IRISH ROUTES ALL AT SEA
In November 2010 when Stenaline announced the closure of the Fleetwood to Larne ferry route, shock waves were sent across the Irish Sea.
A ferry service from Fleetwood to Larne had been under operation for more than 30 years, first by P&O Ferries since 1975, and then by Stenaline from 2004.
Under P&O’s tenure, the route had made or lost £1m a year and with an aging fleet, Stenaline was making long term plans to invest in specialist new build ships with low drafts and wide beams capable of navigating the difficult tidal Fleetwood channel, and also providing the economies of scale for freight carryings.
Unfortunately all this came at a time when the Irish economy was hitting a 15 year low, with overall volumes down year on year. Despite investing in all three existing ships to improve onboard services, Stenaline struggled to make the route pay.
The next blow was made by Seatruck Ferries which in May 2010 announced the start of a Heysham to Larne service. Albeit the service started with a 1 ship 65 unit Clipper Ranger, the service would further dilute freight into Northern Ireland and impact on Stenaline’s volumes on the Fleetwood to Larne route. The Seatruck service was further enhanced in October 2010 when a second vessel, the Arrow, was added. There was now another direct competitor to the Fleetwood to Larne service.
In December 2009, Norfolkline announced the sale of its ferry division to DFDS. This would include the Irish Sea network of Heysham to Belfast and Dublin, and Birkenhead to Belfast and Dublin. The jewel in the Norfolkline service was the Birkenhead to Belfast service which continued to enjoy a level of support from freight clients which bucked the trend. There was also a steady increase in support for the Heysham to Belfast route, as service levels continued to improve compared to the difficult tidal operation of the Fleetwood to Larne service. When in July 2010 the Norfolkline deal was completed, DFDS looked to have purchased a network of routes capable of producing a good return.
During 2009-2010 all the Irish Sea ferry operators competed for reducing volumes, freight rates were put under considerable pressure, and as a result Irish Ferries were the only operator to report a profit, albeit small. Stenaline, DFDS P&O and Seatruck were making unsustainable losses. Capacity had to be reduced, and rates had to increase; it was a case of which operator would buckle first and when!
Had Stenaline closed Fleetwood to Larne in isolation, the 100,000 (approx) units shipped in 2010 would had dropped into the market place and almost instantly put the DFDS and Seatruck services into Northern Ireland into profit.
However, Stenaline had an ace card to play. At the same time of announcing the closure of its Fleetwood to Larne route, they had been working very hard in the background to secure the purchase of the Heysham to Belfast and Birkenhead to Belfast routes from DFDS.
DFDS clearly didn’t have the stomach for the continuing Irish Sea losses but had they known what Stenaline was planning and held onto the route network, they would have had the strategic advantage over volume with the ability to increase rates.
Not surprisingly, Stenaline’s acquisition isn’t without controversy, and is currently being assessed by both Irish and British Government bodies. On the 14th January 2011, the Irish Competition Authority announced a full investigation into the deal and the British Office of Fair Trading is likely to pass the matter onto the Monopolies and Mergers Commission.
Whatever the outcome, without the Fleetwood to Larne service, there is now significantly more pressure on freight capacity for Irish Sea routes.
The only long sea ropax service into Northern Ireland is the Birkenhead to Belfast route, still being operated under the DFDS banner until the controversial deal is investigated, and driver accompanied units unable to secure space are now likely to have to ship through Dublin routes or Scottish routes into Belfast or Larne.
For further information about the deal between Stenaline and DFDS visit the British Government’s Office of Fair Trading website and the Irish Competition Authority website
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