Breaking records against all odds

In recent years there have been a great deal of challenges for those within the European ferry and freight industry, largely due to the 2008 crash, the sluggish growth in the EU area, the EU sanctions towards Russia and the Helsinkiintroduction of the new Sulphur Directive inside SECA area. However, some companies have managed to weather this and come out on the other side in a good position. Finnlines PLC is one of those companies – it is a leading shipping operator of ro-ro and passenger services in the Baltic Sea and the North Sea. After these tough times, it has defended and even improved its market position and has managed to deliver best results ever in the company history – this has been due to shrewd leadership, key efficiency measures, and major investments that have all worked towards ensuring the company’s success and longevity.

The company is a part of the Grimaldi Group, one of the world’s largest operators of ro-ro vessels, and the largest operator of the motorways in the sea in Europe for both passengers and freight. This affiliation enables Finnlines to offer liner services to and from any destination in the Mediterranean, West Africa as well as the Atlantic coast of both North and South America. The company’s sea transports are concentrated in the Baltic and the North Sea. However, Finnlines’ passenger-freight vessels also offer services from Finland to Germany and via the Åland Islands to Sweden, as well as from Sweden to Germany. In addition to sea transportation, the company provides port services in Helsinki and Turku, which are the most important seaports in Finland. With its extensive route network in the Baltic and North Sea, Finnlines forms an important and integral part of the Grimaldi Group, one of Europe’s most powerful and well-organised shipping companies.

Finnlines is made up of three business parts – there are the shipping and sea transport services, passenger services, and port operations. In the shipping and sea transport services the company derives its strong position from excellent services and a product concept tailored to its customers’ needs. Finnlines’ high frequency of departures, cargo capacity and information services contribute to flexibility, reliability and predictability to customers’ transport plans. Then there is the passenger service, and with its nine ro-pax vessels, operating between six ports in three countries, Finnlines has established its position as an important provider of passenger services in the Baltic Sea. And finally there is the port operations aspect of the company – Finnsteve companies handle the group’s port operations, and these are focused on unitised cargo services required by regular liner traffic. The port operations are based within two locations – Helsinki and Turku. Both ports offer world-class facilities and infrastructure, and provide for ro-ro services, container services, container terminal and depot services as well as export terminal services.

Finnlines modern and varied tonnage capacity comprises many vessel types that guarantee on-schedule liner traffic around the year. All 22 vessels are ice-classified and specially designed for northern conditions. In total, the company has invested over one billion euros into new builds and high quality second hand vessels throughout the past ten years – having an up-to-date fleet is essential for a promising future. This together with a strategic decision to only operate fully owned vessels clearly demonstrates the modern approach taken by Finnlines over a decade ago.

Finnlines has coupled investment with efficiency and cost saving measures. After 2008, the company went through an overhaul process in which every stone was turned over to find new ways to cut costs, gain volume and simplify corporate structures. After the plans of the CEO were implemented, the next step was consolidating the breakeven results and simplifying the Finnlines structure. Every line, every vessel, every function and every cost item was analysed to see if there was room for lowering costs and improving efficiency. Certain vessels were also sold to cut overcapacity and changes in fleet and routes increased capacity utilisation. This was done at the same time as the company took on Finnlines’ fleet’s fuel consumption, which has since decreased by almost 35 per cent due to new approaches. Finnlines’ cost saving measures also included personnel, reducing the number from 2234 in 2009 to 1588 in 2015. The result of all of these efficiency improvements was that the company now has a higher cash-flow generation that enabled the reduction of interest-bearing debt from the 2012’s EUR 879 million to EUR 533.7 million at the end of 2015.

The efficiency measures also provided a focus on environmental improvements and developments, to a large extent– in 2014, Finnlines launched a EUR 100 million Environmental Technology Investment Programme. The programme that extends to the end of 2016 has so far resulted in 33 scrubbers actively in use onboard 18 of its ships. Moreover, additional energy efficiency investments concentrating on both hull friction and propulsion upgrading have been executed on half of its fleet. In order to meet the standards dictated by the marine technology market, the CEO teamed up with the world’s three biggest scrubber manufacturers – diversifying the supply risk and shortening the lead-time for the delivery of equipment. Already in 2015 the results were clearly visible. The overall fuel consumption was further reduced by 8.4 per cent and the amount of less expensive HFO fuel consumed was more than two thirds of the overall consumption during the last quarter of that year. Without proper emission abatement technology installed onboard this would not have been possible. The impact on Finnlines’ environmental footprint is also impressive. Compared to the previous year, the company was able to reduce its CO2 emissions by over 75,000 tons, SOx emissions with 91 per cent and NOx emissions with almost nine per cent. The amount the company has invested in its green plan is unprecedented for Finnlines and it is a clear statement that the company would remain competitive in the Baltic shipping market.

Finnlines is clearly in a strong position going forward. It has come back from a tough period stronger than ever, with a leaner and more efficient business. It is also more apt to face the demands in the future for the shipping industry by being more environmentally friendly, streamlined, and with a young modern fleet. Finnlines has made great investments in its future – this display of forward thinking will no doubt pay dividends in the coming years.

Finnlines PLC
Investing EUR 1bn in fleet renewal
Launching EUR 100m Environmental Technology Investment Programme
Cutting costs and optimising operations