A Ferry Tale

Our resident Scottish Skipper has a tale of business wisdom forged from the experience of competition.

A Ferry Tale
Photo by Michael Martinelli / Unsplash

Attempting to sell one of my “world’s best ferry designs” in the 1990s to a local but prominent ferry company, the unhappy manager, GF, eyed me suspiciously. “You were here before trying to sell me a ferry design, weren’t you?”

I nodded “ Yes, twice before, but our designs are even better now; not only will they make better profits, but they will protect your company from any competitor”, I declared happily.  

As chief designer, draftsman, tea maker and BD chief of our small company, I knew all about selling.  Smiling in the face of the face of adversity was on Marketing page one.

His face contorted angrily. “Listen carefully, I told you twice to piss off, now I’m telling you to f...off! We’re not interested in your f...ing designs, and we don’t have any competition!”

I responded calmly, “Don’t be wishy-washy about this; just tell me yes or no. Do you want a new design or not!”  

As he was about to explode into apoplexy, I stood up and left.

Now I knew why he was called GF!

I had learnt all about rejection as a pimply teenager, and as I descended the steps of his office, a cheap rickety four-storey tower relic from the 1982 commonwealth games, I gazed across at the four ancient landing barges that were making his fat cat shareholders a tidy $6 million profit a year.

The fat cats, a combo of accountants and lawyers whom I met later in life and got on well with, were “sweating the assets”.

Sweating the assets is a fairly common beancounter strategy, of maximising dividends, but deliberately failing to refleet. Never mind the discomfort of travelling passengers.

This was the same strategy as Alan Joyce's with Qantas, in case you wanted to know why Qantas' service, reliability, ratings, and attitude tanked.

Joyce took over as the number two airline in the world, but by the time the company finally woke up to him, it was number twenty-three, with an ancient fleet that was costly to replace.

GF amused the marine industry by buying cheap old Nato landing craft and sneaking them through the Queensland survey, which was a self-regulating system at the time.

He purchased unused, ex-military azimuthing drives and stuck them in multiple units on the back of his 74m smooth water landing barges.  Despite his lack of marine engineering knowledge, they ticked the box of being cheap and protecting the sweet dividend!  

These drives shuddered and shook themselves free of the hull and littered the seabed of Moreton Bay over a short period of time.  Their corroding remains are probably still snagging lines of local fishermen.

What GF didn’t know was that I was a Scot who had repeatedly watched “Chariots of Fire” and “Braveheart”, and I set out not only to fight but to beat him.

Having done my homework, this Island trade at the time generated $20m in ferry revenue, 85% from passengers and cars and 15% from trucks.  GF’s ancient landing barges were noisy, with a 6.5m climb up steep stairs to a 1950s ancient style café with small high windows and Nescafe coffee. 

To ensure maximum discomfort, exhaust pipes placed on either side of this miserable excuse for a café increased the noise levels by 10 decibels and produced extra vibrations for travellers to assist any weight-watching efforts.

These flat-sided vessels allowed side waves to slap and send saltwater spray over the cars on deck.  However, they were perfect for the truck market, particularly smelly garbage trucks.

Designing and tank-testing our proposed ferry for the operation was straightforward. It would give us a vessel with relatively small engines, using only half the fuel of any of the GF barges on each crossing.

Funding the balance of the vessel build was challenging, with a bank manager from the Queensland Bank quizzing me on my logic.

“Let me get this right: you are planning to directly compete on this Stradbroke Island trade against an established monopoly with four vessels and zero debt at the same ticket price?”

I nodded a yes.

He then continued to tell me he had a holiday house on the Island, travelled frequently, knew the trade well, and knew the incumbent owners, but he declined to give us the loan.

Selling our four sons was my preferred option, but it was unacceptable to my wife, so we had to go for hard finance for the balance of this fairly simply designed and specced vessel.

So, in December 2003, our new modern catamaran, the Seabreeze, entered the harbour in competition with this monopoly. It had a quiet, contemporary coffee shop only 2.5m above the main deck, akimbo windows for children to watch the waves, and flared ship sides to contain the spray.

Seabreeze

GF and his team were openly laughing from their office tower at this new ferry because “it only carried one lane of trucks”.

They still didn’t get it!

For visiting overseas clients, I would take them across to the Island on GF’s barge and then do the return trip on the Seabreeze. This wonderful chalk and cheese page two marketing strategy saw us winning two designs from a prominent Dutch group within 24 hours of the journey across the Bay.

Using the same strategy, we secured orders from Venezuela and Bahamas, then repeat orders.

As for the Seabreeze, anyone who liked a good coffee in a quiet lounge or did not want salt spray on their vehicles travelled on the “Big Red Cat,” as she became known. She quickly attracted the majority of passengers and cars.  

In year one, we took the entire $6m profit from the incumbent, and I resisted the urge to hang a framed photo of GF on the wall!

A few years later, a bus company came along with a big cheque for our ferry company.  This was the closest I have ever come to kissing a guy!  Not long after, the bus company sold the company, including Seabreeze, to a public company, where at twenty-two years old, she still operates, reportedly as the highest KPI performer in their extensive fleet.

There are two morals to this ferry tale. 

Firstly, sweating the assets is not a good strategy. In transport, whether a fleet of planes, buses, or ferries, these assets should never be older than eighteen and a maximum of twenty years.

If terminals are owned by the Government, an operator milking dividends with an old fleet will see the Government calling for a re-tender.

Secondly, be prepared to give visiting sales reps at least fifteen minutes of your time to hear if they can improve your company’s bottom line.  Resist the urge to be rude or dismissive of them, such as telling a rep to p...off or f...off. 

They could re-emerge and take your business away!

Thought for the Day

"There are two kinds of people: those who do the work and those who take the credit. Try to be in the first group; there is less competition there."
Indira Gandhi

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