A successful past, a positive future for DFDS

Max Foster tells Justin Merrigan how service investments, new ferries and hard work are helping DFDS to grow despite a challenging market

A successful past, a positive future for DFDS
This article was first published in the Spring/Summer 2017 issue of International Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed.

Ferry operator DFDS celebrated its 150th anniversary in 2016 and opted to share its success with more than 7,000 staff, giving every employee who works 24 hours a week a welcome Christmas present of 30 shares valued at around DKK10,000 (US$1,413). Other employees also received shares proportional to their contracted hours.

In a video for staff, DFDS chief executive Niels Smedegaard explained that very few companies are in a position of being able to celebrate their 150th anniversary, and that even fewer are able to do so the year they are heading for ‘possibly the best result’ in company history. “We therefore wanted to combine the celebration of our foundation and our founders with a celebration of, and thanks to, our many employees who every day help to ensure that DFDS can continue contributing to trade, travel and growth also in the future,” he said.

DFDS operates a network of 25 routes with 50 freight and passenger ships in the North Sea, Baltic Sea and the English Channel under the DFDS Seaways brand.

Passenger director Max Foster says the company’s very strong result for the first half of 2016 showed that it had exceeded its 2015 performance.

“The introduction of two new ships on our Dover to Calais service helped us to achieve a 63% increase in freight volumes and grow our passenger market on the Dover routes by 23% in the first six months of last year,” he says. “We continued to see strong performance on our Newcastle to Amsterdam service, which carried a record number of passengers in 2015, and we were on track to increase passenger numbers on the route again for 2016. Our Newhaven-Dieppe route also continued to record strong growth, with more than 100,000 passengers carried in the first six months of this year.”

This growth has been driven by DFDS’s decision to continue to invest in its services, which has enabled the company to increase the capacity offered on the Channel routes, providing more choice, greater flexibility and a better experience for customers.

“We work hard to maintain a sustainable platform for operating our business, so that we can continue to build and grow volumes in the future,” comments Foster. “The outlook for 2017 is positive, and we’re aiming to build on our success last year to continue to grow passenger and freight volumes.”

Quarter three results indicated that so far, Brexit has had no impact on DFDS’s freight and passenger volumes.

“Freight volumes grew by 30% and passenger volumes grew by 15% on our cross-Channel routes in the immediate post-Brexit reporting period, so we are continuing our strong growth trend,” Foster says. “The depreciation of the British pound presents a challenge, but its effect has been negated by our strong volume growth. We are carefully monitoring the possible longer term effects of Brexit, as well as the impact of the immediate weakening of the pound.”

Foster adds that in the longer term, Brexit is likely to have positive and negative impacts for the ferry industry. “For example, it could lead to the reintroduction of duty free, which would be good for our business, but if the weakness of the pound continues over a long period, exports may decline, which would impact our freight business,” he explains.

While European border controls currently remain unchanged, any re-negotiation of the current arrangements is likely to have a significant impact on how DFDS operates its business. “We will continue our dialogue with governments on both sides of the Channel to help secure a solution that is in the best interests of our customers,” notes Foster. “Overall, however, we are confident that we are in a good position to adapt to the post-Brexit environment.”

Early indications are that Brexit has had very little impact on passenger volumes. “Our Dover-France routes seeing a 15% increase and the Newcastle-Amsterdam route holding up very well during the third quarter of 2016,” remarks Foster. “However, we are always working to attract new customers to our services to build on the strength of our valued and loyal existing customer base. We have seen back-to-back years of growth on our Dover and Newcastle routes, with extremely strong peak volumes.”

Foster says the challenge is to attract customers during off-peak times at the beginning and end of the year. “Our strategy focuses on offering products that appeal to particular customer groups who may not have considered ferry travel before,” he says. “An example is our award-winning North Sea Sounds mini cruise product, where we provide customers with a package that includes live onboard entertainment from well-known bands and musicians so that the ship effectively becomes a floating concert venue. This product has proved very popular and has helped us to tap into a new audience who are interested in exploring new experiences, rather than relying on traditional customer segments that are principally focused on travel.”

DFDS has a reputation for keeping its fleet and onboard experience fresh, a task increasingly important in the quest for market share. The company constantly monitors feedback from its customers to identify opportunities to enhance the products and services offered on board.

“We’ve seen huge growth in retail sales on our Dover-Calais route in 2016, thanks to our investment in the two new ships for the service and our ability to offer an improved onboard experience,” Foster says. “We can flex ranges offered in the onboard shop on a regular basis to keep up with high street trends and meet the expectations of our customers.”

Foster explains that the annual refit period in the early part of the year provides a chance for DFDS to review its offer and make any changes needed to keep the fleet and onboard services to the highest quality standards, and carry out any necessary routine maintenance.

“On our Newcastle-Amsterdam route we are looking at additional restaurant concepts to keep our dining offer fresh and on trend,” he says. “We’ll also investing significantly in a refresh of the Calais Seaways on our Dover to Calais service. This will bring onboard areas in line with the experience our customers have been enjoying on the two new ships we introduced to the route in February 2016.”

In addition, DFDS has launched a wide-ranging review of its onboard offer to share best practice across the route network, seek the views of customers, learn lessons from other industries and investigate future trends. “This is part of our continuing improvement and investment programme and customers should start to see the results of the implementation of this project during 2017,” Foster explains.

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