Trailers loaded and secured on a Stena Line ferry. Trailer freight on Stena Line’s various routes is a very large and important aspect of the business.

Stena Line

A MORE EFFICIENT LOGISTICS NETWORK FOR THE FUTURE

At year-end 2013, Stena Line operated 22 routes in Northern Europe with 40 ferries. Stena Line also owns five ports. The company is an important part of European trade and infrastructure. Managing this business in a cost effective, safe and environmental way is a daily challenge for our dedicated employees at sea and on land.

Market

The European recession continued in 2013, leading to widespread weakness in freight and travel. Most ferry lines in Europe are therefore using more crew members from outside Europe. Moreover, tighter environmental regulations are being introduced as planned on ship fuels in 2015, which will mean substantial cost increases for shipping in Northern Europe.

Operations 2013

Stena Line serves several different customer groups in the freight, leisure and cruise segments. In 2013, Stena Line transported 14.6 million passengers, 3 million cars and slightly over 2 million freight units. Freight volumes rose by 7% (or 15% including the new routes that were acquired).

Thanks to high-quality vessels and dedicated personnel, freight and passengers were delivered safely and efficiently.

During the year, Stena Line successfully integrated the five new Baltic routes they acquired in 2012 from Scandlines of Germany, of which it had previously been part owner of two. In the process, Stena Line established itself in the Baltic market, where freight volumes have grown strongly in recent years.

As always, the company continued its efforts to reduce the fleet’s fuel consumption. Studies and trials are being conducted with Stena Teknik on several alternative fuels for the future.

One of the chefs on board Stena Danica preparing lunch. Eight people work in the kitchen to provide our guests with a pleasant and tasty respite on their journey.

Process of change

The company improved its EBITDA during the year by nearly MSEK 300, but still reported a net loss. The result improvement was primarily due to higher volume, lower fuel prices and a reduction in administrative costs. In general, the European ferry industry has had long-term profitability problems, as has Stena Line. At the end of 2012, an action plan was formulated to improve profitability through new, integrated solutions for freight customers, value-added offerings for passengers and a lower cost base. The aim is to create sustainable profitability with local crews while maintaining high quality.

The increase in freight volumes in 2013 was a strategic milestone for Stena Line. The development of intermodal logistics solutions for basic industry is continuing in cooperation with partners in Sweden and internationally. These solutions link sea, rail and road transports to ship goods through Europe as efficiently as possible.

New travel and onboard offerings for the company’s passengers also contributed to the higher sales volumes. Stena Line is working on a review of its daily operations while systematically overseeing a total of 170 improvement projects. Simplified and cost-saving processes will also benefit customers, and by increasing customer value will ensure that we maintain high utilisation in the long term.

Automated check-in routines that was developed during the year will be implemented in all our ports in 2014. The response so far has been positive. In addition, a new online reservation system has been launched that better integrates the company’s marketing and sales. Uniform onboard menus have been created for all vessels, enabling Stena Line to coordinate purchasing routines and logistics.

Stena Line implemented a more flexible pricing strategy that has allowed to offer lower prices on low-volume departures and increase its utilisation without affecting margins on existing customers.

Because of the change in strategy, the company established a more streamlined organisation in 2013 and rationalisations was carried out both within the shore and sea organisation. This work continues in 2014. The new strategy will be fully implemented in 2015 with the aim to improve the result by over SEK 1 billion per year.

Fleet

Stena Line expanded its fleet in 2013 through the addition of three RoPax ferries to better meet the needs of its freight customers. These vessels are of standardised Visentini design, which offers increased flexibility to adjust capacity in the network when economic conditions and demand change.

CEO Comment

The strategy adopted in 2013 remains unchanged, and in 2014 the focus will still be on implem­entation. Costs will continue to drop thanks to improved routines and processes. Freight volumes have to further increase in order to raise the fleet’s utilisation. At the same time, the freight rates we charge our customers have to reflect the higher fuel costs that are the result of new environment regulations and in so-called Sulphur Emissions Control Areas (SECA).

Implementation of the strategy is leading to a consolidation of the fleet and higher utilisation on every departure and allowing Stena Line to fully capitalise on the economies of scale from one of the world’s largest ferry networks. The year’s good growth in freight operations shows that we are heading in the right direction.

Carl-Johan Hagman

CEO Stena Line

Next in Annual Review

Stena Drilling

EXTENDED CONTRACTS AND TWO RIGS ORDERED