FERRIES: As costs rise, long-term operating efficiencies are key

Coastal Inspiration, one of BC Ferries’ new Coastal Class vessels, went into service in June. (Courtesy BC Ferries)

The triple challenges of higher fuel prices, more stringent environmental regulations and the rising cost of new vessels are forcing ferry operators to take a hard look not just at their operating procedures but also at their future plans.

“Fuel costs are a prime concern,” said Peter Duclos, president of Gladding-Hearn Shipbuilding in Somerset, Mass. “Operators on existing routes can maintain their service by slowing down as much as they can get away with, and sometimes taking one or two knots off the top makes a significant enough difference.” For some ferries, throttling back can reduce fuel consumption by as much as a third to a half.

Operating parameters, including schedule turn times, have always determined ferry designs — double-ended vs. single-ended, for example — but fuel costs are now affecting hull and propulsion designs as well. “For a new boat, there are always questions,” says Duclos. “I understand 35-to-40-knot operations are cool, so you get there fast, but operators have to ask, will it give an extra trip a day, better service — or is it just because a competitor does it? Is the speed worth the extra cost in fuel?”

Record fuel prices this year have pushed plans for new vessels away from speed toward more efficient and more cost-effective designs. Increasingly strict regional environmental requirements to burn low-sulfur or ultra-low-sulfur fuel are also contributing.

East Coast

J.L. Cecil Smith, the second of two new Derecktor ferries for Bermuda. (Courtesy Derecktor Shipyards)

For SeaStreak, high fuel costs have long been necessary to maintain its passenger base; many of its riders work on Wall Street. The ferry service carries 800,000 passengers a year aboard four leased high-speed 400-commuter catamaran ferries between Monmouth County, N.J., and New York City. In 2006 when its owner, Sea Containers Ltd., filed for Chapter 11 bankruptcy, SeaStreak was at risk of shutting down, especially as its ferries burned increasingly expensive low-sulfur diesel.

SeaStreak was acquired in April by New England Fast Ferry Co., based in Stamford, Conn., giving it the deep pockets it needed to maintain its operations. New England Fast Ferry is a sister company of Moran Transportation, the Interlake Steamship Co. on the Great Lakes and Mormac Marine Group. At the March 31 takeover, New England Fast Ferry paid $3 million for SeaStreak’s corporate value and resolved the debt issue of almost $18 million for the boats’ leases.

Meanwhile, New York City launched a new ferry route in May from the Rockaways on the Atlantic coastline to the tip of Manhattan, and other start-ups are planned for Queens and Brooklyn using federal discretionary ferry funding. The operator, New York Water Taxi, has grown steadily and will take delivery of another newbuild from Gladding-Hearn in September. The propulsion system will comply with Tier-2 emission standards.

North Carolina Department of Transportation contracted with Elliott Bay Design Group to design two 220-foot single-ended New Sound Class ferries with a capacity of 300 passengers and 50 vehicles. Propulsion will come from two 1,140 bhp MTU diesels driving twin propellers for a sustained speed of 12 knots. Christina Villiott, Elliott Bay’s marketing manager, noted that the new boats’ Ocracoke Island route is “notorious for its sand bars and its short, steep seas and strong winds,” so the design is intended to reduce the effects of pitching, spray and breaking waves. Maneuverability will be aided by a 500 hp OmniThruster bow thruster. The program is in the second stage of construction bidding; the challenge for shipyards is to bid to be close enough to the estimated cost to win the contract.

The high-speed Hawaii Superferry met with some success this summer after a rocky start. Over the Fourth of July weekend, Alakai, sailing between Honolulu and Maui, averaged 750 passengers and 200 vehicles per trip, according to Lori Abe, a Superferry spokesperson (capacity is 866 passengers and 282 vehicles). That was a substantial increase over May, when trips averaged 249 passengers and 68 vehicles.

The Superferry faced opposition over terminal funding issues and its environmental impact. After a false start last summer, Alaka entered service in December but was then pulled out for maintenance and repairs, which were completed April 7.

In late summer, there was still strong local sentiment against the Superferry’s planned second route, linking Honolulu with Kauai. Nevertheless, construction continues on a second ferry at Austal USA in Mobile, Ala., with a projected in-service date of May 2009. Austal is adding a stern-quarter ramp for flexibility.

Washington State Ferries
Washington State Ferries’ long-planned fleet modernization, including newbuilds, is underway, but “the price issues are challenging everyone,” noted Dave Humphreys, project engineer for a new class of 144-car, 1,500-passenger boats that started out in 2001 as a four boat order. Humphreys said the state legislature is “now calling for up to three boats, but the way the economy is we’ll have to see how many we can afford.”

Plans for the boats have been underway for several years, but local opposition regarding ferry terminals stalled the program. In late 2007, WSF’s four venerable Steel Electric ferries, built in 1927, were found to have severe hull deterioration that forced their removal from service. Construction of their replacements is pending completion of the newbuild proposal being prepared jointly by Todd Pacific Shipyards and J.M. Martinac Shipbuilding, with Guido Perla & Associates as their design agent. Major systems are already on hand or undergoing final testing, including main engines, reduction gears, other propulsion equipment and diesel generators.

Simultaneously, the ferry system is moving forward with plans to build two 64-car, 750-passenger ferries. “They are patterned after the Steamship Authority’s Island Home on the Martha’s Vineyard (Mass.) route,” said Humphreys. “With some design modifications by Elliott Bay, they would seem to be quite suitable for our service.”

British Columbia Ferries
In Canada, price and delivery were determining issues for two large newbuild orders from BC Ferries. The award of the contracts to Flensburger Schiffbau-Gesellschaft in Northern Germany was made despite considerable opposition from British Columbia yards. When the first of three boats in the initial order, Coastal Renaissance, arrived in Vancouver in December, CTV quoted one shipyard worker as saying, “We still say that these ferries should have been built in British Columbia by British Columbians.” However, FSG offered a design-build, fixed-price quote for the three ferries, and the C$542 million contract also contained substantial penalties for late delivery.

The 21,980 grt, 525-foot ferries are the largest double-ended ferries in the world and have a capacity of 1,650 passengers and 370 vehicles. Propulsion is supplied by two 11,000 kW electric motors powered by four MaK 8 M 32 C diesel generators rated at 16,000 kW at 600 rpm. The efficient system will give the ferries a speed of 18 knots when operating on only two diesel generators. According to a MaK spokesman, two options capable of achieving greater emissions reductions and increased engine efficiency — Flex Cam Technology, which offers precision control of valve timing, and Single Fluid Common Rail Technology — “can be easily retrofitted to the engines.”

In May, with Coastal Renaissance and Coastal Inspiration already in service and the third newbuild, Coastal Celebration, approaching British Columbia, David L. Hahn, BC Ferries’ president and CEO, said the vessels were on time and under budget. “If we signed a contract to build these vessels today, we’d be paying well over 50 percent more due to the major increases in the cost of materials and ship construction,” he said.

A fourth new Flensburger ferry, Northern Expedition, is scheduled to enter service in 2009. The 492-foot cruise-ferry will accommodate 600 passengers and 130 vehicles on the system’s northern routes.

Looking ahead
Ferry ridership patterns normally evolve slowly. However, outside pressure such as higher gasoline prices can increase ridership rapidly, while economic downturns can reduce ridership. One successful example of growth is the seasonal Elliott Bay Water Taxi in Seattle, which makes more than 30 12-minute trips every weekday between Pier 55 on the Seattle waterfront and Seacrest Dock in West Seattle. The ferry company cautions riders to “catch a bus, walk or ride” to its two terminals, because there is almost no car parking. Yet between April 27 and May 31, at the start of this season, the single boat carried 29,340 riders, representing a 17 percent ridership increase over 2007.

As for the market in general, “There have been more inquiries for new boats this year than last year,” noted Duclos at Gladding-Hearn. “The first fast ferries were built around 1987 so they are getting pretty old.” Aging ferries combined with the need to reduce operating costs and comply with the myriad of federal and state regulations could increase interest in building new boats. However, significantly higher shipyard prices have already delayed or changed decisions by some operators to place newbuild orders. As one example, Washington State Ferries rejected a bid for a new 50 car ferry in March. “The price isn’t reasonable,” said Paula Hammond, Washington State’s secretary of transportation, adding that the quoted price was double that of a similar ferry delivered in 2005.

Both ferry operators and ferry builders are financially challenged, but to survive and grow both businesses, ferries must have reasonable fares to attract riders. New York Mayor Michael Bloomberg recently made a statement about his city’s ferry services that applies in many other areas across the United States and Canada. He said, “Ferries are going to become an even bigger part of our city’s transportation network.” But he cautioned: “If nobody uses the ferries, they are not going to survive no matter what anybody promises you. If everyone uses them they will keep growing.”

By Professional Mariner Staff