Greek ferry operators are suffering along with the economy
from 1 January 2015 and full implementation will take place.” He confirmed the lack of appetite for ordering in current market conditions. “We do not see a lot of newbuildings. There are no new ferry contracts at present so it is difficult to gauge prices. But we need to start thinking about it because the fleet is ageing, especially in the passenger segment.” He said that DFDS will not contract any new ships this year
or next. “We will want to see what happens in 2015 in terms of the effect of the sulphur directive.” Emanuele Grimaldi, managing director of the Italian
Grimaldi Lines, said: “We are looking closely at how we can achieve a soft landing in 2015. But all the options are expensive and risky. There are questions about what the low sulphur fuel price will be and its availability in
2015.This looms over the industry in Europe at a time of economic uncertainty. There are more questions than answers and no easy answers. The market is still oversupplied and there are too many old ships. There is a need for more scrapping, especially on the shortsea routes. There is too much uncertainty to invest, both in terms of demand and technical issues. “Installing scrubbers causes big costs and problems. It is too risky to invest in scrubbers as we could make wrong decisions.” Sean Potter, managing director DFDS UK, pointed to a UK Chamber of Shipping estimate that the impact of shifting to low sulphur fuel in 2015 will be to increase ticket prices by up to 21 per cent in northern Europe, and even more in southern Europe. “This will result in a shift of traffic from longer haul ferry routes to shorter crossings, with longer overland transport legs. We are implementing slow steaming on shortsea ferry services, but this is dependent on reducing port turnround times to maintain 24-hour operating cycles and schedules.” Despite the apparent acceptance of the inevitability of implantation of the sulphur directive, a sliver of hope was held out by Ian Woodman, marine director of the UK Department of Transport in his address to delegates. He said that the UK government is trying to understand the problems faced by ferry operators. “We are talking with other EU governments about worries on the sulphur limit, but there is extreme reluctance by the Commission to re-open the debate on implementation in 2015.” However, he did acknowledge worries about the availability
of distillate fuel in 2015. “Our current belief is that enough can be imported to meet the requirement, but it is not clear what the impact will be on prices and work is still going on to look at this. We need evidence to look at the short-term economic effect, but there is a long-term goal of enabling technology to reduce emissions.” Meanwhile, a presentation by Dimitris Dimitriades, director
of XRTC, outlined the desperate plight of Greek ferry companies. “The Greek ferry market is in a very difficult situation,” he said. “Ferry companies have complex shareholding structures and Greek banks have stakes in some of them. Greek banks have little flexibility due to their own need for recapitalisation.” As a result, matching ferry companies’ capital needs with banks’ needs has a big time lag, he said, “which will cause further problems. Some are in technical default of covenants. There are
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big impairments against asset values.” There has been a big decline in passenger numbers and car
traffic in Greece over the past two years, he said, and some services have been withdrawn, although the main routes are still in place – on the Adriatic and key Greek domestic routes. Meanwhile, “the size of the Greek ferry fleet has been shrinking for several years, although there has been some fleet modernisation. In 2001 there were 125 ships, now there are just 62. But for most routes the market does not sustain operations.” During the nine years to 2012, passenger numbers fell by 12 per
cent on Greek routes and 34 per cent on the Adriatic while car traffic reduced by 24 per cent on Greek routes and 35 per cent across the Adriatic. Truck traffic has been hit less severely but still declined, by 1 per cent on Greek routes and 3 per cent on the Adriatic trade. Operating profits for the market overall have been locked in negative territory for the last three years and it looks as though 2013 will be the same. Turnover is also shrinking in the Adriatic and domestic trades. Net income has been negative each year since 2008, with particularly big losses in 2010-2012 totalling just over €700 million for the listed operators and Hellenic Seaways. Companies have been unable to repay debt since the end of 2009. Mr Dimitriades outlined in more detail some of the problems faced by the leading ferry companies. Minoan Lines withdrew from Patra-Venice route and has chartered out its high speed ferries. It is awaiting approval from banks regarding loan waivers. Anek Lines has an outstanding €45.5 million arbitration against Minoan due to the latter’s inability to pay for the acquisition of a 33.35 per cent stake in Hellenic Seaways. “The outcome is crucial for the whole Greek ferry market,” he commented. Attica Group has modernised its fleet, but is engaged in debt
restructuring and has raised funds through vessel sales. Last year it took delivery of the newbuild high speed ferry Blue Star Patmos, costing €70 million, and sold the Superfast VI for €54 million. Nel Lines reached agreement with creditors to reduce debt and repayments. It chartered out two high speed ferries. “The ferry companies are suffering from the Greek economic crisis,” said Mr Dimitriades. “There will be further fleet shrinkage, weak financial results, and financial restructuring will be tested. There is a need for further reductions in operating costs and to seek new liquidity. Services need to be rationalised, with slower speeds, and reduced deployment of high speed ferries.” A new law covering Greek ferry transportation passed this year is expected to provide some relief, but it includes cutting crew costs and unions are strongly opposed. It allows operators greater flexibility in setting the composition of crews and to reduce crews in winter. It also includes other operational aspects giving some flexibility to change service levels and vessel deployments. Speaking to Passenger Ship Technology, Mr Dimitriadis said:
“Many Greek routes are not profitable, the profitable high season has got shorter but island routes are vital links. The government is unable to offer further subsidies and subsidy has reduced by 25 per cent. The only approach is through regulation and easing the burden to enable companies to reduce costs, but there are no easy answers.” PST
Passenger Ship Technology I 2nd Quarter 2013 I 71
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