Leading the turnaround

Leading the turnaround

With three fast ferries serving a diverse community of passengers on two routes in western Denmark, Mols-Linien has much to celebrate. Just three years ago, however, it was a very different story. Amid multiple crises both internal and external, Søren Jespersen was hired to restore the ferry business to profitability.

Jespersen explains: “Back in 2011 the company was in quite a weak position due to several years of change in demand and increased oil prices, so I was asked by the owners if I could step in and facilitate a turnaround of the company. They had lost money for several years and it was obvious that they needed to have a new strategy when it came to tonnage and also towards the customers.”

Jespersen accepted the challenge in March 2011. Since then, he says, “we have more or less changed everything in the company. We started to look at the different business areas and we pretty soon understood that we should get out of the ro-pax business. We also sold the two existing fast ferries. During this process, over the last three years we have managed to build two of the world’s biggest catamarans into the fleet, KatExpress 1 and KatExpress 2.”

The 112m vessels each accommodate up to 417 cars and 1,200 passengers. The first joined the fleet in May 2012 and the second a year later, in May 2013. These large craft were both built by Incat Australia, along with the 91m fast ferry Max Mols. The first was chartered in from Montrose in London and the second came directly from the Incat yard.

Clearly, the new ships have brought with them new possibilities for the business. “We went from having a very high-end market share carrying more or less only business people, and very high levels on fares for transportation, to lowering our prices radically and expanding our customer base very dramatically. So we started to capture a market that we didn’t really have before,” says Jespersen.

“First of all we were in the position where we as a big business could produce at a much lower unit cost. And secondly there was a very big market that we could tap into, but not at the high prices we had before.”

Competition from other transit methods was one of the biggest problems facing the company when he took on his new role and it has remained a constant factor shaping the new business model. In particular, the ferries must lure travellers away from using a land bridge. “When we started the turnaround process in 2011, we had big competition from the land bridge,” explains Jespersen. “But since the beginning of 2012 we have, month by month, been taking market share from the bridge.”

He attributes the success of this venture to several factors. “It’s a combination of the change of fare strategy being possible thanks to lower unit cost and also that we have been working very hard to change the product so it lives up to the expectations of the customers of today. I think compared to many other ferry companies, we have quite a high quality of food and drinks, for example, even though the crossing only takes an hour and ten minutes.”

Modifications were made in drydock to the ship chartered from Montrose, adding new features to meet passenger needs. The newbuild offered more possibilities from the start, comments Jespersen. “On the ship built in 2013 I could decide myself what I wanted since it was not already fitted out. We could arrange the whole passenger area in the right way for our market. We built a very big business class lounge and we have seen that it has been in high demand so in the last few months we had to redo the first vessel and now have an equally big business class area where we can seat around 170 customers.

“Around a third of our customers are business people, sales staff or workers that need to go from one part of the country to another to attend meetings, build houses or whatever. That is around 35% of our market in terms of revenue.

“We are in strong competition with the east-west traffic in Denmark with the bridge, so it’s very important for us to have a lot of frequencies in the morning, then again in the afternoon to fulfil the requirements of this market.”

Mols-Linien is also developing the off-peak family travel segment. “The ‘visit friends and family’ market is more flexible,” he explains. “That’s where the new big ferries came in with up to 400 cars.”

Mols-Linien has seen rapid growth since Jespersen’s appointment. “In 2013 we grew our customer base by 25% compared to 2012 and we increased our market share by 23%,” he says. “One of the challenges is to maintain this – maybe not 25% every year but to have a relatively high level of growth in the coming years.”

The food served onboard is a key area of focus. Jespersen says he is trying to move away from the traditional ferry catering concept dominated by “a carvery and gravy” and towards more modern cuisine. “Now, if you are on our ferries at dinner time you can have lighter food such as a tapas buffet, a very high quality prawn sandwich or a salad niçoise.”

This focus on fresh food has led to a reconsideration of logistics for the line. “We are taking on new ways of doing things onboard the ferries. We used to be more traditional – we had a central kitchen and bakery and warehouses, and then we fed the ships with ready-made products, whereas today we are handling just-in-time deliveries. Every morning we have trucks from suppliers come in and all food will be prepared by chefs onboard the vessels. We even bake our own bread onboard.”

The last three years have seen impressive strides and the next few look set to be interesting too. “It goes without saying if you grow by 25% a year you need more capacity. We are looking at continuous growth and in the coming years we will need to have more capacity in our service. So we will of course be looking into expanding with another big ferry.”

As to when this might happen, Jespersen says: “If the rate of growth continues as it is now, we will need another vessel in 2015 or 2016.” The relationship with Incat seems to have been a good fit for the line. “We will look at what is available on market at that time in general, but have been very satisfied with the Incat ferries.”

The customer experience remains high up on his agenda going forward. “We will continue to find a balance on when and how our customers want to travel.” This, combined with his appointment in November 2013 as chairman of Cruise Copenhagen and Cruise Baltic, will ensure a busy and interesting schedule for Jespersen in the coming months.

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Michele Witthaus
By Michele Witthaus
19 September 2014

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