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Niels Smedegaard: Bloodbath on the English Channel

DFDS' competitor on the English Channel, Eurotunnel's ferry company My Ferry Link, is losing money fast. DFDS CEO Niels Smedegaard describes the market as a bloodbath with prices down around 40 percent due to massive overcapacity.

Photo: DFDS

The heavy competition on the English Channel is costing DFDS and British P&O large sums of money due to Eurotunnel's ferry company My Ferry Link, which will in a few weeks, at a hearing on September 10 and 11, attempt to ward off the British Competition Commission's ruling that bans the company from calling in British ports.

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According to My Ferry Link's financial report, the company lost 19 million euros in the first six months of 2013, after having lost approximately 15 million euros in the last four months of 2012, when Eurotunnel suddenly entered ferry operations on the Channel by acquiring ferries from bankrupt SeaFrance. In other words, the tunnel operator's ferry company has lost around USD 44.7 million, though the company stated that it has secured a 10 percent market share.

Hearing to decide dispute on the English Channel

"It's a bloodbath, and the situation is completely unsustainable. Fortunately, we've received a crystal clear ruling from the British Competition Commission. We're also losing money down there, and we can't just save and rationalize our way out of it. There's so much overcapacity, which of course affects the prices, and they are on rock bottom. I guess we're lookin at around 30-40 percent, so it hurts a lot," says Niels Smedegaard to ShippingWatch.

DFDS CALAIS SEAWAYS DOVER BRUCE-PETER.jpg

Eurotunnel's purchase of the ships from bankrupt SeaFrance was approved by the French competitive authorities in November 2012, but on June 6th the British Competition Commission decided to ban My Ferry Link from operating out of Dover. Eurotunnel has appealed this decision.

Eurotunnel barred from ferry operations out of Dover

DFDS and British P&O reported Eurotunnel to the British Competition Commission, demanding that the company's ferry activities be shut down, stating that Eurotunnel as tunnel operator would have a far too big market share and infuence on the market. An opinion that was shared by the British Competition Commission.

In the shipping company's expectations for 2013 as a whole, DFDS has accounted for the fact that Eurotunnel and My Ferry Link will keep operating until all available options have been used and the ban against calling in Dover from Calais comes into effect. In reality, Eurotunnel and My Ferry Link could continue operating till April 2014 due to the set deadlines following a final ruling by the British Competition Commission.

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