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UK shortsea capacity on the rise

Date: 19/09/2016

SHORTSEA ro-ro and lo-lo freight capacity serving the UK market has continued its steady recovery from the downturn it suffered from 2007 and, as of May 2016, stood 3.8% up on where it had been at the beginning of 2014.

Total market capacity now stands at 15.8m units, according to the latest UK Short Sea Freight RoRo and LoLo Capacity Analysis & Report from PRB Associates.

Ro-ro accounts for 11.3m feu, lo-lo 2.4m feu and the Channel Tunnel 2.1m feu. While there has been an increase in capacity across all modes since January 2014, lo-lo capacity witnessed the largest rise of 14%, followed by the Channel Tunnel at 9% and ro-ro capacity increasing by just 1%.

Nevertheless, ro-ro delivers 72% of overall market capacity, with the lo-lo mode and Channel Tunnel shuttle and through train services contributing 15% and 13% respectively.

The cross-Channel market employs 46% of total capacity, up from 44% at the beginning of 2014, while capacity employed on the UK/near-Continent market now amounts to 30% of the total.

Capacity on the Irish Sea has also risen slightly, but the Baltic market has remained largely flat and there has been a reduction in capacity on Scandinavian services.

“The two smallest market sectors for direct ro-ro ferry and container service links with the UK are Scandinavia and the Baltic and in both of these sectors, operators have struggled to maintain capacity, let alone grow,” the report says.

“In the Scandinavian market in particular, there has been a rationalisation in service provision and a further concentration on the port of Immingham for Danish, Norwegian and Swedish service connections.”

According to report author Peter Baker, the current shortfall in the Scandinavian and Baltic markets is being replaced by indirect ‘land-bridge’ and transhipment services.

“On longer routes it is harder to maintain a daily service schedule,” Mr Baker said. “If you have a daily direct service, you would possibly attract the traffic, but it is a big commitment in vessels to do that.”

The growth on the cross-Channel market is being driven by the supply chain, Mr Baker said. “Buyers and retailers in the UK want goods delivered at a certain time on a certain day and the best way of ensuring that is to use the accompanied mode of transport. It is easier to add to capacity on the freight shuttle services by utilising all of their available shuttles and adding the maximum number of round trips in a day. DFDS and P&O Ferries have a similar degree of flexibility on the Dover- Calais services.”

For capacity to grow on longer routes, there needs to be a change in supply chain thinking, Mr Baker said. “It would take the buyers working with the trailer operators and the ferry operators to come up with a solution. But big retailers are not forgiving for late arrivals."

As elsewhere in container shipping, shortsea operations have seen a wave of consolidation. Despite the number of route connections rising to 153 in 2016 from 150 in 2014, the number of operators active in the market has fallen from 38 in 2014, and 44 in 2010, to just 32 in 2016.

“There has been some significant rationalisation among service operators since 2010 but at the same time the number of routes served has increased,” Mr Baker said. “Whether it has reached the point where is impossible to consolidate any more is unclear but it is not far off.”

 
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