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  • Finnlines News 3/2023

Editorial: Evolving markets drive for new strategies

Shipping is extremely sensitive to geopolitical changes and global market trends. For a shipping company changes are instantly reflected in cargo volumes and passenger statistics. Resilience and adaptation are some of the necessary qualities to succeed in this business.

Finland and Finnlines used to be dependent on the forest industry and still are, but the cargo mix of exports and imports is very versatile nowadays. Finnlines operates mainly on established routes, but may suddenly be forced to suspend one line and make efforts to find compensating freight on another.

Finnlines was founded in 1947 by the Finnish forest industry giant Enso-Gutzeit and KELA (Finnish Social Insurance Institution) to create new maritime links as the Finnish merchant fleet had suffered massive losses during World War II. Enso was a strong owner, but decided to concentrate on its core business in the 1980s.

When the Grimaldi Group entered the scene in 2005, there were numerous shareholders, many private investors, small companies and institutions. Stora Enso’s ownership was only 5.4 per cent, Grimaldi’s over 13 per cent. In 2016, the Grimaldi Group then finally became the sole owner of Finnlines.

The Grimaldi Group has always been committed to shipping, it has experience and as a consequence profound knowledge of the business.

One strategic change was to operate an owned fleet instead of chartering vessels. Grimaldi noted that Finnlines operated an excess of tonnage, in 2005 as many as 42 vessels, which were small, obsolete and expensive units, depressing profitability. Chartered vessels were soon re-delivered to their owners.

In 2023, an average of 21 have been in traffic, all owned by Finnlines. The majority have over 3,000 lane metres for rolling cargo, the largest 5,800 lane metres, which brings economies of scale.

Finnlines had operated under a myriad of names, like Finncarriers, Railship, FG-Shipping, and FinnLink. The group structure was simplified and the number of group companies greatly reduced. The organization was restructured, operations streamlined, a new management was appointed and passenger business became a separate business segment.

Finland has a small domestic market and companies must expand their operations outside the national borders to grow. Finnlines used to struggle with an unbalance between southbound and northbound cargo on the routes to the North Sea and the Bay of Biscay. Ships were fully loaded on southbound voyages, but they carried small volumes back to Finland.

Grimaldi’s extensive network and the three new Eco-series ro-ro vessels helped to change the game. The Eco-vessels have carried cars and special cargo, also called project cargo, and done occasional spot shipments. The more cargo, the smaller is the carbon footprint per each unit transported, which benefits every party, customers in particular.

Finnlines has shown increased activity in entering new markets when volumes have declined in another area. A political decision, like the Brexit, provided an opportunity to open a direct line from Ireland to Continental Europe. From time to time new ports are added to the route network when freight flows change.

Finnlines is well prepared to meet the future with its renewed fleet and professional staff.

Normally companies invest during an economic boom, but Grimaldi looks far into the horizon and makes long-term plans. In spite of uncertain times, caused either by economic recession, global pandemic or other crises, massive investments have been made during the last 15 years. Finnlines has taken delivery of ten new ships (one more soon to come), installed emission abatement technology on all its ships and lengthened six ships.

At the time of writing this editorial, prospects are uncertain, recession is in the air. Yet Finnlines is well prepared to meet the future with its renewed fleet and professional staff.

In the past, a worker in a warehouse could forecast trends in the economic activity, today the ups and downs are more unpredictable. Changes can be frightening, but they may provide opportunities to learn, to innovate, to rethink, to build, and to rebuild. Keep your eyes open, seize the moment or the chance will not come again.

One can study navigation, economics, information technology and many other neutral disciplines, but to excel in shipping, it is necessary to have experience. Shipping is something to die for!

Keep well and enjoy this issue of Finnlines News.

Staffan Herlin, Commercial director