This article was first published in the Autumn/Winter 2016 issue of International Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed
When it comes to experience of the port and ferry industry there are few who can match Bill Moses. His CV includes senior roles in both segments. Not only has Moses led operations at the UK ports of Ramsgate and Sheerness, but he also headed up former British ferry operator Sally Line, was the managing director of Hoverspeed and Sealink’s Channel routes, and he brought Olau Line to the short-sea route between the UK and Netherlands. These days, Moses spends his time travelling the world carrying out due diligence for ports and ferry operators, governments and private equity concerns.
The ferry industry has faced several challenges in recent years, including the loss of duty-free spirits, wine and tobacco goods onboard passenger ferries 17 years ago. Noting that operators have struggled to replicate the 60% gross profit they reaped from duty-free, Moses comments: “The loss was a bitter blow to all but a few destinations, such as the Channel Islands and Finland’s Åland Islands. Nonetheless, the ferry sector has survived worse, such as the arrival of fixed links, which in the case of the Channel Tunnel, literally removed around 50% of the spoils.”
Another challenge was the introduction of emission control areas and the 0.1% sulphur emission limit in January 2015. However, this did not cause the initial expected furore because many operators decided to bide their time until exhaust gas cleaning technology was developed further and low-sulphur diesel became cheaper. “The industry is well aware that the last has not been heard on the subject, particularly when fuel costs rise as this is likely to provide less of a buffer to the Mediterranean region where an environmental respite is every bit as valid,” cautions Moses.
Moses explains that while operators have come and gone, one of the ‘remarkable features’ is that many of the surviving routes were originally created by railway companies. For example, drive-on, drive-off ferry services from Eastern Docks in Dover, England were inaugurated on 3 July 1953 by British Railways with its intrepid 1924-built SS Dinard. The passenger-only vessel had been butchered to carry around 70 cars, as travellers had not yet fully embraced the concept of taking cars on ferries.
“Ironically, SS Dinard became the first vessel to be operated by Scandinavian operator Viking Line, suggesting that it was British Railways that taught the Baltic operators the drive-on, drive-off concept and not, as some would have you believe, the other way round,” comments Moses.
However, the emphasis has now changed and, rather than passenger ships that carry some vehicles, the pendulum has swung in the direction of freight ships that carry some passengers. Larger more modern ro-pax vessels will bring challenges of scale associated with length, breadth, draught and shore interface, and some ports will find this difficult to cope with.
“Passengers are only part of the story and the industry needs to be thankful for freight and particularly in Europe for the enlarged European Union (EU) as it has provided earnings growth that has delivered sustenance,” says Moses. “Freight throughput for most ferry operators has almost returned to pre-recession levels, which although largely welcomed, brings new challenges. Relatively few orders for replacement tonnage have been made in recent years and some are well overdue.”
Today, many larger Baltic operators offer a cruise-ferry concept. “The city-centre to city-centre concept enjoyed by the larger Baltic ferry operators provides an obvious platform that enables passengers to travel there and back simply for the nightclub experience,” Moses says. “Equally impressive for services that cater more for passengers than freight is the growth in throughput and tonnage operated by companies such as Tallink & Silja Line, Viking Line, Eckerö Line and DFDS Seaways.”
A more functional shuttle-type operation is performed by Scandlines, which consistently delivers a regular and highly efficient operation born of Danish, Swedish and German railway origins dating back to 1872. The company carries around 15 million passengers, three million cars and 900,000 freight vehicles annually on more than 90,000 departures, however its services have been somewhat hampered by the late delivery of two newbuilds, Berlin and Copenhagen, on the route between Rostock, Germany and Gedser, Denmark.
“Stena Line’s services are longer distance, but no less strategically placed within and outside of the Baltic region,” says Moses. “Further south, Stena’s Harwich-Hook of Holland service has benefited from impressive scale, while Cobelfret Ferries quietly continues its enviable fleet upgrade.”
The Channel services between England and France lost MyFerryLink in July 2015 following a ruling by the UK’s Competition and Markets Authority. Moses deems this ironic, commenting: “The company was offering a good service with a user-friendly tariff that was certainly a benefit to the travelling public, something that competition authorities used to use as a yardstick.”
Apart from Eurotunnel’s rail service, passengers and freight customers must now choose between P&O Ferries’ Dover to Calais route, and DFDS’ routes from Dover to either Dunkirk or Calais. “The capacity has changed little since the demise of MyFerryLink, but only time will tell if the reduction in competition from three surface operators to two, and in particular the loss of the one blamed or famed for being cheaper, will cause ticket price inflation,” says Moses.
In the meantime, a number of European ferry services have become lacklustre, notes Moses. “Some operators have become more about getting from A to B than targeting an onboard experience and selling goods that travellers would be interested in,” he remarks. “On the basis that the shipping industry is cyclical, we’re reminded by an alleged quote from Otto Thoresen, who was about to teach the industry and thing or two: ‘You needn’t be a genius to do better than this’.”
As far as the UK’s planned EU exit and the impact this will have on ferry services to and from Europe is concerned, Moses remains positive. “Very little of any substance has been said about the UK’s post-Brexit trading position or the influence that our divorce from the EU is likely to have on shipping in general and ferry trades in particular,” he explains. “What we do know however, is that the tradition of trading between countries of the world goes back to the year dot and that wherever demand exists, so too will supply. Strangely, ports and ferry operators overseas have been first to recognise the Brexit opportunity. In fact, my phone has been busy with common thought that duty-free could grace our onboard shops once again.”
Moses adds: “At a time in the ferry timeline when getting from A to B has been the order of the day rather than any thought of fun or excitement, the return of duty-free could breathe life into an industry that often lacks sparkle or initiative. Roll on Article 50!”
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