How the ferry industry is leading post-pandemic change

Interferry CEO Mike Corrigan explains the defiant mood of resilience and recovery among industry leaders as the world awaits a Covid-19 cure

How the ferry industry is leading post-pandemic change
CalMac Ferries
Travellers are using ferry services from Scottish operator CalMac to enable them to enjoy staycations in their home country this summer

What does the future hold for the ferry industry as the world confronts and eventually emerges from the Covid-19 pandemic? There is no denying the devastating impact of the crisis, yet in the worst imaginable way, it has somehow presented the glimmer of an opportunity to reinforce our value to society.

Please don’t think I am trying to put an unduly positive spin on an unprecedented catastrophe. For much of 2020, the bad news has by far outweighed the good. However, the constantly evolving governmental, scientific and commercial response has encouraged sufficient hope that recovery is at least in sight, albeit in phases and on a potentially long road.

The current change in fortunes has been stark. For several years before the pandemic, ferry operators throughout the developed world had enjoyed annual and often record traffic growth, with rising demand being matched by a wave of orders for new ships. When non-essential travel was banned under the Covid-19 lockdown, those ferries still operating were largely limited to lifeline freight services and incurred unsustainable financial losses. Most services were either suspended or run on a reduced scale, so ships were laid up and thousands of sea-going and shore staff were laid off. Sadly, these solutions may often prove to be permanent rather than temporary, and further consolidation of companies, routes and fleets cannot be ruled out.

Our crucial community of suppliers was likewise hit by revenue losses and lay-offs as operators signalled a hold on capital expenditure.

However, there was eventually a flicker of light at the end of the tunnel when governments paved the way for a gradual relaxation of travel restrictions during the peak summer season. Interferry was ready for the safe resumption of passenger services thanks to feedback from members enabling us to produce best practice guidelines for social distancing and enhanced sanitisation. The summer months are critical for ro-pax operators as tourist traffic sustains lower earnings during the rest of the year. That won’t be the case in the late-starting summer of 2020, but there has been a season of sorts – notably on a ‘staycation’ regionalised basis as customers realised the benefits of travelling safer and closer to home. All the same, passenger numbers are bound to be vastly reduced and operators have resigned themselves to accumulated losses of billions in revenue.

By now you must be wondering what I meant by suggesting earlier that there is some (relatively) good news in all this. Fortunately, together with my own assessment, I can also cite some cautious optimism stemming from my regular conversations with industry leaders among our more than 260 members in 40 countries. Our general consensus on strategy and future prospects can be summarised as follows.

Governments have acknowledged the industry’s importance during the crisis, which confirmed that ferries are an indispensable part of the global transport infrastructure. However, the need for profitability will be greater than ever to recoup Covid-19 losses, so being ready to adapt and move quickly is paramount. In addition, there is a strategic opportunity to introduce new routes and services because ferries are in pole position to become the favoured travel option due to their ability to ensure social distancing compared with the closer confines of other modes of transport. Similarly, the attractions of short-haul travel will gain momentum due to the hiatus in long-haul offerings.

Meanwhile, capital expenditure is an immovable agenda item – not only to replace old ships but also to ensure new and existing vessels comply with demanding environmental and emerging Covid-19 regulations. Government aid for R&D projects will be vital to help suppliers continue their work on new technology.

Such sentiments were underlined when I spoke with Anders Ørgård, majority owner and chief commercial officer of Danish naval architects OSK-ShipTech. He told me they have never been busier doing conceptual designs for customers, who are evaluating a range of post-pandemic scenarios and also looking to build or redesign in line with new Covid-19 standards being introduced by many class societies.

Meanwhile Interferry remains heavily engaged in our key representations on safety and environmental regulations. When International Maritime Organization sessions resume, we will be presenting proposals for sector specific solutions on carbon dioxide reduction targets, exhaust gas scrubbers and ro-pax fire safety amendments among many other issues.

In short, life goes on. The exact shape of the future is still hard to predict at this early stage, but one thing is certain – the ferry industry is poised to lead both the commercial and regulatory charge.

This article was first published in the Autumn/Winter 2020 issue of Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed.

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By Mike Corrigan
22 September 2020

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