Did they realise the scale of the huge hike in costs that would affect all the ferry companies and their customers when the companies passed those costs on? And did they appreciate the affect on marginal routes, whether it would trigger withdrawal from those the companies had been tolerating, hoping that trade might pick-up, but suddenly found that losses due to the fuel cost would be unsustainable?
So the end result must be more congestion on those ferry routes that survive while the operators levy significantly higher charges. There will also be more traffic on the roads to and from those remaining ferry ports with cars and heavy goods vehicles that would previously have taken a longer sea route by ferry that has now disappeared. While for passengers, short haul flights have just become even more attractive and more convenient, perhaps hiring a car at the airport, compared to the long drive to or from a now more expensive ferry.
It is hard to believe DFDS Seaway’s Harwich-Esbjerg route would have closed for good if the fuel costs had not tipped it over the edge fi nancially. And DFDS are now in the process of determining the future of their Portsmouth-Le Havre route which looks unlikely to survive, at least in its current form. All the principal operators are trying to minimise the impact of the new fuels but they are all taking a big financial hit just as things might have been looking rosier after the years of downturn especially in the Euro-zone.
DFDS is spending nearly £100mn on ‘scrubber’ technology reducing the emissions on 21 ships. But they also say the ships will cost more to run because of the scrubbers. They have worked out a sophisticated ratio of the fuel cost per lane metre of cargo transported and while they say the figure depends on the length of route, the ship type and speed, and the cargo, whichever way you cut it the longer routes suffer very high new fuel costs. For DFDS, the Dover-Calais/Dunkerque routes have the lowest most economical ratio, ie using the least fuel per tonne carried, whilst Rosyth-Zeebrugge could be five times higher. The Felixstowe routes are lowish whilst Newcastle and Immingham links are more median. Does that mean the longer distance ro-ro freight runs may be vulnerable to cost cutting? At the least we might expect slower more economical speeds.
I have been worried that the ageing Tyne – Ijmuiden vessels might not warrant investment in clean emission technology but their loadings seem to be healthy enough and so it appears they should get the investment needed.
In their turn, P&O estimate their extra fuel cost per annum will be in the region of £30mn while in 2013 they recorded a £10mn loss and will not achieve their budget prediction on the short sea route. They have their large Dover-Calais ‘Spirit’ twins but the rest of their passenger fleet is ageing as are most of their freighters so here too they will be looking to clean the emissions rather than a more capital intensive upgrading to new LNG fuelled motors.
Then again a report, apparently leaked to the local Dover press, is suggesting P&O is looking to slash wage bills especially to their shore staff, another way of cutting their costs. The new fuel ruling seems to mean that, in this case at least, if true, wages may suffer as a result. Redundancies are being proposed but it is the wage cuts that are the shock, again if true, with savings of as much as one third of current salary levels being sought from staff, from mooring personnel to supervisors.Brittany Ferries, who seem to have had a good season, had seemed very bullish about new engines for six ships at a cost of £320mn to run on ‘clean’ natural gas. No more. They are abandoning this option as too expensive in the circumstances. They were even planning to order a large LNG fuelled French new-build (see Ferry World March 2014) for the UK-Spain route. No longer, they are taking a much more conservative option by using their existing, largely excellent vessels but running them on expensive diesel fuel and adding cleaning systems to their emissions. In the circumstances who can blame them?