P&O Ferries is on course for record results next year, despite disruption caused by workers angry at the sale of rival MyFerryLink and the migrant issue in Calais.
The company attracted record freight traffic in July as customers switched from Le Shuttle and then handled more than a million leisure passengers in August, its best single month since 2003.
P&O Ferries chief executive, Helen Deeble, told the Times: “The last few months have been very challenging, but 2015 has also been a large step forward for us.
“We are back at pre-recession levels, though we took a big hit financially in June because of the Calais closure.
“The last year of record volumes was 2003,” she added. “We take another big step up in 2016 and expect a record year in terms of volumes and financially.”
Intervention by the Competition and Markets Authority radically changed the economics of the short sea crossing after it ordered Eurotunnel, which claims 60% of the cross-channel car market, to stop running its two-vessel MyFerryLink operations.
While that took out one of the three competing ferry operators, the two vessels were acquired by P&O Ferries’ other rival, DFDS Seaways, which put the two vessels into dry dock for refurbishment.
That took a large chunk of cross-Channel capacity out of the market, helping P&O Ferries’ particularly strong end to the summer.
The disappearance of a rival also means that P&O has been able to raise freight rates this autumn in an attempt to claw back losses from the financial slowdown and MyFerryLink’s competition.
Although the CMA’s contention that reducing competition is better for consumers has been questioned in some quarters, Deeble said that it was correct because it had taken subsidised services out of the market.
MyFerryLink and its pricing structure, was being subsidised by the financial strength of the Eurotunnel sub-sea rail operations, she argued.
Before that, the MyFerryLink vessels had been operated by the loss-making SeaFrance, which was being bankrolled by the French government.
“It reduced freight rates,” she said. “It meant [customers] were not paying the right rates. It was a bonanza [for hauliers] because they were not paying normal commercial rates.”
The Dover-Calais run accounts for about £350 million of P&O Ferries’ £1 billion-a-year turnover, which also includes £250 million from freight traffic between Hull and Rotterdam and Zeebrugge, ferries between Liverpool and Dublin and links between Northern Ireland and the west of Scotland. The other £400 million comes from the Ferrymasters logistics business.
“An acceptable return would be the sort of margins we were making between 2006 and 2008 of about 5% to 6% cent,” Deeble told the newspaper. “We are currently making a small return and that is not enough to invest.”
Freight comprises 65% of P&O’s business and two million units a year is growing at 8% this year and is projected to increase by between 4% and 5% a year.
The leisure passenger market - more skewed to the faster tunnel link - is expected to grow at between 1% and 2% from its present nine million a year.
P&O has recommissioned one mothballed freighter, but within five years, some of the P&O fleet will be up for retirement.
The company plans to replace older vessels due for retirement within five years with triple-decker super-ferries, which will add 50% more capacity per ship - space for 150 trucks, rather than 100.
P&O brought its two existing super-ferries, Spirit of Britain and Spirit of France, into the fleet five years ago at a cost of €300 million.
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