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From the News Desk: Ro-ro sector facing double whammy

The economic downturn as a result of the pandemic combined with recent safety issues contribute to a stormy time for ferries and car carriers

Car carriers and ferry operators have been among the hardest hit segments of the maritime industry as a result of the coronavirus backdrop, while a spate of recent fires on ships have highlighted serious safety concerns

CAR sales are a key indicator of the health of an economy and with the steep fall in demand for vehicles seen in almost every country since the start of the coronavirus pandemic in the first quarter of the year, it is unsurprising that the effects of lockdowns and mass unemployment have been keenly felt by carriers.

With many production facilities closed during the lockdown period and demand in Europe’s biggest markets particularly badly affected, global car sales are predicted to fall by about a fifth in 2020, which has left many shipowners specialising in car transportation in crisis mode.

Similarly, with travel restrictions and movement between countries severely impeded by coronavirus containment measures, some ferry operators have needed to rely on controversial state aid packages and severe cost cutting to stay afloat. 

According to data compiled by Lloyd’s List Intelligence for its latest Shipbuilding Outlook, global port calls by ferries dropped alarmingly from week 11 of the current year to about 9,000 weekly through to week 20, some 40% down on an average of 15,000 during the same period in 2019.

Looking at individual countries, in the UK ro-ro traffic in the first quarter of the year fell 12.4%, while unaccompanied freight volumes were down 9%, as the car carrier trade was hit. 

Citing data from the UK Department for Transport, the British Ports Association said ferry passenger travel between the UK and the Republic of Ireland fell 7.2% in the first quarter of the year, while travel between the UK and mainland Europe fell 25.8% as travel curbs started to take effect.

In Sweden, which did not impose the same level of restrictions as the rest of Europe, there are a few glimmers of hope with vehicle exports from Gothenburg, which ships large numbers of Volvo cars, increasing since the end of April although imports of vehicles are still some way behind.

Car exports from Japan, meanwhile, have fallen by 64% compared with last year, which is nearly as much as the fall recorded in the wake of the 2011 earthquake and tsunami that shut down the northeast part of the country.

This month, ferry operators have gradually started to increase services again as borders re-open and the tourism trade resumes, although there has been some confusion over non-aligned rules in different countries, which has hindered progress.

However, Danish car and ferry operator DFDS, one of the beneficiaries of a UK state subsidy for companies battling the coronavirus pandemic, announced on Monday it will cut 650 jobs in order for it to adapt to the ‘new market conditions’ of a severe drop in demand.

It plans to combine some sales operations, focus its ferry division on freight transport, optimise port terminal and haulage operations, and other structural changes amid “a downsizing of various functions”.

Chief executive Torben Carlsen told Lloyd’s List the job cuts were split roughly 60/40 between sea- and land-based positions, and many related to passenger services.

He said the UK’s ferry aid package “ended up not supporting our Channel service” because of the way it was set up. He said he would have liked to see the scheme tailored for ro-pax carriers and hoped “there will be some sharing of the losses”.

Spate of fires

Meanwhile, a series of fires on car carriers in recent weeks has led Italian shipowner Emanuele Grimaldi to reissue calls for tougher safeguards for ro-ro and container cargoes.

Speaking to the Lloyd’s List Podcast last week, he revealed that the fire on the 67,000 dwt Cruise Bonaria on June 18 was caused by a faulty reefer plug.

Despite repeated investigations, warnings and recommendations, the persistent nature of recurring casualties linked to car batteries, misdeclared cargo and electrical faults are not being reduced. “There must be new rules,” Mr Grimaldi said.

“We are fighting and we are investing [in new safety systems],” Mr Grimaldi explained, but pointed out that this is a long-running industry issue.

Lloyd’s List Intelligence’s Casualty Reporting service reported a fire breaking out on the Cruise Bonaria’s car deck as the vessel entered the Gulf of Olbia earlier this month. Black smoke was reported to be coming from a truck on the vessel’s car deck. Fire crews and a tug used water cannon to tackle the blaze and the ship was escorted to berth.

The incident was the latest in a spate of recent car fires that have highlighted concerns within the sector.

The day before, an incident led to a fire on the K Line vessel Polaris Highway at Zeebrugge, Belgium, causing minor damage to the vessel, while a fire and explosion on the 12,250 dwt Höegh Xiamen in the port of Jacksonville, Florida, on June 4 took nearly a week to bring under control.

Mr Grimaldi’s concerns are not new. He had previously called for tightened safeguards last year following fires on two vessels, the ro-ro Grande America, which was lost in the Bay of Biscay and Grande Europa, another ro-ro to suffer from a fire breaking out in the cars it was carrying.

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