Early “winter” due to costs in coastal shipping

Summary

This year Greek coastal shipping entered “winter operation” one month earlier, as the surge in fuel costs forced companies to prematurely reduce their routes and available capacity, effectively activating their winter schedules already from mid-September.

So far, six ships have been withdrawn from the routes, resulting in offered capacity and frequencies being reduced by about 20%, with the Cyclades network bearing the brunt, although island connectivity has not so far been disrupted.

Under normal conditions, the transition to winter schedules would take place around mid-October. This year, however, the adjustment began about one month earlier, as companies are trying to adapt their network to the new reality created by the sharp increase in operating costs.

What the picture is

And although for the time being island connectivity is being maintained, the early transition to the winter period is nevertheless a first tangible indication of the pressure that fuel is exerting on coastal shipping.

They are awaiting feedback from the government

The issue of increased costs was discussed in detail at a meeting held about ten days ago between representatives of coastal shipping and the political leadership of the Ministry of Shipping and Island Policy. Specific figures were put on the table regarding the burden caused to companies by the surge in fuel prices.

Ferry operators are now awaiting the government’s feedback as to whether and in what way there can be intervention, estimating that the only solution that can have a substantial effect under the current circumstances is subsidizing the cost at the source.

The logic of the proposal is for the support to be applied at the fuel supply level, that is, at the refineries, and not retrospectively to the companies, since, according to industry sources, any other mechanism would hardly be able to cover the scale of the burden.

The European framework, moreover, provides the possibility for intervention in increased energy costs. Specifically, the temporary state aid framework (EU rules on permissible state support for businesses) adopted by the European Commission to address the effects of the crisis in the Middle East provides for the possibility of covering up to 70% of the additional fuel cost, among other things, for intra-European short-sea shipping.

The fuel equation

The scale of the problem was outlined a few days ago by the president of the Association of Passenger Shipping Enterprises (SEEN, the body representing ferry companies), Dionysis Theodoratos, in the context of the 9th Infrastructure and Transport Conference, describing an equation that has changed significantly within a few months.

According to what he said, at the beginning of the year marine fuel was around 600 euros per ton, while now its price has more than doubled, reaching 1,300 euros. As a result, fuel now accounts for more than half of a ship’s total operating cost.

Indicative is the example he gave for the Mykonos route. A ship that in January needed about 18,000-19,000 euros to operate the Rafina-Mykonos route and return to Rafina, today needs about 40,000 euros. Correspondingly, the cost for Piraeus-Rhodes, via Patmos, Leros and Kos, has increased from about 100,000 to 200,000 euros.

It is indicative that, based on the data from the beginning of the year, the annual fuel bill for coastal shipping was estimated at about 400 million euros, while based on today’s prices and international forecasts it may reach as much as 700 million euros. The surge in prices has completely overturned this equation, significantly burdening the operating cost of ships.

The problem becomes greater as passenger traffic is not showing a corresponding rise. According to the president of SEEN, overall ferry traffic is running about 1.5%-2% higher compared with 2025, with significant deviations between routes, as some show a noticeable increase and others record a decline.

This means that companies are being called upon to absorb a very large increase in their most important operating cost without a corresponding strengthening of demand.

“If all of us together, including our state and the European Union, do not understand the critical importance of the sector, we will be facing a very harsh winter”, warned D. Theodoratos.

The particularity of conventional ships

The role of conventional ships becomes particularly important in the winter period, as, while high-speed vessels reduce their presence after the end of the season, they are the ones called upon to cover the greater part of the network’s needs.

The challenge becomes greater in the winter months, when passenger traffic declines, but the islands’ connectivity needs remain, at a time when a significant part of ships’ operating costs continues to run.

The strong seasonality that characterizes Greek coastal shipping is also highlighted by the Final Report of the Competition Commission (independent authority supervising competition in the market), which was published in recent days. As noted, the large fluctuations in demand during the year affect the functioning of the market, in a sector that is called upon to serve different needs, from the increased tourist traffic of the summer months to the movements of permanent residents and the transport of goods.

The picture, moreover, is not the same across the entire coastal shipping network. Conditions differ on routes that concentrate high tourist traffic in the summer and on those where demand is lower, but the need for stable island connectivity remains throughout the year.

The Commission also places weight on public service contracts (state-assigned routes on lines not commercially viable), which cover network needs that are not adequately served through the free market. The report more broadly points out the need for modernization of the regulatory and supervisory framework of coastal shipping, with the aim, among other things, of the sector’s connectivity and sustainability.

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