Mounting pressure on the Irish Sea “shoulder” ferry services.

February 22nd, 2010

As 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.

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Stena HSS…..sailing into the history books ?

February 1st, 2010

On 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.

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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.

Posted in Freight Ferry ships | 1 Comment »