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Passenger and freight transportation firm Finnlines reports that its fleet of vessels consumed 310,662 tonnes of heavy fuel oil and diesel oil in 2016, representing an increase of 2.9 percent compared with the previous year.

Despite the volume increase, bunker purchases during the period actually fell by $21.21 million, or 28.1 percent, to $54.15 million, down from $75.36 million in 2015.

Explaining how the installation of exhaust gas cleaning systems, or scrubbers, aboard its ships helped the company control rising fuel prices via the use of cheaper heavy fuel oil (HFO), Finnlines said: "In 2016, most of the vessels were operated using less expensive fuel oil, which had a positive impact on the result even though bunker prices started to increase globally during the fourth quarter."

The company's earnings before interest, taxes, depreciation and amortisation (EBITDA) in 2016 was EUR 139.1 million - an increase of 9.6 per cent on the EUR 126.9 million figure achieved the year before. The result before interest and taxes (EBIT) was EUR 81.5 million, up from 70.3 million the previous year.

Investment in bunker-saving technology

In 2016, Finnlines continued to implement its EUR 100 million Environmental Technology Investment Programme, which includes the installation of exhaust gas scrubbers, investments in propulsion and reblading, and silicone anti-fouling.

In 2015, Finnlines launched the second phase of the initiative, which covered scrubber orders for its remaining ro-ro vessels and a further three of its ro-pax vessels. Additional energy efficiency investment was also initiated by extending the propulsion upgrading programme.

The first of three ro-pax vessels to be rebladed and equipped with scrubbers, the MS Finnclipper, received its new IAPP Certificate on 18th August 2016 upon completion of scrubber system commissioning. The second ro-pax vessel to be rebladed and equipped with scrubbers, the MS Finnfellow, was under retrofit during the fourth quarter 2016. The last of the three ro-pax vessels to undergo the same environmental upgrade, the MS Finneagle, is scheduled to have its scrubbers and new blades installed during the first quarter 2017. After this, the whole programme will be completed.

Reducing commodity risk

As Finnlines is exposed to commodity risk relating to the availability and price of bunker fuel, the company aims to minimize this risk by making framework agreements with known counterparts and by including bunker price clauses in its contracts with customers.

In the long term, Finnlines says these clauses can hedge more than 50 percent of the risk, but in the short term the ferry operator notes that the hedging level fluctuates considerably and is also dependent on the utilisation rate of the vessels.

Research and development (R&D)

In 2016, the main focus of Finnlines' R&D continued to be on environmental investments and the energy efficiency of its vessels.

In addition to the installation of scrubbers, improvements to enable a lower resistance were carried out on some of the ships. These measures are designed to reduce energy consumption and the impact on the environment.

The company has also initiated a study to examine lengthening a ro-ro vessel series by approximately 30 metres. The technical specification was prepared during the autumn of 2016. The objective is to enable profitable growth by increasing vessel capacity and improving efficiency by utilising bigger transport units.