(Article originally published in Nov/Dec 2014 edition.)
***From Nov-Dec 2014 Edition of The Maritime Executive magazine***
As part of the Stena Sphere, an $8 billion conglomerate with operations ranging from shipping to scrap metal, Stena Line is the largest and most recognized ferry company in Europe. But that’s just the beginning.
In 1939, Sten Allan Olsson, just twenty-two years old, started a scrap metal trading company in Gothenburg, Sweden, which he aptly named Sten A Olsson Metallprodukter. While many considered scrap metal to be junk, the young entrepreneur understood that recycling metals would soon become a growing and important business.
After World War II he was proved right when Sweden suddenly found it was in dire need of iron and steel for manufacturing. Moreover, Sten Allan’s father had owned and captained a schooner, so the concept of shipping was a familiar one and he began importing iron ore ingots. By 1948 the young and thriving businessman started his own shipping company, and by the mid-1950s his company owned twelve freighters and chartered in another twelve ships.
In the early 1950s the metal trading business was also doing well and expanded to a huge processing facility in Hisingen, which is still operating today. At the time, Sten Allan used intermediaries to sell his recycled metals to foundries. But in 1962 the company became a certified supplier to mills and foundry operators throughout Sweden.
The Stena Line Story
1962 turned out to be a hallmark year for Sten Allan as he launched a ferry business on the Gothenburg-Skagen (Denmark) route. He named the company Stena Line, the word “Stena” being a combination of his first name and the first letter of his middle name. By the late 1960s Stena began Sweden-to-Germany service with the opening of a route from Gothenburg to Kiel.
Throughout the 1970s and 1980s Stena Line grew by adding vessels and routes, but the expansion was met with fierce competition. The so-called “Kattegat War,” as it is still known within the company, was waged with Sessan Line over ferry routes in the Kattegat Sea between Sweden and Denmark. Rates were driven so aggressively low that it was only a matter of time before one of the operators filed for bankruptcy. In 1980, Stena acquired its competitor and renamed itself Stena-Sessan Line, which was eventually shortened to Stena Line.
In 1989 Stena acquired the Dutch operator Stoomvaart Maatschappij Zeeland (SMZ) and gained its first route from the European continent to England. The next year it purchased Sealink British Ferries and immediately became the leading ferry operator between Europe and the U.K., a position it still holds today.
In 1996 Stena introduced the world’s first aluminum, high-speed catamaran ferry, which revolutionized the industry. The HSS Stena Explorer began operations across the Irish Sea between the U.K. and Ireland. Eventually, Stena would build three catamaran ferries which, in addition to speed, had very fast turnaround times and could transport up to 1,500 passengers and 375 automobiles.
By this time Stena Line had become one of the largest ferry companies in the world. In 2010 it introduced two super-RoPax ferries, the Stena Hollandica and the Stena Britannica, which featured 16 decks, 538 cabins and accommodations for 1,200 passengers. At 778 feet in length, 105 feet in width and over 65,000 gross tons, they were the size of small cruise ships.
Today, the company operates 23 ferry lines including Stena SeaLine in the Black Sea and Stena Daea Line in South Korea, marking the beginning of its international expansion. It recently streamlined its online reservations and automated check-in systems and standardized menus on all of its ferries to reduce purchasing costs. More importantly, the company has been taking steps to increase freight revenues by integrating cargo logistics with sea, rail and road links throughout Europe.
The SECA Challenge
Stena Line provides parent company Stena AB with about 37 percent of its overall revenues. It operates eight ferries, five RoRo ferries and 27 RoPax ferries. But the company is bracing for the implementation of the new sulfur directive within the North European SECA (Sulfur Emission Control Area), which will dramatically impact its operations in Scandinavia, the North Sea and the Baltic Sea.
Carl-Johan Hagman, CEO of Stena Line, indicated the impact could be more than $70 million a year in increased fuel costs when the new directive becomes effective on January 1, 2015. But his primary concern is the lack of a uniform enforcement authority and the prospect of unilateral enforcement by individual countries in the region, which could lead to conflicting regulations and added expensive for vessel operators.
In an effort to achieve a level playing field, Stena Line became one of the founding members of the Trident Alliance, established in July to help ensure fair and equal enforcement of SECA regulations in northern Europe. Today, seventeen major vessel operators have joined the alliance including Maersk, one of the largest vessel owners in the world. The alliance claims its members consume only about seven percent of global bunkers but will bear the major portion of compliance costs globally.
The Stena World
Sten Allan Olsson died last year at 96 and is considered one of Sweden’s most successful entrepreneurs. The family empire he left behind includes ferries, cargo carriers, shuttle tankers, offshore drilling, real estate, financial services, steel production and the largest recycling operation in Europe.
Dan Sten Olsson, his oldest son, is CEO of Stena AB today. The company has annual revenues of about $5 billion. The Stena Sphere, which includes Stena AB as well as Stena Sessan AB and Stena Metall AB, has revenues of over $8 billion. It employs roughly 20,000 people, operates 173 vessels and 96 wind turbines, and has a real estate division with 27,000 residential and commercial units.
Stena AB, the largest business unit, includes the following subsidiaries: Stena Line, Stena Drilling, Stena Renewable (wind power), Stena RoRo, Stena Bulk (crude oil and product tankers), Stena Teknik (shipbuilding and ship conversion), Northern Marine Shipmanagement, Stena Property (real estate in Sweden, the Netherlands, France and China), Stena Finans (treasury and asset management for the entire corporation), and Stena Adactum (investments).
Stena Sessan AB is the result of the 1980 merger of ferry rivals Sessan Line and Stena Line. The division also includes Concordia Maritime, Stena’s publicly traded tanker subsidiary.
Stena Metall AB, the oldest company in the portfolio, recycles metal, paper, electronics, hazardous waste and chemicals and has operations in Sweden, Norway, Denmark, Finland, Poland, Russia, Germany, Austria, Italy and the U.S.
Focus on Innovation
Hagman became CEO of Stena Line in 2011, but in fact he is responsible for all of Stena’s maritime activities. He is a shipping industry veteran of 25 years and a former Swedish naval officer. Among the innovations he has introduced is a single invoicing system for intermodal cargoes, including rail, ship and terminal transfers, within Norway, Sweden, Finland and Poland. The single-invoicing arrangement includes Stena, rail carrier Green Cargo and logistics company Logent.
In addition to its regional operations in Scandinavia, the U.K. and northern Europe, Hagman has also extended the Stena Line’s activities to include the Black Sea and the Far East.
Hagman says Stena Drilling has been a major profit contributor of late. Based in Aberdeen, Scotland, it has offices in the U.S., Norway, Cyprus, Luxembourg, West Africa, Egypt, Brazil and Australia. The unit operates four drillships and three rigs and has contracted with Samsung Heavy Industries to build two additional rigs for delivery in 2016.
Stena Bulk controls over 100 tankers ranging from Suezmaxes down to intermediate size, as well as a handful of LNG carriers. In 2011 it formed an innovative joint venture with Denmark’s Weco, part of the privately held Dannebrog shipping group, with the stated goal of becoming a global leader in MR tankers. Stena Weco provides double-hull tankers for transporting not only petroleum products but also light chemicals and vegetable oils, including palm oil. The company currently has 50 tankers on the water and is building ten new eco-class IMO 2 product and chemical carriers in China.
But hardware is not the company’s prime asset. With more than 20,000 employees, mostly seafarers, who every day perform their duties with professionalism, care and loyalty, Hagman believes that they are Stena’s true strength.
While the new sulfur directive will have the greatest impact on Stena Line in the short term, the company has been testing methanol fuel on the auxiliary engines of one of its ferries and will be the first company in the world to convert a large RoPax vessel to methanol propulsion in January 2015. Innovation-driven Stena is also considering electric battery propulsion for its short-range ferries between Sweden and Denmark (a 15-minute crossing) as another step toward its vision of zero emissions short-sea transportation.
“The long-term goal for us is to move cargoes off roads and onto Europe’s short-sea shipping system,” says Hagman. “Our company believes that methanol – and even battery power – will be an investment not only for society but for Stena Line’s long-term success.” – MarEx
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The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.