The boss of Danish ferry operator DFDS has backed UK plans to force P&O Ferries to pay sailors the minimum wage as he warned that the economics of running cross-Channel services was becoming unsustainable.
Torben Carlsen said P&O’s decision to replace its UK crew with lower-paid workers meant cross-Channel ferry operators were no longer competing on a “level playing field”.
Both P&O and Irish Ferries, DFDS’s cross-Channel rivals, use a low-cost labour model with agency staff, making it difficult for the Danish group to compete.
Carlsen added that there were now too many ferries operating on the Dover-Calais route after Irish Ferries, owned by Dublin-listed Irish Continental Group, moved into the market last year.
P&O caused outrage in late March when it sacked nearly 800 UK-based crew, giving them no notice and replacing them with cheaper agency staff, many of whom were paid below the minimum wage.
Its cost-cutting decision, which mirrors the business model of Irish Ferries, prompted ministers to lay out plans to make ferry companies that regularly sail from UK ports pay seafarers the minimum wage.
P&O has said it would be happy to pay the minimum wage, if its rivals did the same.
“We fully welcome the government’s commitment to increasing the minimum wage for all seafarers working in British waters,” the company said this week.
Carlsen said: “I am not surprised P&O felt they had to do something. We are a strong competitor . . . and then somebody has tried to come in with a low-cost model. They were squeezed.”
He added he had no plans to cut pay or conditions at DFDS, and instead welcomed a UK government push to make ferry companies operating from British ports pay the minimum wage.
“We have committed to the Department for Transport that we are not changing our model at this stage, and what we have seen in response from them is very encouraging.”
He stressed that without a minimum wage floor for pay, it would be hard to compete against two rivals with significantly lower cost bases.
“If we operate with 50 per cent higher costs on the personnel side, that is not sustainable in the long run,” he said.
Carlsen said there will be nine vessels running between Dover and Calais once P&O returns to full service following safety inspections, with only enough demand to fill six boats.
“There is not room for three operators, and in the past at least one has given up after a while when there have been three,” he said.
Carlsen was speaking after DFDS on Wednesday posted results, helped by P&O’s problems.
The ferry and logistics group reported an operating profit of DKr822mn ($117mn) in the first quarter, up from DKr750mn the previous year.
Revenue across the Channel benefited from a 2.2 per cent rise in freight volumes “partly due to a positive impact” from P&O’s suspension, DFDS said.
Irish Continental also released results on Wednesday, which laid out the rapid growth of its ferry business.
For the year to May 7, Irish Ferries carried 123,600 cars, an increase of nearly 700 per cent on the previous year.
