Finnlines - Grimaldi Group

The ships in question are Finnlines’ five
Star-class Ro-Pax ferries, glossy young
thoroughbreds with capacity for 4,200
lane metres of rolling cargo and 500 passengers.
Capable of 25 knots, they also have
speed to burn.
As Finnlines’ chief executive explains,
however, their fate over this last year also
makes them a useful metaphor for the changes
that have taken place at the company over
that period.
From sorry victim to Exploiting thE
rEcovEry
A year ago, two of the five were operating
between Malmo and Travemunde, “a trade
where in places you can only go at five or six
knots because of the wind farms along the
route.” They were, in effect, hobbled. Now
they have been given their head.
All five ships, which he calls “among the
most modern and efficient in the world,” are
now operating on routes through Helsinki
that demand exactly their kind of speed and
size. It was a question, Mr Bakosch says, “of
using our best ships to support the Finnish
economy to the maximum.”
But it was considerably more than that.
Matching the right ships to the right routes
for maximum efficiency was one element in
a sweeping overhaul of Finnlines designed to
transform it from a sorry victim of the financial
downturn into a company poised to exploit
the recovery. The vessels, he says, are
fun to watch becoming productive.
NETWORK
Baltic Sea
North Sea
Russia
Mediterranean Sea
Cork
Setubal
Wallhamn
Göteborg
Kapellskär
Aarhus Halmstad
Esbjerg
Malmö
Hull
Travemünde
Sassnitz
Lübeck Rostock
Immingham
Liverpool
Hamburg
Gdynia
Tilbury
Bristol Sheerness
Amsterdam
Flushing
Southampton Antwerp
Bilbao
Valencia
Savona
dEEp undErstanding oF thE company –
and Quickly!
The story of the Star-class ferries, however,
is symptomatic of the problems afflicting
Finnlines before Mr Bakosch’s arrival last
year. A year ago, it was disorganised enough
not just that the wrong ships were running
on the wrong routes, but that individual ships
were handling their own procurement, a very
costly way of doing things.
It was also weighed down with assets and
companies – 49 separate companies, for instance,
compared with 27 now – that often
bore little relation to its core business and
delivered less still to the bottom line. And
it was detached enough from the wealthgenerating
possibilities of its own operations
that major potential profit centres, such as
the passenger business, were all but ignored.
As Mr Bakosch puts it, the last year has
been about putting as much right as possible.
He says “we had to go down to the 17th
level of the mine to really understand the
company, and we had to do it quickly.” They
went to work. Cost reduction was immediately
high on the agenda, and the company
made significant gains both in cutting back
port expenses and bunker costs.
Focus on FlEEt and routE optimisation
Optimising the assets was also a critical part
of the campaign to get the company fit again.
Finnlines reallocated ships where they were
most suited, including new routes to Poland
and Germany. But it also began a major effort
Monfalcone
Venice
Koper
Ravenna
Livorno
Rauma
Naantali
Turku
Kotka
Helsinki
St. Petersburg
Civitaveccia
Yenikoy
Cagliari
Salerno
Palermo
Gemlik
Izmir
Trapani Catania
Tunis
Malta
Piraeus
Limassol
Mersin
Latakia
Tartus
Beirut
Tripoli
Haifa
Al Khums
Tobruk
Alexandria
Ashdod
to winnow down the chartered component of
its fleet, which had become ruinously expensive
as demand plunged with the financial
crisis.
Over the course of the year, Finnlines
redelivered nine chartered vessels to their
owners and four more will follow this year,
substantially reducing the average age of the
fleet as well as the company’s costs.
Finnlines also moved to sell off non-core
assets, from flats, warehouses and car parks
to container port operations and a cement
port business, that were in many cases both
a distraction and a cost. And it focused hard
on yield management, adjusting prices meticulously
to lure in new traffic, filling its
ships to the gunwales where in the past such
efforts were lackadaisical at best.
BEnEFits From closEr knit grimaldi
opErations
In circumstances such as this, the benefits of
being part of a larger group come very quickly
into focus. Mr Bakosch says synergies
with its parent company, the Naples-based
Grimaldi Group, have been a critical element
behind Finnlines’ turnaround thus far, and are
likely to prove highly beneficial as the recovery
gets underway in earnest. Centralising
procurement in Finnlines and other costs had
an immediate impact because of the economies
of scale it made possible, but there was
more to it than that.
While Finnlines expanded its network
around the Baltic, it also began to knit itself
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