Finnlines is holding a steady course amid choppy waters
The world has entered a period of turbulence: geopolitical tensions; the pandemic; environmental challenges; market upheavals.
Consequences vary from region to region, but we have already seen shocks in the energy markets; the automotive industry; hotels and tourism; as well as the financial sector and global trade.
Finland is by no means shielded from this turbulence. Finland is almost an island geographically speaking and therefore requires a steady flow of cargo to and from Europe carried by ship operators resilient enough to withstand crises.
Reliable transport links in turbulent times are more vital than ever in order to meet demand for food, products and services. Solid marine carriers should be considered part of Finland’s heritage and seen as strategic assets. Other good maritime services for instance, such as those specialised in tourism or duty free shopping, are not ‘strategic’ to anywhere near the same extent.
Finnlines has since 1947 played a vital role supporting both national exporters and importers. Finnlines alone transports more than a third of the one million trucks that move annually across the main sea-bridges to Estonia, Sweden and Germany. Moreover, the Company’s fleet fly the blue-and-white flag and company management is Finnish, but almost all supplies and services are sourced in Finland.
We are Finland's premier seafreight operator and also a large transporter of passengers. We survived the oil crisis of the 1970s, the 2001 Twin Towers shock, and the 2008 financial crisis. We will survive the pandemic too.
The resilience we enjoy is based not just on hard work but also on sacrifice. Profits have in largest part not be distributed to shareholders but rather re-invested in the Company.
We have deliberately chosen the path of diversification, which means that we carry all types of cargo on versatile ships: from paper to cars, trucks and trailers. And passengers. We have avoided restricting ourselves to just one sector, even when this has seemed the more financially attractive option. Vessel diversification increases reliability because it works as a type of insurance; declines in one business sector can be offset be more sturdy performances in others.
We survived the oil crisis of the 1970s, the 2001
Twin Towers shock, and the 2008 financial crisis.
We will survive the pandemic too.
Finnlines is part of the Grimaldi Group, and this too acts as a backstop; one part of the Group can seek help from the mother company, and also other subsidiaries, in times of distress.
Diversification gives our customers a more stable, dependable service, but it has come at a cost, namely reduced margins. Large, flexible tonnage is considerably more expensive than simple tonnage designed for just one trade. These vessels also require more specialist knowledge to operate. We have at times had to turn down what would have been lucrative business in order to maintain the right cargo balance.
Due to the pandemic, Finnlines has seen a decline in revenues. Passenger numbers have been hit particularly hard, dropping by more than 50% between January and September, and by around 70% on routes from Finland to Sweden.
But despite difficulties, we have not laid up vessels, unlike some of our competitors. Our services have been maintained even if this has meant sailing part-empty. In October, we even gave back to cargo clients about EUR 5.3 million in reduced bunker surcharges, which is around a tenth of our monthly turnover and more than the double of the money we saved due to lower oil prices.
This helped stabilizing Finnish transportation companies’ income statements, and helped the national transport system stability in general, together with Finnish market competitivity, which is an asset for the Country. Finland, and Finnish citizens, have benefited from this. Finnlines ships continued to bring in the spare parts, the equipment, the industrial products and the e-commerce packages that Finnish citizens require.
These efforts were however not rewarded when state subsidies were handed out to the shipping sector in recent months. Despite Finnlines being specialised in the most strategic niche of transportation (goods and passengers), other shipping companies specialised in cruising and duty free shopping, not usually considered as strategic, took all the public subsidies. We would like to ask what has been found strategical in those latter passenger leisure businesses, especially in times of social distancing.
This discrimination has the potential to be doubly harmful. Not only are taxpayers keeping alive services that are currently not required due to excess capacity, but taxpayer money is creating market distortions that have unfairly depressed rates for honest players such as Finnlines.
Readers can however rest assured: however bad the turbulence gets, Finnlines will keep serving its native country with the steadfast loyalty that the position of national carrier demands of us.