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Speedferries Problems


BJSLIV

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This has actually been a bit of a wake up call for us.

We have merrily been using Speedferries for the past couple of years since we bought our place in the Pyrenees and driving down in one go from Boulogne in the summer and staying overnight enroute somewhere in the winter

We had booked with SF to go on the 27th Dec and return on Jan 5th.   This debacle obviously meant we had to have a look at alternatives as I suspect, like others, that SF is no more.

We eventually ended up booking overnight crossings both ways with Brittany Ferries, Portsmouth to Caen, with a cabin.

Now for us living in Derbyshire, Portsmouth is about the same distance as Dover  but a damn site easier journey,  no A14, M25, Dartford holdups.

Distance from Caen to our house is just over 500m so easily doable in one day from the ferry docking at 6am.  Boulogne is 730 ish miles so we've saved about 300 miles driving and fuel. But what astonished me is that the toll charge from Caen is  down as 4.5 euros and is about 66 from Boulogne so saving about 120 euros. (I'm going to check my doofah statement carefully on this as it seems odd) 

So overall wev'e ended up paying roughly another £60 over the total using SF, hotels, tolls etc.

We will arrive at home in France at the same time, eat & sleep on the boat and generally have a much easier journey (both in the UK and avoiding either Paris or Rouen in France.)   Well worth it as far as we are concerned. 

Shame I'd just got another six trip voucher.

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It looks more like the 26th now. My confidence hasn't been high since everything went pear shaped. There is a World wide financial crisis, so who in their right mind wants to buy a single craft ferry company with debts??? The best thing that could happen is that Speedferries find an investor, or a method to cover the debts, in an attempt tp trade out of trouble, but that doesn't seem likely either. It's not a disaster for us, but it doesn't help, but obviously I'd rather Speedferried kept running, it was friendly, well run, very very convenient, and well priced.

Pinkies crossed!!

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In the unlikely event of somebody else taking over the service, there is no way it could continue with the same level of low fares. Despite good occupancy levels, income from tickets only just covered basic operating costs, so the charter fees for the ship, which ran at over £2 million per annum (replaced by the repayments on a £13.5 million mortgage to buy it) were not covered. So to make the service viable, any new owner would have to cover those losses, plus make up the unpaid taxes and port fees. Even if the debts were written off, a new, similar, service would need to charge at least twice the Speedferries brochure fare to be viable in today's conditions.

The latest on the LD Lines offer is that those who can present a valid voucher/ticket for Speedferries will be offered travel at 25% of the standard tariff on any LD Lines or LD Transmanche cross channel crossings (cabins excluded), the offer being valid until end of January 2009 (subject to availability). Further details and booking procedures are expected to be released imminently.

 

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"Distance from Caen to our house is just over 500m so easily doable in

one day from the ferry docking at 6am.  Boulogne is 730 ish miles so

we've saved about 300 miles driving and fuel. But what astonished me is

that the toll charge from Caen is  down as 4.5 euros and is about 66

from Boulogne so saving about 120 euros. (I'm going to check my doofah

statement carefully on this as it seems odd) "

Unless you choose to avoid all motorways were posssible then the figure is more likley to be €45 - 55.

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Distance from Caen to our house is just over 500m so easily doable

in one day from the ferry docking at 6am.  Boulogne is 730 ish miles so

we've saved about 300 miles driving and fuel. But what astonished me is

that the toll charge from Caen is  down as 4.5 euros and is about 66

from Boulogne so saving about 120 euros. (I'm going to check my doofah

statement carefully on this as it seems odd)

I'd think there is something wrong there. Boulogne to Belves is 657 miles, and we pay approx' 20 Euros on our route, and a fair bit is motorway.

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I'm sorry that may have been meant as a joke, but I'd rather it was brought and kept running, if only to keep the other operators "honest", I'm sure those possibly losing their jobs would been only to keen for there to be a "mug" willing to employ them. If it wasn't a joke, just another reason why I eventually hope to leave the UK

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There has, allegedly, been some interest in buying the company. I am sure that anybody willing to take on all the liabilities could snap it up for £1 or less.

Unless any new buyer was indeed a 'mug', the structure and business plan of the company would have to be drastically revised to clear the debts and give it the potential to be profitable in the future. It wouldn't take a mathematical genius to find that this would mean charging much the same fares as the other operators on the Channel - the so-called 'pirates'. Remember that Hoverspeed, which used similar ships, failed too, despite charging much higher rates. High speed catamarans do not allow the operator to take advantage of the more stable, more profitable freight traffic.

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The shareholders are going to suffer here for they are well down the line.  Maybe just maybe that someone will 'buy' this company and as Will say for a nominal £ for in any contract there has to be consideration!

However who would want to take over a huge bundle of debt?  Who in their right mind?  Whats in it for them risk is relative to reward and to date no reward has been forthcoming.

I probably will be proved wrong tomorrow.

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Not knowing a thing about marine finance, I had assumed that Stavis had found a niche for customers looking for fast, no-frills travel from Dover to France and that the comparatively small catamaran gave him the flexibility to offer this service at low cost, provided he could keep the thing filled to the gunnels. It has certainly suited me. I never did understand why anyone would want to use the slower, more expensive ferries on such a short crossing. Who needs frills for a 50 minute "bus ride"?

However, others that seem to know a lot more about the financial side of running ferries, including cats, suggest that a catamaran is not economical enough to achieve this aim, regardless of numbers. That being so, why would there be a market for the vessel?

It will be interesting to see where Speed One ends up and what use will be made of it?

 

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[quote user="dragonrouge"]

The shareholders are going to suffer here for they are well down the line.  Maybe just maybe that someone will 'buy' this company and as Will say for a nominal £ for in any contract there has to be consideration!

[/quote]

The shareholders took a risk, customers who have paid up front, have lost their cash, for a service they may never get.

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Speedferries generally had excellent occupancy levels, particularly in the summer months. However the income from fares etc barely covered basic operating costs - i.e. staff, fuel, port charges etc. Being a no-frills 50-minute crossing there is little opportunity to supplement that income from things like on-board sales. The costs of owning/chartering the ship and rental etc on shoreside facilities were therefore not covered; these were running at about £2.2 million per annum on the latest accounts (2006) filed at Companies House. Frankly, given that business plan, I am amazed that Speedferries lasted as long as it did.

Catamarans are used successfully in many places, but are very specialised. The sea conditions in the Channel tend to limit them to the summer months, and on short crossings like Dover-Boulogne the time advantage is hardly enough to make a difference. They have a good speed advantage on the western channel, and this allows the operators to charge a small premium for completing the crossing in little more than half the time of a conventional ship.

There have been studies done, mainly in the USA, which show that because the lower staffing levels can offset the higher fuel costs, and because more crossings can be done in a day, so the same traffic can be carried (at least on the right routes) fast catamarans are slightly cheaper to operate. (Although this is disputed by many ship operators; for instance Brittany Ferries for many years said it would not get into fast ferries, although the one that it now has operates successfully, and LD Lines has spoken out against such ships - it offered to take over the Speedferries service last July but a condition, unacceptable to Stavis, was that the cat would be replaced by a normal ferry).

However on a crossing like Dover-Boulogne any advantages from using smaller, faster ships are tiny, and to undercut the established services by such a wide margin was never going to be sustainable.

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Thanks Will.

What baffles me is, if it was so obvious that it couldn't work, even with full capacity, how did they ever get started? Is Stavis dim?

And what about his backers? I know banks were handing out mortgage funds to home-buyers like sweets to kids, until that bubble burst, but they have always tended to look more closely at business propositions. If revenue could not exceed expenditure......

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Good question. I'm (fortunately as it turns out) nothing to do with the financiers of this venture, so I can only hazard a guess.

Stavis is certainly not dim. I would imagine the idea was to start off with low fares in order to build up market share and loyalty and drive competitors out. That was sort of achieved with Hoverspeed, the closest competitor, whose owner Sea Containers pulled out blaming rising costs and increasing competition. Stavis made no secret of the fact that he wanted to emulate Easyjet, and had a similar model. Unfortunately air and sea transport are not that similar.

By encouraging customers to buy tickets in advance, Speedferries no doubt felt that initial running costs could be covered until the service was established, allowing fares to then rise to an economic level. As we know, this didn't happen. I think Stavis took a big gamble, and failed to forecast rising fuel costs and also a sharp rise in port fees and taxes.

He was also hampered by only having one ship. A second one was constantly promised, but that would have added an enormous cost, as the first was picked up on a cheap charter which could not be repeated for a second cat. The biggest problem though was that when Stavis was ready for his second ship there were no suitable vessels available on the charter market, and to build a new one would take too long and be too expensive. It was also well known that when the charter deal for the first ship ran out it would cost a lot more to renew it - Stavis took another option and bought the ship. The £13.5 million cost was, presumably, funded through a marine mortgage, and would most likely have saved money on a new charter deal although it brought potential extra maintenance costs etc (as well as having to be repaid).

What goes around comes around, of course. When Speed One was first chartered it was at the time its previous owner was in administration, and the accountants were more than happy to get what they could by letting it go on a cheap deal. Who knows - there may (however unlikely) be another would-be Curt Stavis on the horizon.

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The latest published accounts continue to give my client and myself nightmares.  I just cannot get my head around that this company and for its turnover only had a rolling two month overdraft with HSBC.  Yes two months so every two months application of Poultry (HO) of HSBC for £200K and I am informed but cannot guaranteed its authenticity that each two months there was a commitment fee paid.  Sometimes banks charge 0.5% sometimes 1%

This model was never ever going to work it was funded through shareholder funds plus those of you who paid upfront plus a tiny overdraft and which itself was guaranteed by the main mover and shaker plus one other shareholder.

However in  this case it was the Directors who appointed the Administrators not the bankers so at least that suggests something?

One of the biggest things that Directors have to be aware of is the allegation that they traded on an insolvent basis and this is in itself a criminal offence and equally the Directors could in theory be responsible for the debts of the company.  So the Directors must have seen that no new money was coming in to the company so prudence was called for.  Perhaps some would say a little late.

Tomorrow I may well be proved wrong that this company is sold as a going concern.  What I would say that if the new purchasers are let us say not too well known then both Dover and Boulogne ports will need a lot of money up front (this time)

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I notice that the web-site has been changed, they now say that an announcement will be made tomorrow instead of Thursday and that the vessel has been released following a court order.

I will probably get some flak for this but if anyone is going to buy the company for £1 and take on the liabilities which would include passengers with pre-booked tickets then I would prefer it to be Curt Stavis.

Contencious I realise and not likely to be popular with the investors whom I believe included his family and neighbours but if as I suspect the business had some long term viability and was seen as a threat by the other operators, whose tactics seem to indicate this, I would not like to see it bought by one of them in order to remove the competion..

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