Eimskip makes changes to its container sailing system

Tuesday, September 24, 2019
Eimskip will by mid-October change the Company’s container sailing system to increase service level and lower fixed operating cost. The changes are an important milestone in the Company’s journey to improve profitability and strengthen its core operation. Furthermore, the changes pave the way for the Royal Arctic Line (RAL) cooperation scheduled to commence in Q1 2020.

The new system will simplify the European and Scandinavian sailing routes and enables the Company to offer both one day later departure and shorter transit time from Rotterdam and Aarhus to Iceland. Eimskip will continue to provide express services for the export and import of fresh products to and from Iceland and Faroe Islands.

The Company will reduce the number of vessels by one on the European routes and at the same time start operating larger vessels maintaining similar capacity at lower unit cost. Recent investments in the port of Sundahöfn with extended container terminal, new gantry crane and larger quay enable larger and more efficient vessels in operation.

Eimskip will formally start to operate the new sailing system by mid-October.

Key highlights:
  • Increased and better service to import customers in Iceland with a day later departure and shorter transit time from main ports in Europe which creates additional opportunities in import of fresh products
  • Simplified sailing routes and larger vessels increase reliability in the sailing schedule
  • The Scandinavian line (Red line) ready for RAL cooperation under the Vessel Sharing Agreement (VSA) once the two 2150 TEUS new-buildings will be delivered
  • Number of vessels in the container liner system reduced by one
  • Capacity maintained at similar level with larger vessels and further benefit of lower unit cost per TEUS
  • Eimskip’s target net operating cost reduction with the overall changes, including the cooperation with RAL, is in the range of EUR 7.0-9.0 million on an annual basis but will not be fully realized until after the RAL cooperation commences and is subject to various important operational factors
Vilhelm Már Þorsteinsson, CEO:

“Eimskip has in recent months been on a journey to increase profitability and strengthen its core operation. The introduction of the new container sailing system is an important step of that journey with the additional benefit of increased service level and reliability. We are streamlining our system with fewer and larger vessels on simplified routes allowing us to carry same volume with fewer port calls and thus lower unit cost per TEUS. Furthermore, with these changes we have created the platform for the planned cooperation with RAL.

We are pleased to be able to offer services with shorter transit time from main ports in Europe to Iceland and a day later departure creates additional opportunities for importers of fresh products. Additionally, the new system strengthens the export service from the Faroe Islands and is well suited to support further growth in Trans-Atlantic services.

The Company’s target net operating cost reduction of the new sailing system, and the cooperation under the VSA with RAL, is in the range of EUR 7.0-9.0 million on an annual basis. However, it is important to note that the target is subject to various critical factors such as, operational efficiency and reliability of the new-buildings and chartered vessels, efficient port operation, the cooperation with RAL and development of oil markets.”

Main changes of each line:

Red line will be the Scandinavian route being important transport route for Faroe Islands and will further offer shorter transit time to Iceland and one day later departure from Aarhus. The line will be served temporarily by the 1460 TEUS vessels, Godafoss and Laxfoss until the 2150 TEUS new vessels Bruarfoss and Dettifoss will be in operation and the cooperation with RAL commences as estimated in Q1 2020. In the current system Scandinavia is served by both the red and blue lines with three calls per week in Aarhus. In the changed system one line will serve Scandinavia weekly reducing unit cost with larger vessels and fewer port calls.

Blue line will continue to be the express service between Reykjavík and Rotterdam. The line will stop calling Scandinavia allowing for express service with shorter transit time and a day later departure from Rotterdam to Reykjavík. The Company has chartered two 1800 TEUS vessels to serve this line which are the largest container vessels in scheduled liner services to and from Iceland. Currently there are three lines calling Rotterdam but will be reduced to two lines with larger vessels and fewer port calls.

Yellow and Grey lines will be merged into one and continue to provide export services from Iceland and Faroe Islands to Immingham and Rotterdam and be the express service for fresh fish into UK. This line will service the Icelandic coast bi-weekly anti clockwise. Currently the Yellow and Grey lines are served by three vessels, two 900 TEUS and one 700 TEUS but will be served by the 900 TEUS Lagarfoss and 700 TEUS Selfoss in the new system.

Purple line will continue weekly service for fresh fish from Faroe Islands to Scotland UK. The line will furthermore be used bi-weekly for connection of import service from Immingham UK to Iceland via Faroe Islands. Currently the line is served by the reefer vessel Svartfoss but will be changed to a 350 TEUS vessel.

Green line will be unchanged offering weekly services between Iceland and North-America with three 700 TEUS vessels.

In relation to these changes the Company will off hire three vessels, the 900 TEUS Bakkafoss currently on yellow line and the 1000 TEUS vessels Perseus and Pollux currently on red line. The reefer vessel Svartfoss will be moved from the Purple line to service on the Orange line in Norway. Godafoss and Laxfoss will be sold once the new-buildings Bruarfoss and Dettifoss will be delivered into operation.

For further information please contact Edda Rut Björnsdóttir, head of Marketing & Communication via phone (+354) 825-3399 or investors@eimskip.is