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

OFT Investigation

TCI Investigation

• 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 3^rd 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) 3^rd 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.