INTRODUCTION

Caledonian MacBrayne (Scottish Gaelic: Caledonian Mac a' Bhriuthainn), usually shortened
to Calmac, is the major operator of passenger and vehicle ferries, and ferry services, between
the mainland of Scotland and 22 of the major islands on Scotland's west coast. Since 2006 the
company's official name has been CalMac Ferries Ltd although it still operates as Caledonian
MacBrayne. In 2006 it also became a subsidiary of holding company David MacBrayne Ltd,
which is owned by the Scottish Government. CalMac Ferries Ltd (CFL) is a wholly-owned
subsidiary of David MacBrayne Ltd, which is wholly owned by Scottish Ministers.
Previously operating as Caledonian MacBrayne Ltd, CalMac was created in October 2006 to
bid for the Scottish Government contract to operate Clyde & Hebrides Ferry Services, which
it subsequently won.
CalMac Ferries Limited has one wholly owned subsidiary; Caledonian MacBrayne Crewing
(Guernsey) Limited, which employs and supplies all sea going staff (approx 770) to
CFL. There are currently 27 routes within the network. In the 12 months to December 2014,
nearly 4.7 million passengers, 1.1 million cars, 93,000 commercial vehicles on 130,000
annual sailings.

COMPANY HISTORY
Caledonian MacBrayne has a long history stretching back more than 160 years. Its name is
synonymous with the west coast of Scotland, providing vital lifeline ferry services and
carrying millions of people each year to and from the islands and remote peninsular
communities. It has been, and remains a major local employer, both on shore and at sea. This
short history summarises the key milestones from its inception in the 1850s to the modern,
award-winning operator it is today: Caledonian MacBrayne started life in 1851 as a steamer
company under the name of David Hutcheson & Co. The main sphere of operation was from
Glasgow through the Crinan Canal to Oban and Fort William and then on through the
Caledonian Canal to Inverness.
In the late 1870's the Hutcheson brothers retired leaving the firm in the hands of David
MacBrayne to which the firm was renamed. Throughout the late 1870's and 80's the
1

MacBrayne empire continued to expand with a mail run to Islay, Harris and North Uist from
Skye and an Outer Isles run from Oban to Barra and South Uist.
In fairly quick succession new railways began to reach the West Coast - at Fort William, Kyle
of Lochalsh and Mallaig and the fleet rosters were altered to meet the new situation. There
followed a period of new ship building, largely for the mail routes to the islands and remote
mainland communities.
Following the Great War of 1914 - 1918 David MacBrayne was operating a much-reduced
fleet and this eventually resulted in the company's withdrawal from the tender for the mail
contract. Thanks to a rescue operation jointly with LMS Railway and Coast Lines Ltd a new
company was formed - David MacBrayne (1928). 1948 saw the nationalisation of the LMS
shares in the company and the acquisition of the ships.
Five years later the state-owned Scottish Transport Group (STG) was formed to operate not
only MacBrayne's services but also those of the Caledonian Steam Packet Company (CSP) on
the Clyde together with the dominant Scottish Bus Company.
Soon after, the shipping companies were amalgamated and renamed Caledonian MacBrayne
Ltd; lorry services were operated by MacBrayne Haulage while David MacBrayne was
retained for certain minor services. The CalMac vessels soon sported the red CSP lion in the
yellow disc in the centre of the red funnel. From the sixties to the mid-eighties many
improvements and refinements took place in order to complete the modern roll on-roll off
ferry revolution and ensure that all vessels were operated to the maximum levels of safety.

In 1990 Caledonian MacBrayne threw off the umbrella of STG and became wholly owned by
the Secretary of State for Scotland (now the Scottish Government.)
In 2006 the then Scottish Executive, decided that under EU rules ferry services were required
to be put out to tender, but this presented an issue as the vessels required to operate the
services, and many of the ports to which services ran, were owned by Caledonian MacBrayne
Ltd, giving it an unfair advantage over potential competitors. The solution was to rename
Caledonian MacBrayne Ltd as Caledonian Maritime Assets Ltd (CMAL) in order to retain
the vessels and ports in state ownership, and a separate ferry operations company, CalMac
2

Ferries Ltd, was created. It is a wholly-owned subsidiary of David MacBrayne Ltd, which is
wholly owned by Scottish Ministers. (CMAL also retained ownership of the Caledonian
MacBrayne brand, which CalMac uses as a trading name under licence from CMAL. The lion
rampant device is also used by CFL with the permission of CMAL.) CMAL is also wholly
owned by Scottish Ministers and is based in Port Glasgow, Inverclyde. CFL and CMAL are
two entirely separate entities. CFL provides certain services to CMAL under contractual
arrangements.
In 2007 the contract to provide services under the Clyde and Hebrides Ferry Service (CHFS)
was awarded to CalMac Ferries Ltd for a period of six years. CMAL leases the vessels and
piers to the operator of the Clyde Hebrides Ferry services (currently CFL) and is also
responsible for the procurement of new ships and the maintenance and development of port
facilities in its ownership. (Some ports are owned by local authorities or private harbour
trusts/ authorities.)
In 2013, Transport Scotland, which is part of Scottish Government, announced it was to
extend the period of the CHFS contract by a further three years, and go out to tender for a
new contract to commence in October 2016. This process is now underway.

COMPANY POLICIES
Environmental policy:
As per Cal Mac environment is direct public concern. So, they are concern about their
direct and indirect activities which are impacting environment. So, they aim to manage and
contain these impacts to a practicable minimum and to become an effective and trusted
partner within the communities in which they serve.
They have planned to conduct and monitoring its operation using the best practicable means
to protect the environment from impairment. The concept of best practicable Environment
option ( BPEO) and Duty of care will be implemented to established high standard of
operation in all companys activation.

Quality policy:
This organization is totally committed to achieving the highest management standards by

Consistently providing safe and efficient transport service which satisfies its

customer needs and expectation

Providing safe working environment
Complying all relevant safety regulations regarding safe working practices and

protection of environment
Continuous improvement
Comply ISO 9001:2008 and ISO 14001:2004
Developing knowledge and skill of staff

Health and safety policy:

This organization has a strong health and safety policy. They are committed to provide safe
environment by

Compliance to international safety management ( ISM) code and the port marine

safety code ( PMSC)

Promoting a safety culture
Continually improving risk based safety management system
Operating a safety committee to oversee the governance health and safety
Challenge unsafe behavior and bring unsafe situation in attention

MAJOR COMPETITORS
There are multiple competitors of Caledonian MacBrayne. For example:

Stena Line,

North Link Ferries,

Argyll Ferries etc.

RESEARCH OBJECTIVE

To know about the business strategy and performance about CalMac.

To learn the business strategies of the competitors.

To evaluate the strategic position of CalMac and recommend to betterment.

RESEARCH FINDINGS
The Scottish Government has extended the ferry service contract from six years to eight years
for internal ferry services. Government hopes that it will increase the competition between
private ferry companies and state owned ferry companies. In the previous bids the private
companies could not take the advantage due to strict rules imposed by the government. Eight
years deal will provide enough time to fulfill the conditions of government as well as to
make the business profitable. So, the entry barrier in this market is quite strong.
The participation of private ferry companies on the bid will increase the competition in the
passenger and cargo transport market in Scotland. So, the rivalry among the competitors will
increase.
Stena Line is going to launch a ferry named Stena Germanica wich will reduce the
Greenhouse gas emission by using Methanol as fuel. The cost of conversion will be Euro 22
million. Wrtsil will provide the technical support for this conversion. Both Methanol and
fossil fuel can be used in this ferry. The use of methanol will reduce the emission of Sulphur
about 99%, nitrogen (NOx) 60%, particles (PM) 95% and carbon dioxide (CO2) 25%. As a
result, it will be the first Ecofriendly Ferry in Scotland.
It seems that Stena Line is very much conscious about the social responsibilities and the
preservation of environment. This initiative will create a brand image among the customers
about Stena Line. Ecofriendly operational strategy will provide a strong competitive
advantage for Stena Line.
The Karlskrona-Gdynia ferry route is developing significantly in terms of passengers and
cargo transportation services. So, to meet the increasing demand Stena Line expanded its
service in this route by introducing the Stena Baltica besides the previous three ferries. The
number of departures in the route by Stena Line increased from 28 to 32. Stena Line is very
5

much adaptive in the strategy. With the change in the market demand it expanded the ferry
service so that it can enjoy fast mover advantage from this route.
It is highly conscious with the customer demand. The customer needed frequent ferry
departure on this route. Though Stena Line is facing hard situation in competing with other
companies, it is trying to serve the best by adopting the market oriented business strategies.
SWOT ANALYSIS ON CALMAC
STRENGTHS

WEAKNESSES

Government owned company.

Long run business experience on ferry.

Monopolistic ferry business on the

The number of ferries are not sufficient for

serving

the

increasing

numbers

of

passengers.

No innovative marketing plan.

CalMac is facing financial losses since last

specific routes.

Domestic

suppliers

and

employee

year.

friendly company.
OPPORTUNITIES

Potential for increased transportation of

THREATS

goods and passengers to national and

international routes.

operational positions.

The number of passengers and cargos are

increasing day by day.

Strong competitors in terms of financial and

The brand image of the competitors is very

high.

By increasing the number of ferries the

Privatization friendly policy taken by the

Government.

revenue can be increased significantly.

PORTERS 5 FORCE ANALYSIS ON CALMAC

6

Threat of New Entry :Low

1. Contract provided by the
Government for eight years.
2. Huge capital is required to
enter in shipping business.

Competitive Rivalry: High

As the competitors are quite
strong than CalMac in terms of
financial position the competition
will be high on the next bid
initiated by the Government.

3. CalMac is serving long time

in this route.

Supplier Power: Average

As there are few domestic
suppliers fixed by CalMac, the
suppliers power is average.

Threat of Substitutes: Low

-Substitute: Airlines
-Switching costs: Buyers have
high switching cost.

Buyer Power: Low

As the route is served by the
Government owned company the
buyers have low bargaining
power.
Price sensitivity: Buyers are not
highly price sensitive. Thus, they
have less power.

CalMac is a wholly subsidiary company owned by Scottish ministers who are regarded as
ultimate controlling party. This is 160 years old organization. We have seen that there is
multiple problems of this organization:

Vessels are too old to support the current demand

Current facilities and infrastructure are not suitable for loading and discharging
vessels

Some strong competitor has already in the market

Direct government control making the organization slow in decision taking

Volume of goods requiring shipment may not be great enough to justify increased
investment

Labor unrest happened recently which shows a clear organizational failure

No innovation happening in terms of customer support

No exceptional initiative for support environmental, safety and quality policies

No major marketing strategy to attract new customers

CALMACS PERFORMANCE AND RECOMMENDATION FOR IMPROVEMENT

The company enjoys a de facto monopoly on the shipment of freight and vehicles to the
islands, and competes for passenger traffic with number of aircraft services of varying quality
and reliability. But only few of these routes currently operated by CalMac are profitable, and
8

the company receives significant government subsidies due to its vital role in supplying the
islands - these routes are classified as "lifeline" services. But the Caledonian Mac Rayne is
not persuing the right strategy. As per our study we have seen they have multiple policies but
not are working in right way. This also reflects in their business result.
Their business result shows they were in a loss in 2015

The following are the recommendation to the CEO which can be done in upcoming days to
overcome the negative scenario of the business

Invest on new vessels

Invest on new innovation. Like fuel cost reduction initiative, find alternate fuel based
engine. Similar to stenaline shipping corporation doing

Evaluate new route and increase transportation of goods on nationally and internationally
by sea to reduce economic and environmental costs.

Increased frequency of ferry sailings at peak or popular times.

9

Introduce new and attractive service. Like: Fastest ferry service

Check the possibility to major expansion in cargo business

Focus on marketing strategy compare to competitor

Give promotional offer during off pick time. Example: 50% reduction in fare.

Give additional offer during pick time. Example: Tour package

Give more focus to safety and health. Also make it a major theme of the business
strategy

Mac cal is getting some awards but still need to do some improvement and try to get
more awards for improves service. This will attract new customer.\

Go collaboration with other organization for R&D so that new idea can be implemented
for service

10

Article-1:
Scottish Government seeks private sector competition for Calmac ferry services
18th February 2015 4:42 pm
Eight-year deal will encourage offers from new bidders
AN EXTENDED ferry services contract of eight years worth nearly 1bn will be available to
public and private sector bidders from June this year.
Scottish Government Minister Derek Mackay announced the lengthening of the contract from six to eight years - as part of a drive to increase private sector bids for west coastal ferry
contracts.
Mackay was quoted in The Scotsman as saying: This will make it more attractive to
potential bidders by giving the operator more opportunity to deliver service improvements
and efficiencies over the course of the contract.
Ferry services along Scotlands west coast are dominated by government-owned company
CalMac. The transport links currently receive public support to encourage travel and links
between rural and island communities.
Previously private sector groups have failed to bid for the contracts, claiming that the
responsibilities were too restrictive.
However, cases of ferry service privatisation have been met with anger from trade unions,
who point to reductions in staff terms and conditions.
Multinational company Serco took control of ferry services to Orkney and Shetland in 2012.
CalMac staff representatives in the Rail, Martime and Transport union, opposed attempts to
undermine worker conditions.
General secretary of the union Mike Cash said: We have to make it clear that if RMT do not
receive the basic assurances from the SNP government over maintaining existing contractual
employment and pension protections for our members, then a serious industrial situation will
arise.
The list of approved bidders will be revealed in June this year, with with the preferred bidder
announced in May 2016.
Source URL:https://www.commonspace.scot/articles/418/scottish-government-seeks-privatesector-competition-for-calmac-ferry-services

11

Article-1# Synopsis:

Monowara Akter, ID-1407008

The Scottish Government has extended the ferry service contract from six years to eight years
for internal ferry services. Government hopes that it will increase the competition between
private ferry companies and state owned ferry companies. In the previous bids the private
companies could not take the advantage due to strict rules imposed by the government. Eight
years deal will provide enough time to fulfill the conditions of government as well as to
make the business profitable. So, the entry barrier in this market is quite strong.
Rail, Martime and Transport union of CalMac is opposing the decision of extending ferry
contract time. If the internal ferry routes take over by the private ferry companies, the
employees may lose their job as well as the facilities provided by the government. An unrest
situation may occur.
The participation of private ferry companies on the bid will increase the competition in the
passenger and cargo transport market in Scotland. So, the rivalry among the competitors will
increase.

12

Article-2:
Stena Line drastically reduces emissions with the worlds first methanol ship
WED, NOV 19, 2014 12:51 CET
One of the worlds biggest ferry companies, Stena Line, becomes the first operator in
the world to run a large 1 500 passenger ferry on methanol, drastically reducing
emissions compared to todays standard fuel.
Stena Line has decided to convert one of its ships sailing between Gothenburg and Kiel to
methanol propulsion. The 240 meter long ferry Stena Germanica will be the first ship in the
world to run on methanol in early 2015. The project is done in co-operation with the leading
engine manufacturer Wrtsil, the port of Gothenburg, the port of Kiel and the worlds largest
methanol producer and supplier Methanex Corporation.
Stena Germanica will be converted at Remontova Shipyard in Poland starting January 2015,
the process is expected to take six weeks and is financially supported by the EU Motorways
of the Seas initiative. Total project cost is about Euro 22 million.
"At Stena Line we are extremely proud of contributing to the development of our industry.
Our focus has always been on innovation for the benefit of both customers and society at
large and this is a prime example when this goes hand in hand. We are constantly evaluating
different fuels for the future and to be first in the world with a methanol conversion is a big
step towards sustainable transportation. The project has been possible thanks to the great
teamwork and collaboration between our technical staff, Wrtsil and Methanex, says CarlJohan Hagman, CEO of Stena Line.
Wrtsil has developed the new engine conversion kit and ship application in co-operation
with Stena Teknik. The engine will be dual fuel using methanol as the vessels main fuel grade
but with the ability to use MGO (Marine Gas Oil) as backup.
Methanol is a clear, colorless biodegradable fuel that can be produced from natural gas, coal,
biomass or even CO2. Methanol plays a key role in the energy sector as a clean and cost
competitive alternative fuel and energy resource. By using methanol the emissions of sulphur
(SOx) will be reduced about 99%, nitrogen (NOx) 60%, particles (PM) 95% and carbon
dioxide (CO2) 25% compared with todays fuel.
"Due to our size we have a broad perspective on handling the new sulphur regulations and it
is likely we will use some different types of solutions in the coming years. However, based on
the results of the methanol project we are intending to convert additional ferries, says Stena
Line CEO Carl-Johan Hagman.
Methanol has the potential to be an important fuel for the shipping industry in the future. The
emissions are similar to using LNG but the need for infrastructure is much less and handling
is simpler. Since 2005 Stena Line has worked to reduce its environmental impact within its
Energy Saving Programme, which has successfully reduced vessel energy consumption by on
average 2,5 % every year.
Source URL :http://news.cision.com/stena-line/r/stena-line-drastically-reduces-emissionswith-the-world-s-first-methanol-ship,c9682342

13

Article-2 # Synopsis:

Md. Hasim Hasnat, ID-1407026

This news article says the recent success story of one of the biggest ferry companies, stena
line, becoming the first operator in the world to run large 1500 passenger ferry on methanol
as a fuel which will drastically reduce the emission compared to other fuel. Leading engine
manufacturer Wartsila and methanol supplier Methanex are giving technical support for this
22 million euro project which will take 6 weeks time starting from January 2015. With this
change the engine can run using both fuel- either methanol or regular fuel MSG (marine gas
fuel).
As per the article- stena line has chosen methane as alternate fuel as this is biodegradable,
cheap and easy source which is coming from natural gas, coal, biomass or even CO2. It will
help to reduce SOX emission 90%, NOX 60%, particles 95% and CO2 25% compare to
current fuel.
In this article CEO of Stena line has mentioned that they are proud for this innovation. He
mentioned that they are committed to the society to a make a sustainable transportation
system, and methanol conversion based engine is the initiative of that commitment. As per
article since 2005 Stena line is working to reduce environmental impact by taking different
energy savings program. Since then every year they reduced average 2.5%. They are
expecting in future they will bring much more upgraded solution to reduce environmental
impact.

14

Article-3:
NorthLink picks up Best Ferry award
Wednesday, March 9, 2016, at 1:46pm
NorthLink Ferries has scooped a national award at this years Guardian and Observer Travel
Awards.
The ferry operator was awarded the title of Best Ferry at the annual ceremony, which
celebrates the best in travel and tourism services across the world.
Speaking of the award, Stuart Garrett, managing director of NorthLink Ferries, said: We are
extremely honoured to have received this prestigious national accolade. Wed like to thank
everyone for their ongoing support and to those who voted for us.
The award not only recognises NorthLink Ferries as ferry operator of choice, but helps to
showcase Scotland, and indeed the Northern Isles, as an exciting UK tourism destination.
Source URL :http://www.orcadian.co.uk/2016/03/northlink-picks-up-best-ferry-award/

15

Article-3# Synopsis:

Khaled - Ibne- Rashid Patwary, ID-1407004

NorthLink Ferries has been awarded as Best Ferry. This national award is given based on
the survey on the readers of the Guardian and Observer. This award has provided a special
brand image to NorthLink. This award reminds the other competitors of NortLink such as
CalMac, StenaLine about the quality of service provided by NorthLink.

A journey with NorthLink Ferries offers the perfect gateway to exploring the Scottish
Northern Isles which are rich in prehistoric ruins, spectacular coastlines and stunning
wildlife. The plethora of facilities on board across the vessels include the Viklings Den play
area for children, delicious food available featuring locally sourced produce, the exclusive
Magnus Lounge and even a cinema showing the latest releases.
So, NorthLink has got its brand image on customers mind which will provide a great great
competitive advantage to it.

16

Article-4:
Stena Line is expanding services on Karlskrona-Gdynia
THU, APR 23, 2015 09:00 CET
There has been a very strong development in freight on the Karlskrona-Gdynia route in
recent years. Now, the operations are being further strengthened with more departures,
which means increased capacity on the route to meet the strong demand.
2014 was yet another strong year, in which the freight volume increased by full 14 percent,
compared to 2013, and the boom has continued this year.
"Despite a tough competitive situation, the development on Karlskrona-Gdynia has been very
positive during recent years. We believe that this will continue and we are now expanding the
operations with more attractive departure times. Our operations are very flexible and we can
quickly adapt and adjust to the market demand. This gives us a great competitive advantage,"
Tony Michaelsen, Route Director, Region Baltic Sea, says.
In January this year, a return trip on Mondays was added to meet the demand for freight
capacity on northbound services from Gdynia. And, in the middle of April, a further round
trip was added on Fridays to meet the demand for southbound freight from Karlskrona.
"Freight is increasing in both directions and, at the end of last year, we saw a great need for
additional capacity. Compared to last year, we have now expanded from 28 to 32 departures a
week," Jacob Koch-Nielsen, Freight Manager, Scandinavia, says.
The route is currently served by three ferries, the Stena Vision, Stena Spirit and Stena Baltica.
The four new departures are served by the Stena Baltica.

Source URL :http://news.cision.com/stena-line/r/stena-line-is-expanding-services-onkarlskrona-gdynia,c9760978

17

Article-4# Synopsis:

( Mehri Sanam, ID- 1407032)

The Karlskrona-Gdynia ferry route is developing significantly in terms of passengers and

cargo transportation services. As a result, the demand of new ferry services with frequent
departures is increasing in recent years. In 2014 the volume of cargo transport in this route
increased 14% than the previous year.

So, to meet the increasing demand Stena Line

expanded its service in this route by introducing the Stena Baltica besides the previous three
ferries. The number of departures in the route by Stena Line increased from 28 to 32.
Stena Line is very much adaptive in the strategy. With the change in the market demand it
expanded the ferry service so that it can enjoy fast mover advantage from this route.
It is highly conscious with the customer demand. The customer needed frequent ferry
departure on this route. Though Stena Line is facing hard situation in competing with other
companies, it is trying to serve the best by adopting the market oriented business strategies.

18