Passenger Vessels Steering a Course Through Testing Waters
The head of global trade association Interferry reflects on the unprecedented challenges of 2020 and those ahead—but makes a case for cautious optimism.
What a difference a year makes…
In this column last January, I was hailing the worldwide ferry industry’s exceptional growth in 2019—marked by soaring tourist traffic and a host of newbuild orders—and eagerly anticipating further advances in 2020. None of us could have known that within a matter of weeks, all expectations were to be upturned by a global crisis of unimaginable scale.
The COVID-19 pandemic continues to take its toll on lives and livelihoods throughout society. Within the ferry community alone, the economic impact of travel restrictions has already seen income reduced by billions of dollars. That traditional seasonal greeting, “wishing you a healthy and prosperous New Year,” could hardly come at a more appropriate and heartfelt time.
Prospects for health and wealth in the immediate future are anyone’s guess right now, but there is at least one good reason to suggest that we may have turned a crucial corner. Several vaccines have now been licensed as safe and effective by various administrations around the world. From a ferry perspective, the gathering pace of inoculation programs gives us legitimate hope of an economic recovery in the second half of the year if we can get back to something like a normal summer vacation season.
Last summer was anything but normal due to lockdown measures that largely restricted ferry and other travel options to staycation bookings. To some extent this wasn’t a bad thing if it now attracts a wider customer base to the short-haul, safer environment benefits of ferry travel as opposed to long-haul alternatives. However, on international routes where limited ferry travel caused a drastic drop in summer passenger revenue, it was once again illustrated that leisure travel during the peak period is absolutely key to the profitability of ferry services.
This was especially highlighted among multipurpose operators who depend on this seasonal revenue to support their year-round freight services and to offset the cost of emptier passenger decks over the winter. Interestingly, a number of these operators have reported significant increases in freight volumes over the past year, largely due to maintaining lifeline services—despite mounting losses—to deliver essential goods during the pandemic.
Interferry itself was directly affected by the crisis. Our 2020 conference planned for Hobart, Australia, which was to have been our 45th annual event, had to be canceled as yet another COVID-19 casualty. The vaccine breakthrough encourages us to believe that this year’s gathering can take place as scheduled in Santander, Spain, in October. In these unprecedented times, the meeting of minds among hundreds of industry colleagues would more than ever provide a vital platform for the knowledge-sharing and networking elements of our mission.
As I hope you know, a major aspect of the association’s work is representing our members on regulatory affairs, notably though consultative status at the International Maritime Organization (IMO), the United Nations authority dedicated to shipping’s environmental and safety issues. During the pandemic, virtual meetings have replaced face-to-face sessions to ensure this fundamental activity continues.
Currently our main focus is on the IMO proposal to reduce greenhouse gas emissions from existing vessels under the so-called Energy Efficiency Existing Ships Index (EEXI). The pace of work involved is not far short of alarming, because individual ships must meet new short-term measures due in force in 2023—or lose their license to operate. In addition, once ships have been recertified, they must then conform to a continuous improvement plan under an operational efficiency regime called the Carbon Intensity Indicator (CII).
The short-term measures were agreed in principle by the IMO’s Marine Environment Protection Committee (MEPC) in November and are set for final approval at the committee’s next meeting in June. They are an initial step towards the 2030 target of a 40% improvement compared with 2008 values. In their proposed form, the measures will prove extremely challenging for ferries because the main EEXI compliance option is power limitation. Deepsea ships can feasibly limit their installed power to reduce speed and thereby meet the ‘average performance’ required of each shipping sector. But this option does not marry with the diversity of ferry designs and services, which demand sector-specific solutions to achieve operational flexibility.
Interferry responded to the proposals by launching a survey among members to collate energy related data from each of their ships. The data will be examined against the EEXI formula to see if their ships can comply with the measures due in 2023. If not, we will still have some time to draw up realistic adjustments for ferries before the formula is approved at this June’s MEPC session. Once we have resolved the EEXI technical requirements, we then need to work on the operational aspects covered under the CII. Overall, our aim is that the regulations incentivize and reward our members for their efforts on energy efficiency—including the use of greener fuels and shore power—and acknowledge every kilogram of reduced CO2 emissions.
The data feedback has been comprehensive and we are now close to finalizing the study. Members are intensely aware of the enormous savings in pain and money that Interferry’s lobbying stands to gain by preventing numerous ships from being forced out of service just two years from now. In such a context, it is not surprising that our membership tally of 260 operators and suppliers in 40 countries has held firm despite the financial ravages of COVID-19. I hasten to add that Interferry represents all ferry interests whether or not they are members, but those who are part of our family clearly see the modest fee as a proactive investment in their future. Through thick and thin, it’s good to know that members truly embrace our belief that we are stronger together.