Shipping and Ferries /

Short-term focus and long-term perseverance

Shipping is a cyclical industry and Stena AB is a company with a broad portfolio of activities. Stena Line is beginning to deliver acceptable results and is expected to do so in the years ahead, thus compensating for the weaker financial performance expected from Stena Drilling.

Between these two areas, we are exposed through the tanker products, crude oil and gas, which each have their own cycles.

Regardless of where each business area is in the cycle, we must ensure we have the best operation, both in terms of customer value and quality. It is therefore particularly pleasing that Stena Bulk was able to report zero LTI1) in 2016, as a result of a constant focus on safety and quality.

High efficiency in a strong economy

Stena Line has been successful during the year, due to its focus on increased utilisation of the cargo deck and improved pricing strategies. More customer segments are being served by more differentiated freight rates while the filling ratio is increasing. To achieve an average filling ratio of 70% is an absolute target for the next three years.

In 2017, we are seeing the full effect of Stena Line’s 2016 reorganisation, which means that responsibility for results has been clarified. Full commercial ownership of the business is close to the customer and production. Efforts to reduce production costs through standardised processes are in progress and will be facilitated by the organisational changes that have been made.

Stena RoRo has also benefited from a stronger economy, with an excellent profit from the sale of vessels.

The tanker segment is still characterised by high volatility, partly due to global shipbuilding capacity and a high risk appetite among many investors. This affects shipping in general and is particularly intensified in the Suezmax segment. Stena’s MR vessels, particularly the newly delivered IMOIIMAX ­vessels, are performing strongly in the Stena Weco system. The short-term LNG market has been under pressure, but with the expected increase in demand over the next few years, the outlook is gradually improving.

An important development in 2016 was the expansion of maritime services in Northern Maritime Group. The Group’s acquisition of Clyde Group has strengthened its product portfolio and it is now able to offer external and internal customers marine services within training, travel and recruitment.

Sustainability strengthens the offering

The rapid technological development in sustainability and digitalisation affects all operations.

Stena Line’s project on running Stena Germanica on methanol has been technically successful so far. The evaluation is continuing and the focus is on creating demand to ensure production of bio-methanol is relevant in terms of ­volume. Methanol dramatically reduces emissions into the air compared with previous fuel. Emissions of sulphur oxides and particulate matter are reduced by 90% and emissions of ­nitrogen oxides by 60%.

In the long term, battery power is a feasible way of managing the carbon challenge. During 2017/2018, batteries will be installed on Stena Jutlandica to replace three of the four auxiliary engines. In the medium term, the aim is for the ferries to run on battery power in environments close to cities. In Stena Jutlandica’s case, this would mean zero emissions between Vinga and Masthugget. With similar solutions on other lines, we are showing that shipping plays a vital role in creating sustainable cities and communities.

“We take advantage of developments in sustainability and digitalisation.”

A number of other projects primarily designed to influence behaviour are being conducted within Stena Line. One project involves reducing the amount of plastic we handle onboard by half over the next three years and we are introducing complete onboard waste separation at source during 2017. We have also installed the world’s first closed-loop scrubber on Stena Britannica with good results. This new way of ensuring that no residue is released back into the water has significant margin benefits and will be evaluated carefully.

In addition to seeking new fuels that will ensure long-term competitiveness, we work continuously on everyday rationalisation. The internal target of a reduction of 2.5% per tonne-mile was achieved this year. A fully loaded Suezmax tanker doing 14 knots currently has less than half the fuel consumption it had 15 years ago. This is the result of intensive work by captains, masters, project groups, Stena Teknik and onshore operators.

Digitisation brings competitiveness

Another cornerstone of our change work concerns quickly and effectively capitalising on the opportunities offered by technological development. This is essentially an issue of attitude and organisation, which is why initiatives such as Stena Challenge, Stena Turntable Mentoring and Stena Digital Transformation Lab are key to our continuation as a business-oriented and entrepreneurial company. We use databases and algorithms to optimise vessel operation for Stena Bulk, Stena RoRo and Stena Drilling and pricing for Stena Line. Many commercial decisions are driven by empirical data these days, and this will be increasingly the case in the future.

This requires employees who can match the company’s production processes with new technology, good business acumen and transparency. Having the ability to communicate and interact in a more unstructured organisation will become increasingly important.

Shipping is cyclical, as I have already said, but our fundamental belief is that the world continues to grow and integrate. This means that maritime transport will remain important and will grow in the foreseeable future. If we are our customers’ first choice, we shall ensure that the cyclical market changes play to our advantage. Short-term focus and long-term perseverance have built Stena historically and they are also the watchwords for our future.

Carl-Johan Hagman
Head of Stena Shipping and Ferries

1) LTI stands for Lost Time Injuries, and means the time that operations are at a standstill due to accidents.