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CHOPPY
Page 40
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SEAS
Ferry rates have increased to cover losses from duty free and increased investment in new ships. But are hauliers being targeted unfairly to cover these extra costs? Steve McQueen sets sail to find the answers.
ore ships, increased ser vices, better sailing condi tions and rates that are lower now than they ivere before the Channel Tunnel was )pened. It's hard to find anybody who can :ondemn the ferry operators for ncreasing the price of their Dover-Calais height services over the past few years.
Prices have certainly risen on all outes—but not without reason: the Vend Trade Centre attack 11 September ind the outbreak of foot & mouth lepressed international movements last ear, and the resulting decline in revenue ferry operators to hike their prices in bid to make up the shortfall.
But by far the main reasons for the icreases are investment in new ships and le falling margin from on-board sales ince the abolition of duty-free in 1999.
"The loss of tax and duty-free revenue as had a large negative impact on our arnings," says Michael Mcgrath, freight director at Stena Line. "However, the only way for us to survive such a dramatic change was to review our tonnage needs and systematically change our ships to be adapted to new market conditions.
"Nobody can deny that the loss of duty free was a serious blow to the ferry industry," he adds. "It accounted for something like 35% of the industry's revenue. All of our rates have had to go up to compensate for the lack of duty-free sales—we are still selling a considerable number of products on our ships, but at a considerably reduced margin."
Falling revenue
Increasing prices is an understandable response to falling revenue, but some ferry operators also reacted by increasing investment and capacity. Irish Ferries is a prime example of this philosophy: launching the Ulysses—the world's largest multi-purpose ferry—on the key Dublin/Holyhead route early last year cost it a cool E100m. This, with the subsequent transfer of the isle of Inishmore to its Rosslare/Pembroke route, has boosted the firm's annualised freight capacity by some 60%. In fact 2001 was a record year for Irish Ferries' RO-BO freight business on both Irish Sea routes, with an 11% increase to183,000 units.
The company says its investment has provided hauliers at the dockside with a virtually guaranteed sailing time: "To pay for that the rates have had to rise," says a spokesman.
Stena Line has also been ready to invest in its services, with two new vessels joining the fleet in the past year. The brand new Stena Forwarder was launched on the Holyhead/Dublin Port route in Spring 2001. Bigger and faster than the vessel it replaced, it provides the fastest traditional ferry crossing, with a journey time of 3hr 15min. The Stena Europe entered service on the Fishguard-Rosslare run in March 201 after a .24rn refit; it makes the crossii in 3hr 30min.
Not to be outdone Sea France N added the Rodin to its Dover-Calais se vice; and Truckline, the freight arm Brittany Ferries, is expecting a new sh in late summer—the Mont St Michel IA sail between Portsmouth and Cae alongside the existing Normandie.
New ships It's easy for cynical internationi hauliers to look at the investments beir made and accuse the ferry operators inflating their freight rates to recoup th cost of new ships. The ferry operator vehemently deny this: "Freight operz tors should be dissuaded from the vie that only they are paying increase rates," says a spokesman for 1386( Stena Line. "That isn't true. On the pas senger side some of the rates hay increased from between 25-50%, partic ularly with towing traffic."
Stena Line is a joint venture se up by two of the leading players on thi Dover-Calais route to counter thi threat posed by the opening of thr Channel Tunnel. It is the largest freigh carrier over the short-sea sector, han dling 1.1 million freight units last year This year it will run up to 38 services ty at peak times, so on average operars can expect to wait less than 45 mines between ferries. Freight charges we certainty risen in the past two years so, but they are nowhere near the levs that they were before the opening of e Channel Tunnel. Most hauliers report at the quality of the ferries has iproved in recent years, too.
For example, Nick Dukes, traffic manger at the Geodis depot in High lycombe, says that 30 out of his 34 driars would rather use the ferry than the wind; apparently they prefer the break OM their vehicles and the more comx-table surroundings of the ferries.
lus service
aul Woodward, European freight manger at Dover-based Mike Beer -ansport, is also generally happy with uality of service on this route: "Where ie are, between the Sea France and the '&0 Stena Line berths, we can get a ervice about every 20 minutes. It's like . bus service."
Not that he's totally won over by the Fry operators' arguments—he points tut that when the Channel Tunnel first )pened freight was effectively 'bought' by educing prices: "The ferries responded )y reducing their rates, but now that the -unnel is established and pretty well satu rated with freight the ferries have got more and more business. The prices have been able to move back up again."
The Port of Dover is the busiest ROAD freight port in Europe, and competition from the port has become fiercer than ever this year with Norfolk Line adding sailings to Dunkirk. More changes are expected at Dover, with Stena Line believed to be preparing to sell its 40% stake in the joint venture in P&O Stena Line to P&O.
It looks increasingly likely that the mainly freight service from DoverZebrugge will cease by the end of this year, but one positive result of this might be that capacities on the Calais services will increase.
Investment in new ships has never been as high, capacities have never been greater and accom modation has never been as lux
urious. But some things never change. The calculation of ticket
prices, for example, continues to mystify many operators, although some accept that there is at least a degree of fairness about the system.
The big boys get their preferred rates don't they, and
there's some sense in that," says David Bray, transport manager at Eric Vick Transport in Gloucestershire. A spokesman for P&O Portsmouth confirms that "negotiations on rates with our freight customers are based upon volumes of traffic".
P&O Stena Line agrees, adding: "Clearly the bigger operators do expect a discount. That's the way the industry is structured and that's something we are unlikely to move away from."
One operator, who prefers not to be identified, says that he understands why prices are rising. He even accepts that it is getting harder and harder to pass on the increases to customers. But he is left bemused by the fact that they all seem to go up by the same amount at the same time. Perhaps it's something in the water, shipmate.