FERRIES
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SURCHARGE
sea return ferry crossings. "We have protested most strongly to the ferry companies, saying the market simply can't bear such increases at the moment because of the recession," he says.
The Road Haulage Association is demanding Government intervention, stressing that the surcharge will give Continental operators who do not pay in sterling a competitive edge.
The Freight Transport Association has lodged complaints with the Office of Fair Trading and the EC competition directorate, claiming there are "clear signs of concerted practice" on the cross-Channel routes.
It points to strong similarities in the scale of surcharges, the date of imposition and the wording of letters to customers outlining reasons for the decision. It also says none of the shipping lines has proposed a surcharge on motorists.
Director Jack Welsh claims the impact of devaluation is unlikely to have been the same on each company, which begs the question: why did they apply a common rate of surcharge?
Collusion between cross-Channel ferry operators is forbidden by the Government following requests by P&O and Sealink to co-operate on services and fares.
Both companies strongly deny acting together, however. P&O says a significant amount of its wages and port charges are paid in Continental currencies. "Every time we send a truck through Calais, it costs us 300 francs to the port authority alone," says the company. Devaluation has also hit repayments on three new freight ships on the Dover-Zeebrugge route. They were built in Germany and cost £50m each. Sealink cites similar reasons for its surcharge and says it will still need to find money from somewhere to compensate for its 5% surcharge cut. The company claims it would be impractical to impose a surcharge on passenger fares because there are relatively few tourists at this time of year and they tend to book a long time in advance anyway.
Sealink denies the timing of the surcharges was the same, saying its Dutch-based sister company Stena BY, which operates on the Harwich-Zeebrugge route, imposed surcharges two weeks before everyone else: "Virtually all their costs are in guilders and all their revenue is sterling so it's not surprising they acted quickly. Our decision was that we could swallow the increased costs for so long but not for ever."
The FTA has suggested that North Sea Ferries and Tor Line have also been acting together, but Allan Hull, group freight manager for North See Ferries, says surcharges were delayed to allow the currency situation to stabilise. "There's clearly an imbalance when 99% of our income is in sterling and 70% of our costs are in other currencies. In a competitive situation, hardly anybody wants to be the person to act. The market is led by Dover and in many cases, people wait for Dover to make the first move." Although competition could explain why the surcharges are so similar, the suspicion remains that they are partly an excuse to bolster profits.
Laser International's Charlesworth says: "The ferry companies may have very substantial foreign currency elements to cope with, but they have not been terribly open about how they equated that to the revenue increases they have set."
Christian Zbylut, freight director for Eurotunnel, describes the arbitrary imposition of the surcharges as unacceptable.
When Eurotunnel opens to freight traffic, he says, every contract will have a clause which covers any marked changes in currency values or interest rates. "There will be renegotiation on a customer-by-customer basis," he says. "It will be the same as when we negotiate yearly tariff increases, taking into account the business of the customer, their credit worthiness and their potentiality." Zbylut says Eurotunnel will be less vulnerable to currency fluctuations anyway because it will have much lower overheads than ferry companies: "The ferry companies have large workforces and their fuel consumption is very expensive." He also promises that Eurotunnel customers will have a choice of currencies in which to be billed. If fluctuations end up significantly benefiting Eurotunnel rather than customers they will still be able to renegotiate rates.
But Zbylut does concede that Eurotunnel will be more exposed to fluctuations in interest rates: "A 1% variation in interest could mean over 2,200m difference in interest for the total value of the project."
The row over surcharges has many similarities with the dispute over toll rises at river crossings earlier this year, reinforcing an impression of victimisation among many hauliers.
Once again they are being forced to shoulder an arbitrary increase in costs way above the rate of inflation — and once again they are paying much more than motorists.
Not everybody believes that rates are so depressed that it is impossible to pass on extra costs to customers. Jeremy Francis, partner in Swindon-based livestock haulier MFP International, says devaluation has meant that hauliers now have to pay higher fuel bills and motorway toll charges as well as ferry tariffs. But he adds: "There are not that many trucks operating in Europe as there were 18 months ago. Recession has cleared out the weaklings in the industry. I know this is traditionally a busy time in the run-up to Christmas, but there is definitely a better market out there."
For other operators, the surcharge is such a nominal amount within their overall costs that the sum can be absorbed.
Wayne Denton, director of operations for Securicor's Network Europe door-to-door delivery service, says: "As an overall percentage of our mileage each week, the ferry surcharge is minimal. As we did during the Gulf War, we will let things settle a bit before reacting."
The surcharge cloud may have a silver lining, however. Although the hike in costs is clearly causing severe difficulties for many hauliers, devaluation of sterling should ultimately stimulate exports, increasing business opportunities for everyone.
El by Guy Sheppard