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20 RO-ro shipping
DFDS annual report 2009
Markets, activities and customers
Ro-Ro Shipping’s activities comprise the operation of route networks
on the North Sea and the southern half of the Baltic Sea. On
the North Sea, primarily the flow of goods between Scandinavia
and Great Britain/the Continent, as well as between the Continent
and Great Britain, are serviced. In the Baltic Sea, services are mainly
focused on the flow of goods between Scandinavia and the Continent
on the one hand, and Russia, the Baltic States and the CIS countries
on the other.
The network includes ro-ro and ro-pax routes, the latter primarily
in the Baltic, where the market for unaccompanied trailers is larger
than on the North Sea.
International haulage and forwarding companies account for approximately
56 % of total volumes, manufacturers of heavy industrial
goods approximately 44 %. This split remained unchanged from 2008.
The most important industrial target customer groups are the car
industry and producers of heavy goods and plant equipment requiring
development of tailor-made logistics systems, including investment in
specialised transport equipment, IT solutions, dedicated warehouses
and, in some cases, deployment of larger tonnage. Industrial logistics
contracts are therefore long-term with DFDS operating as part of the
customer’s supply chain.
Market trends
The Northern European ro-ro freight market as a whole declined by
about 10 % in 2009 as a result of the recession, which began in late
2008. The total decline in DFDS’ primary markets in the southern
Baltic Sea and the North Sea was around 15 %. The largest decrease
was experienced in H1 2009, particularly Q1. The market stabilised
in H2, and in Q4 volumes reached a level at or above Q4 2008 in
several market areas.
The low level of activity created overcapacity in most companies
in the ro-ro sector, as well as among container and trailer operators,
impacting rate levels negatively. The competitive situation, especially
in the Baltic Sea, was characterised by overcapacity in the land-based
transport sector. However, in response to the market conditions,
several shipping companies adapted capacity by closing routes and by
chartering out and laying up tonnage.
Ro-Ro Shipping’s success criteria
The most important success criteria for Ro-Ro Shipping are reliability
and frequency and a schedule adapted to customers’ requirements.
Other significant factors include adjusting capacity to reflect market
trends, and reducing clients’ overall transport time on an ongoing basis,
which places demands on tonnage speed and turnaround time in port.
Fleet modernisation and adaptation
The fleet was further modernised in 2009 following the deployment
of two newer ro-ro ships on the route between Rotterdam and
Immingham at the start of the year, and a ro-pax newbuilding on the
route between Kiel and Klaipeda in May 2009. Customer service has
been improved on both routes through increased reliability, frequency
and capacity.
In addition, the third in a series of four chartered ro-ro newbuildings
was delivered in mid-2009. By the end of 2009, three older
chartered ro-ro ships had been returned, and the fleet’s oldest ro-ro
ship was sold in early 2010.
In mid-2009, three ro-ro ships sailing between Sweden and England
were extended, which reduces operating costs and environmental
impact per unit, and adds capacity to the market.
The renewal of tonnage in 2008 and 2009 led to savings in terms
of both operating costs, including bunker consumption, and improved
operational reliability, strengthening the route network’s long-term
competitiveness. It is therefore currently estimated that no tonnage
investments are required within the next couple of years.
The tonnage market
The global decline in activity generated overcapacity in the market for
ro-ro and ro-pax tonnage, particularly for older and smaller tonnage.
Older ships still constitute a disproportionately large share of global
ro-ro tonnage, and rates for newer and larger tonnage are therefore
expected to remain relatively stable over the coming years. This is also
based on a moderate influx of new tonnage, as capacity on orders
constituted approximately 15 % of global capacity at the end of 2009.
In addition, the number of ships scrapped is expected to rise in 2010
and new orders very limited.
Ro-Ro Shipping 2008 2009
DKK miLLION Q1 Q2 Q3 Q4 FULL YEAR Q1 Q2 Q3 Q4 FULL YEAR
Revenue 926 997 1,009 867 3,799 669 736 798 794 2,997
Operating profit before depreciation
(EBITDA) 186 217 207 174 784 119 135 132 133 519
Profit/loss on disposal of tangible assets 0 7 3 2 12 0 0 0 0 0
Depreciation -62 -65 -66 -53 -246 -63 -69 -73 -82 -287
Operating profit (EBIT) 124 159 144 123 550 56 66 59 51 232
Operating profit margin (EBIT), % 13.4 15.9 14.3 14.2 14.5 8.4 9.0 7.4 6.4 7.7
Invested capital, average 4,596 4,645 4,626 4,491 4,560 4,510 4,916 5,256 5,320 4.965
Return on invested capital (ROIC) p.a., % 10.8 11.9 12.2 10.7 11.7 4.7 5.0 4.4 3.6 4.4
Lanemetres, '000 2,605 2,663 2,474 2,269 10,017 2,139 2,274 2,327 2,457 9,197
Passengers (Baltic Sea), '000 45 58 81 40 224 63 94 129 77 363