Post by Ali on Sept 2, 2010 18:53:00 GMT 1
Having heard a snippet on the news that the Ferry companies are suffering I'm trying to find out more. Here's some info for Dover/Calais:
Eurotunnel has denied accusations that it is responsible for a price war on one of Europe’s busiest ferry routes.
Over recent weeks it has been acknowledged that a pricing war has been launched on Dover Strait services, with different operators accusing each other of sparking price cuts.
In late June, Brittany Ferries (BF), which does not operate services on the Dover Strait, just on the Western Channel, accused Eurotunnel of lowering prices in order to win back marketshare it had lost as a result of a fire in the tunnel in September 2008.
Christophe Mathieu, BF’s Group Strategy and Commercial Director, explained that as a result of the fire, the tunnel’s capacity had been reduced for four or five months.
However, when announcing its half-year results, Eurotunnel claimed it was the troubled ferry operator SeaFrance that had been cutting prices and Eurotunnel had been able to start winning back lost marketshare by selling itself on the speed and frequency of services.
Eurotunnel CEO Jacques Gounon said he believed its marketshare would be back up to pre-fire levels of 38% by December, thanks to returning customers and because it had re-aligned its customer base.
Gounon also said SNCF-owned SeaFrance was trying to attract new customers by offering “aggressive” prices of around €30-40 (US$39-52) less than normal. It was able to do this because it was in administration and did not have to pay creditors, he said.
But P&O blames the price war on Eurotunnel (see today’s top story)
In a letter to staff on 27 July, CEO Helen Deeble warned “our current performance is of serious concern” and “is going to need urgent attention”.
She cited the shortsea sector as the area of most concern as it was “currently under a strong attack from competitors”.
Deeble said: “This attack, in the form of a price war, emanates primarily from Eurotunnel, which has slashed its freight rates to win back the marketshare it lost to us after the tunnel fire.
“This has cost us a loss of freight volume and a significant downturn in revenues due to the lower prices we are having to charge our customers.”
She added: “Eurotunnel and ferry competitors are piling on more pressure with weekend promotions that have further depressed freight rates, and we have been forced to fight back with special freight deals of our own.”
But Eurotunnel has moved to distance itself from the rates row. Spokesman John Keefe told IFW: “We genuinely do not think it is the case that we have started a price war. We have not taken our prices down and we are maintaining our premium for the service we offer.
“We are not undercutting the ferries in any way, and, if anything, it seems they are putting in low prices.”
He said Eurotunnel was trying to maintain its yields for when the market returns to full strength – volumes are currently around 17% down on pre-recession levels.
Keefe admited Eurotunnel had put some “tactical prices” into the market, but said there were only two elements to this: a reduced weekend price for smaller vans – a summer deal coming to an end in two weeks’ time – and lower prices for empty loads on off-peak services.
“That is on two very specific products,” he said. “The strategy for the rest of the business is to offer standard pricing.
“We want to remain considerably above the ferries in order to distinguish the service we offer – speed and frequency. It is nonsense that we are undercutting the market and leading it down.”
Keefe said the perception that Eurotunnel had undercut the market stemmed from the ferry operators seeing it had gained volumes once the tunnel was back to full capacity.
The ferry firms assumed the volumes had returned because Eurotunnel had cut its prices, he believed.
“The kind of volumes that have come back is perishable goods and high-value and low-weight products going into manufacturing chains on a just-in-time basis that need a frequent and quick service.
“Whatever our price, that kind of business will come back to us because we provide the type of service they need – it is naturally migrating back.”
Eurotunnel has denied accusations that it is responsible for a price war on one of Europe’s busiest ferry routes.
Over recent weeks it has been acknowledged that a pricing war has been launched on Dover Strait services, with different operators accusing each other of sparking price cuts.
In late June, Brittany Ferries (BF), which does not operate services on the Dover Strait, just on the Western Channel, accused Eurotunnel of lowering prices in order to win back marketshare it had lost as a result of a fire in the tunnel in September 2008.
Christophe Mathieu, BF’s Group Strategy and Commercial Director, explained that as a result of the fire, the tunnel’s capacity had been reduced for four or five months.
However, when announcing its half-year results, Eurotunnel claimed it was the troubled ferry operator SeaFrance that had been cutting prices and Eurotunnel had been able to start winning back lost marketshare by selling itself on the speed and frequency of services.
Eurotunnel CEO Jacques Gounon said he believed its marketshare would be back up to pre-fire levels of 38% by December, thanks to returning customers and because it had re-aligned its customer base.
Gounon also said SNCF-owned SeaFrance was trying to attract new customers by offering “aggressive” prices of around €30-40 (US$39-52) less than normal. It was able to do this because it was in administration and did not have to pay creditors, he said.
But P&O blames the price war on Eurotunnel (see today’s top story)
In a letter to staff on 27 July, CEO Helen Deeble warned “our current performance is of serious concern” and “is going to need urgent attention”.
She cited the shortsea sector as the area of most concern as it was “currently under a strong attack from competitors”.
Deeble said: “This attack, in the form of a price war, emanates primarily from Eurotunnel, which has slashed its freight rates to win back the marketshare it lost to us after the tunnel fire.
“This has cost us a loss of freight volume and a significant downturn in revenues due to the lower prices we are having to charge our customers.”
She added: “Eurotunnel and ferry competitors are piling on more pressure with weekend promotions that have further depressed freight rates, and we have been forced to fight back with special freight deals of our own.”
But Eurotunnel has moved to distance itself from the rates row. Spokesman John Keefe told IFW: “We genuinely do not think it is the case that we have started a price war. We have not taken our prices down and we are maintaining our premium for the service we offer.
“We are not undercutting the ferries in any way, and, if anything, it seems they are putting in low prices.”
He said Eurotunnel was trying to maintain its yields for when the market returns to full strength – volumes are currently around 17% down on pre-recession levels.
Keefe admited Eurotunnel had put some “tactical prices” into the market, but said there were only two elements to this: a reduced weekend price for smaller vans – a summer deal coming to an end in two weeks’ time – and lower prices for empty loads on off-peak services.
“That is on two very specific products,” he said. “The strategy for the rest of the business is to offer standard pricing.
“We want to remain considerably above the ferries in order to distinguish the service we offer – speed and frequency. It is nonsense that we are undercutting the market and leading it down.”
Keefe said the perception that Eurotunnel had undercut the market stemmed from the ferry operators seeing it had gained volumes once the tunnel was back to full capacity.
The ferry firms assumed the volumes had returned because Eurotunnel had cut its prices, he believed.
“The kind of volumes that have come back is perishable goods and high-value and low-weight products going into manufacturing chains on a just-in-time basis that need a frequent and quick service.
“Whatever our price, that kind of business will come back to us because we provide the type of service they need – it is naturally migrating back.”
