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The Danish ferry operator DFDS is taking on three routes and four ships from French rival Louis Dreyfus Armateurs as the industry braces for growing competition for Channel crossings.
The deal creates a joint venture, 82 per cent owned by DFDS, that will operate nine ships on five routes, including two routes on the Dover Straight portion of the Channel – the focus of a lunge for market share by Eurotunnel, which is looking to expand its business into ferry ownership.
It also extends DFDS’s reach into western Channel crossings and returns it to the Mediterranean for the first time since the early 1980s, through a Marseille-Tunis route currently run by LDA.
Ferry capacity on the Channel fell last November as the lossmaking French state-backed operator SeaFrance collapsed, spurring a race to pick up the slack. Eurotunnel is preparing to bid next month for three of SeaFrance’s ships, which it hopes to use to provide a complementary service to its tunnel crossings.
DFDS had joined LDA in bidding for SeaFrance’s assets late last year, but France’s commercial courts rejected the offers. Instead, the two groups formed a partnership this winter to run a route between Dover and Calais – the shortest ferry journey between England and France. They will add a second ship next month, doubling the number of daily rotations to 10.
While the joint venture, announced on Wednesday, will be consolidated into DFDS’s accounts, LDA will hold an 18 per cent stake, and the French flag will continue to fly on ships transferred from its fleet.
Neils Smedegaard, chief executive of DFDS, said he did not expect volumes to grow significantly on the Channel so long as European economies remained subdued, but anticipated healthy trading due to the lower capacity.
A purchase by Eurotunnel of SeaFrance’s ships would be fraught, given threats by P&O Ferries, which dominates the Dover Straight route, to report any deal to the European Commission on competition grounds. Eurotunnel now commands about half both the freight and passenger markets for cross-Channel crossings when rail and ferry are included in the mix.
But it still plans to pursue a deal, having this week examined the ships a second time, and says it is looking at the possibility of bringing on a group of former SeaFrance employees to operate the ships. “If we could get to 10-15 per cent [of the ferry market], that would be a good place to be,” said a Eurotunnel spokesman.
DFDS and LDO, which is privately owned, did not disclose financial details of the joint venture. They expect it to begin operations in July.