Bruce Barnard | Feb 24, 2009 7:00PM EST
Scandlines, a leading Baltic ferry freight line, confirmed it will lay off 400 of its 2,400 employees amid a deepening slump in cargo volumes that is forcing a radical restructuring in European short sea shipping.
The market environment has "dramatically changed" in the past few months, said Michael Hassing, chief executive of Rostock, Germany-based Scandlines. The job reductions are necessary to ensure the long-term success of the carrier, he said.
Baltic and North Sea routes posted double-digit growth over the past five years, attracting financial investors to the market. Great Britain's Montagu Private Equity acquired Unifeeder, a 42-ship carrier, in 2007, and 3i, a British venture capital company, and Germany's Allianz Partners were members of a consortium that bought Scandlines for around $1.5 billion in the same year.
But traffic tumbled in the final quarter of 2008, driven by a deepening economic crisis in the Baltic states shrinking Russian imports and faltering German exports which has prompted carriers to trim fleets, axe routes and lay off employees.
Norfolk Line, A.P. Moller-Maersk's short-sea subsidiary, announced this week it is moving up a planned fleet reduction by two months to align capacity with lower volumes on routes between the Netherlands, the United Kingdom and Ireland.
Finnlines, Finland's leading roll-on/roll-off carrier, says it will cut staff and sell non-core activities after a "dramatic" decline in traffic led to a fourth-quarter loss of 19.7 million euros [$25.2 million].
Sea France, a wholly-owned unit of France's state-owned railway SNCF, last week said it will shed 650 jobs, more than a third of its 1,700 payroll, and shrink its fleet because of "grave economic and financial difficulties." Traffic on its cross-Channel routes to the UK plunged 23 percent in January from a year ago.
French shipping line Louis Dreyfus Armateurs has offered to take over Sea France and merge it with its ferry unit, LD Lines, but SNCF rejected the move.
The industry is facing further consolidation as cargo volumes are expected to continue falling through 2009. Denmark's DSV, Scandinavia's biggest trucking and logistics company, recently acquired a 25-percent stake in Copenhagen-based DFDS, a leading carrier in the Baltic and North Sea.