UK keeps ferry cargo shipping with COVID-19 subsidy

UK keeps ferry cargo shipping with COVID-19 subsidy

Struggling UK ferry companies will receive a multimillion-dollar subsidy lifeline to ensure essential cargo corridors are kept open. Photo credit: Shutterstock.com.

The UK government will provide a nine-week £35 million ($42 million) subsidy to ferry operators on cross-channel freight routes and those linking Britain and Ireland to keep vital cargo corridors open until the coronavirus disease 2019 (COVID-19) is under control and passenger revenue returns.

Agreements have been signed between the government and six ferry companies to ensure there is enough freight capacity to prevent disruption to the flow of essential food and medical supplies, much of which enters or leaves the UK via the Port of Dover.

The Calais-Dover trade corridor handles 75 percent of all roll-on/roll-off freight arriving by ferry from Europe every year, or more than 4 million accompanied trucking units per year, according to UK government statistics. An estimated 14,000 trucks cross the UK-EU border points in total every day, about half of those passing through the Port of Dover that handles 17 percent of the UK’s total trade in goods.

Robert Keen, director general of the British International Freight Association (BIFA), said the ferry routes that connected the UK with mainland Europe and Ireland were a key link in the supply chain.

“Given the critical importance of ferry services to the European trailer services operated by freight forwarders that belong to BIFA, we hope the package … is enough to ensure the cross-channel freight sector is able to provide sufficient capacity and resilience over the coming days and weeks,” he said in a statement welcoming the government support.

Lack of passengers erases life-supporting revenue

Travel bans and stay-at-home orders have cut virtually all passenger traffic from the ferries, and the operators cannot survive with only freight revenue. P&O Ferries, a DP World subsidiary that transports 15 percent of all goods between the UK and Europe, suspended all passenger transport in March, laying up vessels and focusing on moving essential freight on accompanied and unaccompanied trucks. 

The UK government relief package was made to protect 16 of the most important routes that cover the English Channel, the Short Strait between Calais and Dover, the North Sea, and routes between the UK and Northern Ireland. The routes were all at risk of closure, but will now be designated as Public Service Obligation routes for up to nine weeks.

Ferry trade association Interferry said in a statement at the weekend that reopening ferry services to non-essential travel was crucial for the viability of many ferry companies.

“Passenger traffic has been virtually non-existent during the pandemic, with operators reduced to maintaining lifeline supplies of essential goods in the face of ever-mounting financial losses,” said Interferry CEO Mike Corrigan. “We welcome the growing signs in Europe and beyond that COVID-19 lockdown restrictions are starting to be eased.”

The UK, French, and Irish governments have pledged to work together on temporary measures to ensure COVID-19 does not threaten vital freight routes between the countries.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.