One ship option is NOT cheaper to operate
11/9/09A new report from the Route Partnership suggests that the proposed larger combined passenger and freight vessel will be cheaper to operate than the existing two-ship system, but an initial review of the report shows that they have got their calculations seriously wrong.
Many of the most controversial aspects of the Route Partnership (RP) scheme stem from their decision to replace the existing two ship operation with a single larger combined passenger and freight vessel. This approach makes it more difficult for the passenger facilities to be located in the most logical place (on the side of the harbour close to the bus and train stations and adjacent to the town’s main car park) and it requires the controversial lengthening and rock armouring of two historically important listed piers.
The current operator of the service switched from operating one ship to operating two for hard commercial reasons and has continued to operate successfully this way for the last 20 years. Until recently the RP were unable to justify the decision to go for one ship, but on the 31st July 2009 they published a report by Hart Fenton comparing the operating costs of the proposed new vessel with two possible two-ship options. This report concludes that a single vessel as specified by the RP will be the cheapest to operate, but as with the report into alternative options for locating the passenger and freight terminals, it contains a number of flaws that if properly addressed would reverse the report’s conclusions.
The RP have refused to release the technical annexes that contain the data that the report’s conclusions are based on, but from what is available in the main part of the report we know the following:
1. That they have calculated the cost of fuel for a freight ship to be £252,628/annum when the current freight vessel fuel bill is around £50,000/annum.
2. When assessing the running costs of the SWATH fast ferry the report included operating costs for two return trips a day when only one would be needed to transport current passenger numbers (doubling running costs); the fuel bill for this service would be around £384,000 but the RP’s report contains an amount of £955,634.
3. The report also assumes that the SWATH can only operate in wave heights up to 1m thus seriously restricting its sailing schedule, while in fact it is specifically designed for wave heights up to 4m and would be able to operate through the summer season with few if any disruptions to service.
4. The wage cost figures are also subject to query, not only in total but also in detail. For example on a one ship system all cargo working at Penzance would have to be in overtime; this is a significant cost item when comparing a “one ship” with a “two ship” system. Similarly the RP appear not to have allowed for self maintenance, a significant cost saving when operating a two ship system.
The fuel miscalculations alone are sufficient to eliminate most of the claimed cost advantage of the single ship approach. A more detailed analysis will only be possible when the RP release the full figures on which the report is based, but it is already clear from the above examples that the report that the RP is using to justify the choice of a single larger and more costly vessel is seriously flawed.
The failure to properly assess the costs of the fast ferry is from an economic point of view particularly worrying. With the Isles of Scilly at full capacity for long-stay visitors (and no growth in capacity anticipated) one of the few possible growth areas is in day visitors. The proposed new single combined freight and passenger vessel will be no faster or more comfortable and is unlikely to attract new day visitors. A fast ferry on the other hand is likely to be more comfortable and with a journey time of 1.5 hours (instead of 2.5 hours) will attract valuable new business to the islands.
Hart Fenton Report