Friday, August 23, 2013

Island RoRo Freight and Passenger Ferry Services Cause Problems for Shippers Globally

Overheads and Safety the Major Difficulties as Cost of Operation Sees another Old Company Sink
Shipping News Feature

UK – US – AUSTRALIA – We have written many times in the past of the difficulties of adequately servicing the islands that lay off the coasts of countries around the globe and the problems faced by the RoRo ferry companies which have to be all things to all men when faced with the problems of transporting passengers, freight and even livestock between islands and to and from the mainland. This month we can see the problems faced by shipping lines on three continents, all different, but ultimately all with the same root problem.

The difficulties of competing in the market to service the needs of the Channel Isles finally became too much for one of the best known names in the island freight trade. Huelin-Renouf, which despite operating between its headquarters in Jersey and UK mainland, Guernsey and Alderney for almost eighty years, has been forced into receivership leaving around ninety staff in limbo. The company ceased trading on the 19th August and competitors Condor Ferries and Alderney Shipping are currently trying to manage what will probably now prove a surfeit of trade.

Three companies are involved, Huelin-Renouf Shipping Limited (Jersey), Huelin-Renouf Limited (Guernsey), Eagleway Freight Limited (Southampton, UK) and staff working in the Channel Islands themselves, Southampton and at the French coastal port of Cherbourg, have all been laid off with accountants Grant Thornton appointed as liquidators. With daily services from Southampton to the two main islands and a twice a week schedule to Alderney, Huelin-Renouf also took responsibility for much of the road haulage work around the islands and these services will also now cease.

Last October saw the demise of Condor Logistics, the freight forwarding arm of Condor Ferries, with the resultant loss of over one hundred jobs and these latest problems means that freight agency services in the islands are now dependent on a tiny coterie of local freight forwarders with minimal options for transporting cargo to and from the islands. The hope is that the Huelin-Renouf operations will be snapped up by a purchaser who sees the possibility of consolidating services and producing a profitable venture.

The Channel Islands situation has been aggravated by the withdrawal of VAT relief in April 2012 which saw large amounts of goods being shipped into the islands, then forwarded to the UK mainland tax free, but is caused by the same set of factors which blight all small island ferry operations. The recent horrific events in the Philippines were, yet again, the result of appalling standards of safety which infect lesser developed societies when economics mean they can only run a service using old ships discarded by other nations, and then pack them to the gunwales with anything that pays a fare.

This shortage of revenue against overheads is a problem illustrated at the opposite end of the scale with the latest problems faced by one of the most affluent transit points in terms of local ferry crossings. The Steamship Authority (SSA) is the company responsible for a fleet of nine ferries which ply between the ‘Presidential Playground’ islands of Martha’s Vineyard and Nantucket to Woods Hole and Hyannis on the east coast of the United States, services which the company has provided for almost a century.

The range of vessels travelling the routes is impressive, including catamarans capable of 35 knots, but time, it seems, runs out for everything and the SSA have decided to sell off their oldest vessel, the mv Governor, a former Coast Guard craft built in 1954 and one of the principal freight carriers on the company fleet. This week saw a proposal for the purchase of a new vessel, at 235 feet just 7 feet shorter than the incumbent ship and capable of carrying up to 17 trucks or 50 car equivalent units and a passenger capacity of at least 384 passengers, including inside seating for at least 250.

SSA’s general manager Wayne Lamson's idea is that the new vessel would be similar in size to another company vessel, mv Martha’s Vineyard, bought in 1993 and the concept is to have a bespoke ship built to be the blueprint for any future purchases. Members of the SSA board it seems have considered larger types of craft and would prefer a passenger/freight balance slanted more toward tourism, but whatever the decision, the certainty is that with management estimates forecasting a net loss of up to $3.8 million, increased rates will almost be a certain outcome, whatever vessel is eventually chosen.

Trading from an island covering over 26,000 square miles, the problems faced by Tasmanian shippers are on a scale far beyond those on other smaller enclaves. We have often seen problems involving the island’s transport and last month a ferry dispute involving wharfies in Melbourne proved a nuisance as reported but the underlying complication is the lack of international export and import facilities. This situation obviously means vastly increased trade for the ferry companies but the extra transhipment and on-carriage costs tend to make Tasmanian goods less attractive in overseas markets and incoming items more expensive.

This week Tasmanian Labor Member of the House of Assembly, Brenton Best, said that the ferry group, TT Line, unwittingly caught up in the recent dispute should move its headquarters from Melbourne to Devonport on the island where local government are developing a new Central Business District called ‘Living City’. The company issued a statement in response saying that two thirds of its shore bound staff were already employed in the Tasmanian port and it was essential to maintain a presence on the mainland due to the nature of the company’s business.

Photo: Shipping in the Channel Islands has changed radically since the advent of RoRo ferries.