The global ferry industry gathered in Vancouver, Canada for the 39th annual Interferry conference from 4-8 October. The conference drew record delegate numbers of almost 400 from the 38 countries the association currently represents, according to organisers of the event. Highlights included a report from CEO Len Roueche on his nomination to a new UN advisory group on sustainable transport established by UN Secretary-General Ban Ki-moon in August.
The 12-strong advisory group will run for three years and will provide recommendations on environmentally and economically sustainable marine, air, rail, road and urban transport solutions at global, national and local levels. Maersk is the only other shipping company represented.
During the conference, it was announced that Roueche will retire as CEO at the end of 2015 and that a replacement is currently being sought by the board. He assured members of his full participation in his current role until the appointed retirement date.
Executive director for European Union and IMO affairs Johan Roos outlined the new funding recently made available for European operators to help them comply with reductions in sulphur limits that will apply in Emission Control Areas (ECAs) from January. Following several years of lobbying by Interferry and its members, the EU aid has been granted under the Trans-European Network for Transport (TEN-T) programme, which includes the Motorways of the Seas (MoS) initiative to promote environmentally friendly alternatives to overland transport. Four operators (Brittany Ferries, P&O Ferries, DFDS and Scandlines) have been awarded 20-50% of project costs for trialling LNG and scrubber installations. Projects covered include a Brittany Ferries LNG retrofit pilot; deployment of a tri-modal scrubber system on two P&O Ferries vessels; installation of scrubbers on five DFDS ro-ro vessels; and retrofit of hybrid propulsion on two Scandlines ferries. Roos said that ferry companies benefited from €35m in the current round of funding and that the next round would see a threefold increase in available funds for LNG and scrubber developments.
In his opening address, conference host and outgoing Interferry president, Mike Corrigan, CEO of BC Ferries, said of Interferry’s diverse membership: “We are all passionate about providing the safest and best service possible.” Interferry chairman Mike Grainge of Liferaft Systems Australia said: “Interferry is so much more than a lobby group – it offers advice to ferry operators, builders and suppliers, working closely with classification societies and IMO in the interests of its membership.” Noting that 2014 was the thirtieth anniversary of the Estonia ferry accident and that this year had been marked by both the Sewol and Philippines ferry disasters, he said: “We regard safety as a constant journey, not a destination.”
Jeff Lantz of the United States Coast Guard shared regulatory insights affecting the industry. “Carrying 1.2 billion passengers annually, ferries transport 250 million vehicles every year,” he said. “They are an indispensable element in our globalised and connected world.” However, with 9,000 people perishing in ferry accidents worldwide this century – around 650 a year – the frequency of tragic accidents did not appear to be diminishing, he noted. “The overwhelming majority of these accidents are on ferries in domestic service that are not subject to IMO safety standards as enforced by flag state and port state control, and are by and large in developing countries that have difficulty overseeing the safety of their maritime transport systems. IMO has a vital role and is in a unique position to drive change by bringing together the right people to develop safety standards.” Lantz cited the broad impact of maritime safety advances in passenger shipping following the Costa Concordia accident in 2012. “Perhaps of most significance to the ferry industry is the move to ensure passengers are aware of emergency procedures. Much of this is the result of an internal review by the Cruise Lines International Association (CLIA).”
Roos said that the Europe office's three-year mandate, which expires in December this year, had been very successful and emphasised that the industry needed a permanent voice at the major regulatory bodies. “We are happy having regulations but one size doesn't fit all. The challenges in the ferry industry are quite different from the cruise industry. Most of the IMO regulations are for bulk carriers and container vessels and we are tagged on. We have to respond to things drafted ten years ago. Rules on issues like water organisms don't make sense for short sea shipping.” He expressed confidence in the maritime body, however: “The IMO is big, it's slow and it's sluggish – but it works.”
Subsidies, governance and state ownership came up for debate in an animated panel discussion. British Columbia ferry commissioner Gordon Macatee said BC Ferries benefited from its role as a quasi-private operation at significant arm's length from government, with capacity to set tariffs and react quickly to the market. Former Washington State Ferries chief Moseley noted that there were advantages and disadvantages to government structures: “You are viewed as part of the state highway system but you end up with competing customers who all think they are your boss.” John Steen-Mikkelsen of Danish ferry operator Danske Faergen's message to state entities was blunt: “Stay out of ferry operations.” Judging by the response this statement received, a number of members of the audience seemed to agree with the sentiment.
Business planning issues were addressed by a panel including CCR Barcas, the company involved in boosting Rio de Janeiro's ferry transportation system for World Cup and Olympic events in Brazil. Nine new vessels have been commissioned and last year the company bought five high-speed craft from Mexico, China and South Korea. “We transport more than 25 million people a year on just one line,” said Tiago Esteves of the Brazilian operator. “The most important thing is to get the legacy and secure all the investment that should have been done years ago so we can increase capacity in all our lines.”
The potential to introduce a ferry system to the Caribbean was analysed by two panelists. Adrian Beharry presented an academic study for a fast ferry service in the Southern Caribbean. The study concluded that despite latent demand, adverse market conditions and other barriers prevented establishment of such a system. Consultant Bruce Nierenberg was more upbeat regarding the potential for Caribbean routes. “There's an operationally friendly market that nobody's taking advantage of,” he argued. “There is not one overnight ferry in the entire region. The Caribbean is politically and economically stable, with affluent travellers who are maturing consumers with more disposable time for travel.” He pointed out: “The same ships bringing customers will also be bringing supplies for resorts. This is very different from cruise operators, whose model of the ship as destination mean destinations view them as competitors. Ferries are the complete opposite as they spread economic benefit if people bring their cars too.” He said the future opening up of Cuba to US holidaymakers represented a great opportunity, “but operators need to get in in advance.”
The question of how to make shopping a reason for travel was considered by Stena Line's Per Ola Jonnerheim and others. Jonnerheim outlined Stena's new onboard strategy for retail: “Following analysis of sales and the width and depth of our range, we figured we need to be more affordable,” he explained. “We created five different packages that a vessel can choose from. As we operate in seven markets with different tax regimes and consumer spending power, we reduced our range from 10,000 to 2,500 articles. With bigger volumes from fewer suppliers we could lower our prices a lot.” He concluded: “We believe tax-free is the old way and the ‘outlet on board’ concept is the new way.” Daily price revision and in-house merchandisers were other successful innovations, he said.
Corrine Storey, VP customer services for BC Ferries, explained how the company had transformed its retail offering from traditional souvenir and gift shops to “shopping experiences to surprise and delight” and said the future strategy was to make ferries “the place to shop for West Coast-inspired gifts”. She said the operator's research revealed that the key shopper profile onboard was women over 35 and it shifted its strategy accordingly with more social shop layouts and stock such as babywear for grandchildren. “We now are hearing that BC Ferries retail can be the place to shop.”
The challenges of short sea shipping were debated on day two of the conference. Kirk Jones of Canada Steamship Line said: “There is a need to differentiate short sea shipping from international shipping for IMO regulations and policies. The short sea maritime industry is not visible and not appreciated. Operators serve the public good and operate in high-risk and high-consequence environments. For example, BC Ferries is often called out in at-sea emergencies. This reflects a very professional company and industry.” He added: “Interferry itself is a very small organisation punching above its weight and influencing strategic change at IMO.”
During a discussion of the viability of the ro-pax concept, Christophe Mathieu of Brittany Ferries, whose nine vessels ply 10 routes encompassing the UK, northern France and northern Spain as well as Ireland, said his company's dependence on the tourist market meant that trends in holiday travel could have major impacts. “We are entering a big change in the car industry. I'm very concerned that in many European cities, most youngsters do not own a car anymore. Different ways of having use of a car, such as sharing, will affect demand for ro-pax. We need to change who we market to (for example, car hire companies) so that people keep taking a car when going on holiday.” The growing demand for charging facilities onboard for electric vehicles also needed to be addressed, he said.
Chet Pastrana, CEO of Archipelago Ferries in Philippines and president of the Philippines RoRo organisation, outlined progress on an ambitious project to develop 10 purpose-built catamarans to serve the second largest coastline in the world. “The new vessels will meet international standards of safety,” he said. “Five brand new ro-pax vessels have already been delivered by our partner, Sea Transport of Australia. The sixth will be delivered in November or December.” He said that his company was also pioneering the use of wind and solar power in its fleet.
The fast-approaching date of 1 January 2015 for reduced emissions within ECAs was top of mind for delegates and panelists. Mathieu drew applause for his statement: “It's still very puzzling and irritating to see we are being forced into a date with no real look at all the consequences. I believe we CEO Len Roueche and Johan Roos, the organisation's executive director and regulatory representative in Brussels, discussed issues related to Interferry's operations. should have been given a couple of years for retrofitting methods. Now we are looking at one date, never mind the consequences. There is a time of two years that could have been used to finalise the job rather than sticking to the date of 1 January at any cost.”
The final session of the conference focused on the challenges of switching to or building for LNG. George Capacci of Washington State Ferries said his organisation was converting its older ships for LNG. “Our research showed that moving to LNG could save 40-50% at today's pricing. Another opportunity is pollution reduction. WSF is the largest single source of marine carbon emissions in the Washington state government and LNG is a way we can significantly reduce a number of emissions. We are retrofitting six Issaquah-class vessels, starting with one prototype for proof of concept.” He said the challenges included “no clear funding mechanism now, and no societal cost credits for emission reductions. There is also a need for public education regarding LNG.” The operator is currently seeking private financing.
Paivi Haikkola of Deltamarin illustrated various methods of “squeezing in” LNG tanks onboard ferries. Demonstrating several possible onboard arrangements and layout designs, she warned: “LNG vessel design should not use the old design as a template for LNG because you need 1.8 to 3 times the volume if moving to LNG. And for dual fuel you will need double the tanks.”
Anders Orgard Jansen of OSK ShipTech in Denmark talked attendees through the country's CO2 neutral facility established on the small Danish island of Samso. The island provides all its own energy via wind turbines, solar power, biomass energy and overcapacity from electrical production. “The missing link was the ferry,” explained Jansen. Fresh from its work on Fjord Line's Bergensfjord, the company presented an LNG ferry concept to the Danish government. Construction of the ship is now nearing completion at Remontowa yard in Poland. “Fjord Line has been a first mover in this process and has made it easier for us with the Danish Government,” said Jansen.
John Hatley of Wärtsilä USA made the ferry business case for LNG: “It represents reduced risk for yard, owner and banker. The US has the cheapest LNG with huge assessed shale gas fields and nearly a century of supply available.” In response to a question from International Cruise & Ferry Review regarding the risk that US shale gas extraction might be curtailed in future due to its carbon impacts, Hatley said: “We are certain when we drill that we are extracting, not exploring. And as fracking has improved in efficiency in the last 6-7 years, the path of least resistance through the regulatory regimes is with the cleanest of the fuels.”
The conference ended with John Steen-Mikkelsen officially beginning his term in office as Mike Corrigan handed over the Interferry flag to him. The 2015 conference will be held in Copenhagen.