Shipping and ferry operations

The strategy remains

The shipping industry is volatile by nature. This is how it has always been, and this is how it still appears to be even in the globalised and well-functioning free market in which we currently find ourselves.

Stena Germanica being converted to run on methanol at the Remontowa shipyard in the Polish port of Gdansk.

As the world becomes integrated, both globally and regionally, trade flows are increasing as over 90% of the goods we consume continue to go by sea. In the last 20 years, both global and intra-European demand for maritime transport has grown almost twice as quickly as the underlying GDP growth. The trend was maintained in 2015 in the shipping sectors in which Stena operates and we expect this to continue in 2016.

Our main challenge is the structural oversupply of vessels, which is largely the result of excess capacity in the shipbuilding industry in Asia. With both established operators and new investors continuing to show a strong desire to participate in what is possibly one of the strongest macro trends of our time, these shipyards continue to have healthy order books. However, the different segments of shipping have widely varying market prospects.

Sustainable exposure

Stena’s strategy has been to have a diversified portfolio, with the individual parts intended to be partly mutually counter-cyclical. We place a considerable focus on maintaining this strategy and ensuring that the overall exposure is sustainable, through the different cycles of several sectors.
We can conclude that the very good offshore market we have benefited from in recent years is in a downward trajectory and will not recover until older units are disposed off. On the other hand, the low price of oil has meant that trading in oil, both crude oil and oil products, has increased in tonne-miles. This has resulted in a strong tanker market, despite a relatively large order book at newbuilding yards. In 2015, Stena Bulk reported one of its strongest performances in ship operation since the company was founded. This strong trend has continued in 2016. The low price of oil has enabled Stena Line and Stena RoRo’s ferry operations to achieve cost reductions, which in turn have particularly benefited the customers of these companies – mainly hauliers and other vessel operators.
In combination with the underlying increase in demand, a limited order book for new vessels and successful marketing work, Ferry Operations have also started to deliver historically strong results. This trend is expected to continue in the coming years. Developments in marine services are particularly pleasing, with the company Northern Marine Group expanding with several new customers and contracts in the technologically advanced gas area. Much of the success has been in the competitive Chinese market.
It is of great strategic importance to us to establish a strong foothold in the world’s largest shipbuilding nation and in the region that is driving global demand for maritime transport and logistics services.

Increased customer understanding

In 2016, a great deal of focus will be placed on developing the company’s ability to fully utilise the opportunities offered by digitalisation. Based on Stena Line’s success in recent years, with approx. 75% of our customer interaction in both freight and passenger traffic being fully automated, we can now focus on our production procedures in all segments. Basing decision-making on empirical data, understanding customers and being able to make decisions quickly are characteristics on which Stena is historically is built. To reinforce these forms of behaviour by using technology is both exciting and transformative. In our relatively conservative industry, we are developing a leading position.

Methanol and battery power

With constantly increasing trade volumes as an effect of the ongoing globalisation, we are seeing an increase in shipping’s overall emissions into the environment. Shipping remains the most environmentally efficient way to transport goods, but we have potential for improvement both as an individual shipping company and an industry. Reducing the energy consumption of our transport is still our main tool. I am pleasantly surprised at our ability to annually exceed our long-term goal of an annual reduction of 2.5% in energy consumption. From the perspective of energy consumption per nautical mile, for example, Stena Line’s consumption declined by 3.8% compared with the previous year. This shows that new technology and a persistent focus produce results. A fully loaded suezmax tanker doing 14 knots currently has less than half the fuel consumption it had 15 years ago. Development of methanol as a fuel is proceeding according to plan, although economic conditions have become more challenging with the lower price of oil. However, from an emissions perspective, it remains a very interesting alternative. We will be taking several steps towards battery power for large ferries during 2016. This is an initiative Stena Teknik has been pursuing for a long time and Stena has been among the industry leaders in this area. We are now endeavouring to give these technical solutions a long-term context that is being developed in each operating company’s sustainability policy. With clear goals, it is our ambition for the external environment, our customers and legislators to have better understanding of shipping’s opportunities to contribute to the building of sustainable communities and sustainable globalisation.

Carl-Johan Hagman


Stena Germanica, operating the route Göteborg-Kiel, is the first ferry in the world to run on methanol.
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