (Ropax), there are simply rafts of additional costs when operating this class of vessel compared to a freight vessel. Lower operating costs equals lower shipping costs.
So, as I started the blog, hauliers should consider all the ferry options!
* Ropax vessel – roll on roll off ferry capabable of carrying more than 12 paying passengers.
Look on www.freightlink.co.uk / www.freightlink.pl for routes and rate information.