gilf_uk

http://www.manxradio.com/newsread.aspx?id=48436 Packet boss says 'sorry' to supermarket chain The Steam Packet has issued an apology to Shoprite over comments made by the ferry company's chief executive, Mark Woodward. In statement, Mr Woodward describes the supermarket chain as 'a valuable and committed customer of the Steam Packet Company'. And he apologises for any misleading impression given that Shoprite was not committed to supporting the Island's economy. The apology follows a comment in the local press in which Mr Woodward quoted Shoprite's motto and questioned whether the firm was really 'Manx to the Max', which the supermarket chain objected to strongly. Shoprite says it is doing business with both the Packet and its freight competitor Mezeron, using seven different hauliers to bring goods to the Island. The statement concludes by saying the Steam Packet recognises 'the significant contribution Shoprite makes to the Island's economy', by employing around 600 Manx workers and supporting Manx domiciled businesses. Oh dear, it would seem that MW is really on course to win back that freight he lost. First, he tells them he has been overcharging them to pay for passenger services, then he questions their ethics. Shall we start taking bets now on how long he will last? #PR-FAIL.

All I have to say is - LIAR LIAR PANTS ON FIRE. How can he say the launch if competition was unexpected? "The Committee also seemed to imply that the Company does not face freight competition. In fact, we compete with both Mezeron and Ramsey Steamship Company for freight shipments. In 1995, the Steam Packet Company had around 70 per cent of market share by weight, and our competitors had 30 per cent of the market. If we were not competitive on price, our market share would be decreasing: in reality, our market share has increased to 80 per cent and our competitors have also chosen to ship some of their business, using our services." Mark Woodward, Steam Packet Chief Executive Tynwald Select Committee on the Isle of Man Steam Packet Company Douglas, Monday 3rd March 2008

Eh?

The SPCo is impaired due to it vast loans, and it now looks like the loss of the freight will signicantly affect it's ability to service it's debt. So what will happen? Well it may well go into administration. It has £20m of assets and c£180m in loans, and a UA which has been previously valued at c£100m (select comittee report) now valued at significantly less. So the company becomes unable to service it's debt and enters administration - the bank sells the assets of the company to recoup some of it's loss, along with the UA agreement, either as a job lot (pre-packaged) or someone buys the assets and starts again, but without the level of borrowing that it once had. The company itself is and has for the majority been profitable, it will still be profitable after the loss of the freight contracts, if you exclude the need to service the bank loans. So the bank will have a debt debtor, and may only recoup 10% minimum of it's loan. The effect on the Isle of Man? Possibly a little disruption while the market sorts itself out, but another operator (whether an external company or a reincarnation of SPCo) will step into the breach, using the same skeleton of the steam packet - we may even have continous service. The SPCo shouldn't be allowed to renegotiate the UA just because it has now found a risk that it had not identified previously - they made a business decision to sign the UA, I'm sure if we went back to negotiate it because the IoM Govt had identified a risk they would have laughed us out of the room. MW & SPCo is on edge and threatening everyone with cuts in service and cuts in jobs, as it's his job and his company on the line - nothing else. If SPCo folds, he will almost certainly be out of a job, but there is a demand for ferry services from the IoM, therefore there will be a supply.

I don't think thats quite right - Richard Branson wanted to buy Concorde and relaunch it recognising that, soon enough, people would return to what was a very popular service. But BA refused to sell them the planes, and , alas, the end on an era. ETA: http://news.bbc.co.uk/1/hi/uk_politics/3005705.stm

You really cannot compare the dover/calais route with the Isle of Man route. The sheer volume of customers allows you to run an economy of scale - just look at what happens when there is any small problem with either the ferries or the Chunnel - operation stack (http://en.wikipedia.org/wiki/Operation_Stack). The operators there can afford to make less per sailing as they make up for it overall in the number of sailings they do each day, and it is the same with the channel tunnel. There has also been a mentioned of DFDS and also that the SPCo 30% profit margin is 3 times the industry standard. Lets have a look at DFDS figures for 2009 - Ro-Ro Roll on-roll off: Ship type where cargo is driven on and off - most comparable to SPCo operation - but I have included other types of shipping to give an indication of the margins/ profits on these: 2009: Inc Profit Mgn Ro-Ro Shipping €403 €70 17% Container Shipping €157 €1 6% Passenger Shipping €218 €42 19% Terminal Services €75 €-2 -2.6% Trailer Services €104 €5 4.8% 2008 was pretty much the same as 2009, and I expect that was due to the economic situation. 2007: Inc Profit Mgn Ro-Ro Shipping €494 €120 24% Container Shipping €220 €20 9% Passenger Shipping €259 €33 12% Terminal Services €94 €2 2% Trailer Services €132 €8 6% (http://dfds.com/english/investorrelations/financial%20reports%20and%20presentations/annualreports/annual) I would really like to see the SPCo figures, broken down between freight and non-freight, and also added-value services. Also, do we know where the 36% figures comes from?

I think you'll find, it was SPCo going direct to Tesco and Shoprite in the first instance that landed them in this mess!

Are you going to interview anyone from the counter side of the argument ? So far only the govt/UA/McQuarrie side seems to represented. Is it just that the other sides are unavailable ? Equally - what about saying - "you know well actually is this really anything like Manx Line vs IOMSPCo 30 years ago ?" and then noting all some of the very obvious significant differences. Like the fact that in those days there was no UA. Like the fact that in those days the passenger side was more significant and there was still some tourism. Like the fact that in those days there was very very much less container traffic. (In those days crates of fruit and veg used to still be brought onto the boats by porters). Lots of people have been arguing for a long time that the UA was not a sustainable model. What about exploring that ? What about exploring the question of whether it really makes sense for freight to subsidise passenger services ? I wonder if he has asked for an interview, perhaps, but if I was them I wouldn't be giving one. Why would they? They don't need to get their point across, and MW & SPCo is digging a big enough hole for themselves, and the Island has a lot of anti-SPCo sentiment anyway!

I'm guessing that is the Company's standard response: The OFT investigation into our company.... adds pressure to our ability to deliver a frequent service. The loss of our freight contract.... adds pressure to our ability to deliver a frequent service. It would appear to me that any inference in the status-quo with the SPCo means the MW & Co roll out these thinly veiled threats.

I understand that Macquarie sold it to the Macquarie Bank Pension Trustees, or some similar Pension Fund, but that the investment continues to be managed by MacQuarie - i'll see if I can find the press statement... ETA: Didn't have to go far: http://www.steam-packet.com/SteamPacket/About-Us/ ETFA: And this is the background: http://www.iomtoday.co.im/news/business/mhks_debate_subject_of_steam_packet_ownership_1_1791555

The above is interesting and no-one else has picked up on it, so I will. If MW has made a commercial decision to go after one of SPCo's customers contracts directly, in the name of 'competition', and it has subsequently backfired, they cannot suddenly go to the government cap in hand, because they don't like the fall out (i.e. competition). If the above is true, SPCo is completely to blame for the introduction of competition as it has itself created the demand for it from customers who would have previously and for sometime, remained loyal. And all this worry about what is going to happen with SPCo, if jobs will be lost and passenger services suffer - there is and there will continue to be a demand for a ferry service to and from the Isle of Man. If SPCo can't do it, someone else will. People will not pay exhorbanent rates for ferry travel, therefore in order to make it viable they will offer similar fares to the SPCo, just as airlines offer cheaper fare in advance and more expensive fares at short notice. Thinly veiled threats from the SPCo just don't wash. In the year to date at September 2010, 545,385 passengers and 150,273 vehicles had travelled through Douglas harbour. I can't see anyone passing up the opportunity to make a profit on that, be it 10, 20 or 30 %. (http://www.gov.im/lib/news/transport/harbours/douglasharbourtr42.xml)