Two ferries, two buyers, same shipyard – but two very different prices.

Whilst spending a fair bit of time investigating how much better ferry services are in Norway compared to Scotland, we have come across a current and very obvious example of why that is so.

Last month CMAL announced that the contract to build two new ferries for Islay had been awarded to Turkish shipyard Cemre. Each of the pair of diesel-electric ferries will carry 107 cars and 350 people, and cost £52 million pounds. This week, the Norwegian ferry operator Torghatten Nord has announced an order from the very same Turkish shipyard for a ferry of slightly larger capacity – 120 cars and 399 passengers.

But we have learned that despite being such similar vessels being built beside one another in the same yard at the same time, the Norwegian ferry will cost as little as HALF the CMAL vessels, at £26 – £31 million pounds.

So what is it that can account for such a price difference for such similar sized ferries?

Is the Norwegian ferry less capable?

Well, no. In terms of passenger and vehicle capacity the Norwegian ferry is a little greater, and both are being designed to comply with Euro-B rules – ie they are both designed to cope with the same kind of wind and wave conditions, and both will be operating relatively open-water routes. The Norwegian ferry will be operating services from the port of Bognes to Lødingen on the Lofoten islands, above the Arctic circle and an open-water crossing of 60 minutes. The Norwegian route is shorter than the journey to Islay, but no less exposed. The Norwegian ferry will be a little slower in the water at 14 rather than 16 knots, but it will make up for that by turning around in port in half the time thanks to a better car deck design and a bi-directional hull.

Is the Norwegian ferry using a cheaper and more polluting propulsion system?

No. In fact, the Norwegian ferry will have a similar diesel-electric hybrid system to CMAL’s Islay ferries, but more advanced and with far larger battery packs. The Norwegian ferry will recharge those batteries in port in 15 minutes using a 7500 kilowatt quick-charge connection that will enable it to make the entire crossing on zero-emission battery-electric power (Diesel will be only for back-up). The 15 mile route will be a new record for battery-electric ferry operation. (Norway will have converted all of its domestic ferry routes to zero-emission systems by 2030.) So rather than being cheap and dirty, the Norwegian ferry is at the cutting edge of low-emission propulsion.

CMAL New Islay Ferry, circa £52 million
Torghatten battery-electric ferry, circa £26-£31 million

Maybe the Norwegian ferry doesn’t operate for as long each day as the CMAL ferries? Could that enable some cost-cutting?

Well, No. Actually, the Norwegian ferry will be operating around the clock, putting on 18 crossings per day and travelling 260 miles every 24 hours. The Islay ferries by contrast will cover half that distance and will only operate for around 14 hours per day.

So what is it that CMAL have designed into their ferries that makes them cost so much?

  • Cabins for 31 crew members, plus mess, kitchen, gym and everything else required for crew living aboard. By contrast, the Norwegian ferry has a crew of just 10. Thanks to good design, this crew of 10 are sufficient to operate the ferry around the clock. The CMAL ferry must stop to allow its far larger crew to rest.
  • A unique design. With each new ferry procurement, CMAL starts with a blank sheet of paper and develops a unique ferry, never before built. The Norwegian vessel by contrast uses a common design that will be repeated over and over for many future vessels. It’s far cheaper to make the same thing over and over than to start from scratch each time.
  • Complexity. CMAL’s design includes expensive and complicated engineering – like vehicle ramps that can move left and right in order to enable a wide boat to fit narrow linkspans; and hoistable mezzanines in order to fit more cars into a restricted car deck area.
  • Large passenger spaces with on-board catering. This all adds more steel, more fabrication, more weight, and more cost.
  • Finally, publishing the price you expect to pay 12 months before putting the tender out doesn’t really help your negotiating position.
CMAL announced what they expected to pay for the Islay vessels in their corporate plan 12 months prior to the tender being issued.

It’s also worth pointing out that Torghatten took 15 months from initiating the design work to placing the order. CMAL took 33 months.

This is one of the root causes of the ferry crisis

The current fiasco of ferry provision in the Hebrides has many causes. But the fact that we pay twice as much for our ferries than other ferry operators (even when they arrive on budget) is not insignificant. Together with ferry industry experts, we have repeatedly said that it’s not a lack of money that is the problem – it’s that the money is being spent very, very badly. Scottish Government have committed to spending £290 million on new ferries in the coming years – but how many ferries will we get for that? We could have 11 ferries of the Norwegian variety, or maybe 5 designed by CMAL.

This difference in cost is not because CMAL’s designers are not capable, but because they are designing to a completely different set of ‘requirements’. Torghatten are a private ferry company; one of around five that compete for public service ferry contracts in Norway. They compete with one another on the basis of who can offer the best service most cost-effectively. Government set ticket prices, zero emissions targets, minimum timetables, and put each individual route out for competitive tender (rather than a whole network). So Torghatten have tasked their designers with creating a ferry that gives them a competitive advantage. By designing to enable longer operating hours, zero emissions, and more frequent sailings for less build cost, Torghatten won the tender.

CMAL’s designers were given a completely different set of criteria – rather than being told to design for best operating productivity, they were told to design for a crew of 31. Rather than being told to design for maximum operating hours, they were told to design for the pre-existing timetable. Rather than being told to design for zero-emissions, they were asked to design for lower emissions. Rather than being told to make the design simple and repeatable, they were told to build the largest vessel possible, with mezzanine decks and complex vehicle ramps, among other things.

Is there a solution to this?

The way to speed up ferry renewal is to make the ferries more affordable. In order to make them more affordable, naval architects have to be working to a better set of priorities. They should be focussing on operational productivity, value for money, fuel efficiency and emissions. Norway encourage those priorities by having an unbundled ferry tendering process, enabling true competition at tendering time. (For more on that subject, see here.) .

If we continue on the current course, nothing will change. The 801/2 fiasco is an extreme symptom of a dysfunctional ferry procurement process that designs in waste, complexity and high cost. As can be seen by this comparison it is being repeated again in the vessels for Islay; though this time the contract has been given to a competent shipyard.

You can see the press release concerning the new Norwegian ferry here.

21 thoughts on “Two ferries, two buyers, same shipyard – but two very different prices.

  1. Navalue or Nae Value?

  2. Interesting but:
    1- it’s normal to advise of a tender budget in public procurement and standard to develop one.
    2- the CMAL design looks much more developed so perhaps the Norwegian one will have costly design development
    3- seems sensible to have flexible linkspan and decks – vessel can be deployed elsewhere if needed
    4- are you saying you don’t want a cafeteria ?
    5- agree standardised designs seem sensible where possible
    6- can’t comment on crewing – assume if crew don’t live on board they are paid to live in hotels so total it’s capital cost versus operational cost
    7- the competition issue has not worked with railways however cmal management def needs looked at. See issues with Arran ferries / Ferguson Marine etc. Perhaps this should be the focus ?

    1. 1. That may be so, but the effect is still the same – the bidders know how much money is available before-hand.
      2. Norwegian design is well-developed, sufficient to go go to tender and a shipyard to produce a detailed price, just like the CMAL vessel.
      3. Yes, but it should not be necessary to RELY on redepoloyment in a breakdown, as is currently the case with CalMac vessels. Breakdown on one route leads to removal of a ferry from another. In any case, Norwegian ferries / linkspans are more standardised than west coast ones. The new Islay ferry is too big for many ports/linkspans, and £17m is having to be spent on pier lengthening and dredging. The moveable car ramp is to enable it to fit narrow linkspans. Had they built a larger number of smaller ferries, not only would the service be more reliable, but each vessel would be much more easily re-deployed than the huge ships they have chosen to build.
      4. We’re saying a cafeteria is low down the priority list for islanders, as demonstrated by surveys we have run. People want a reliable, dependable, frequent service above all else. Hot food catering is a nice-to-have, but it comes at a significant cost, by increasing operating costs (more crew) and build costs. Plus the Mull route is only 50 minutes long.
      5. Yes, so long we standardise around good designs. CMAL are standardising around massive cruise-ferries.
      6. Again, its a balance of priorities and compromises. For a short crossing like Craignure-Oban, the justificationfor liveaboard crewing is very thin, particularly when it comes at the cost of a) much more expensive vessels and b) limited working hours to allow the crew to rest. The Norwegian example is live-aboard, but its much easier to accommodate 10 crew cabins than 31.
      7. Railways and ferries are very different things. Better comparison is with bus companies. I don’t think many people are talking about privatising Citylink? Also compare with best practice in other countries – Norway being a prime example. All routes are individually tendered to a variety of private companies.

      1. Reminds me of the Gills Bay ferry to Orkney – the man who sold you the ticket might be guiding you on and off the ferry and also making your burger on board

    2. Regarding point 6 the crew would not stay in hotels they would stay at home. Seafarers are highly paid, there is no reason they couldn’t afford to rent or buy there own home within commuting distance of where the ship berths at night. On some Calmac ferries the crew already do not live on board, they have a home near the port, it is quite normal practice in the marine industry for crew that work on ships out of the same port all the time to live at home.

      There is no reason that crew on ferries need to live on board. Maybe if they needed temporary cover at short notice they would put crew up in a hotel.

      1. In actual fact, normal maritime practice is for crew to remain on board. This is for a number of reasons, but I can imagine the frothing at the mouth in fora like this if a Mull ferry broke away from its berth and ended up aground and out service because there was no crew on board to maintain moorings.

  3. Thank you for nice clear explanation.

  4. So the RMT insistence on over-crewing and full-board accommodation on board is the major reason for the doubling of cost to taxpayers. Yet the onboard accommodation cannot be used to extend the duty day – as is normal practice in the aviation industry – or deep-sea. As in other occupations, crew should be based on shore and required to be available for ex-mainland sailings as required. there may be a case for onboard accommodation for the Outer Isles – but why for Islay or Mull or Arran or Colonsay?

    1. I’m guessing that these requirements (cafeteria, mezzanine, crew quarters) are so that the ferries can be redeployed on the longer routes (Ullapool to Stornoway, for example).

      However, reading the specs, it seems that the norwegian model would offer more frequent sailings for a similar cost. Extra ferries, which builds more resilience all round.

  5. Thankyou for such a clear and devastating critique of the incompetence that has led to this fiasco.

  6. In Norway they use to Cavotec MoorMaster vacuum system to moor the vessels, which requires 0 ABs and is done in seconds. Calmac still uses the archaic system of mooring ropes that requires at least 8 ABs and takes a long time.

    In Scotland there is a phobia of making things more efficient if it will cost jobs, a phobia that doesn’t seem to exist in Norway, they are very progressive and adopt the latest technologies to make things more efficient. Another example is that they are automating and centralizing air traffic control in Norway, but of course that was stopped in Scotland.

    Video about the Cavotec MoorMaster:

    https://youtu.be/sysyZ076aCs

    1. The vessels propulsion configuration means it holds itself on the linkspan when loading and discharging, no magic “system”.

  7. Following the Norwegians example there could be two ships for the price of one with the crew of one current ship split for the two new ones. I have long advocated a SWATH vessel (or two) for the main Arran run. As for employing crews from the immediate area and then living at home, well, perhaps a study to see if there are sufficient people with the qualification necessary for the job in hand. On board catering, maybe not really necessary because of the short time on passage, but there are those of us living in Arran have to face a near 60 minute journey by public transport and look forward to a cup of coffee and a bacon roll in the morning. A fish and chip tea is not necessary though because a lunch is usually taken while ashore.

  8. I wonder what the union’s reaction would be if Calmac/CMAL/whatever were to consider partially or completely removing the passenger catering function?

  9. Look at the difference in size of the wheelhouses – you could hold a dance in the Calmac one!

  10. Dagfinn Nyhammer 8th April 2022 — 8:15 am

    “Look to Norway” were famous words from WW2🤭

  11. The Norwegian ferries have cafeterias. But the production of food is mostly shore based. So you essentially have the same service, but it needs less people and space to run it. The service span between vending machines and manned kiosk/sale depending on need and traffic.

  12. For the amount of government subsidy they get ferries don’t actually employ that many people. Each person employed costs the tax payer an absolute fortune in subsidy, it is very poor bang for the buck from a jobs to subsidy ration.

    You go on some Calmac ferries and they have way more highly paid crew than is actually needed, there are so many crew they are almost tripping over one another. There are highly paid people that don’t actually seem to do that much e.g. Chief Stewards don’t seem to do much but get paid an absolute fortune.

    Perhaps 49% percent of Calmac should be floated on the private stock exchange with 51% kept in state ownership.

    Lots of other countries have entities that have a 51% state / 49% private ownership model and it works wonders. The state retains a controlling stake but you have private sector accountability that drives innovation and cost savings.

    When things are 100% state owned they become bloated and inefficient, Calmac is no exception to this.

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