In Business : SSA reports financial improvements in 2009
The national economic collapse, building since early 2007, culminated in the last quarter of 2008. And, although in 2009 the nation experienced reduced business activity, a severely damaged housing market and high unemployment, the Steamship Authority's performance generally improved when compared with 2008.
Chief contributors to the improvement were sharply lower fuel costs in 2009 - more than 40 percent lower than in the previous year - along with a reduction in scheduled trips made by SSA vessels, and modest increases in revenues from passenger and auto traffic, especially on the Vineyard routes.
"The Steamship Authority's net operating income for the year 2009 was $3,649,208 or some $2,320,147 or 174.6 percent higher than the previous year," according to an unaudited report prepared by Robert B. Davis, boatline treasurer/comptroller. The SSA had anticipated a net $470,613, or 11.4 percent, more in its 2009 budget.
Operating expenses in 2009 were $74,764,381, or 5.4 percent, below expenses during the previous year. Fuel costs in 2008 were extremely and unexpectedly high, as crude oil ranged above $100 a barrel during the first three quarters.
Operating revenues for 2009 totaled $79,780,480, about a million and a half dollars, or 1.9-percent lower than in 2008. The authority, which builds each year's budget on the actual results of the 12 months prior to July of each year, had estimated operating revenues $5,425,802, or 6.4 percent, higher than they turned out to be. The sharp downturn that gathered speed and momentum in the fall of 2008 undercut the boatline's performance earlier in the year, during the period in which 2009 budget data was being assembled.
Freight revenue fell nearly 10 percent in 2009, creating a budget shortfall of $3.5 million, or 15.7 percent. Freight traffic (trucks) fell more sharply on Nantucket routes, and small truck traffic to and from the Vineyard actually increased marginally.The 2009 revenue boost came from automobile revenue, up approximately 2.1 percent over the prior year, although auto traffic on Nantucket routes decreased, while Vineyard auto traffic rose slightly. Passenger revenue in 2009 also increased $397,000, or 1.6 percent. Parking revenue also increased.
On the expense side, the boatline gave up ground on maintenance, whose costs rose 2.8 percent over 2008.
"The increases," Mr. Davis wrote, "are primarily attributable to higher vessel repair expenses as dry-dock expense increased by $495,000; engine parts and repair increased by $1,179,000 and other miscellaneous vessel repairs increased by $648,000 while dolphin and dock work at the terminals decreased by $1,687,000 and software maintenance decreased by $228,000... [The increase] includes various projects which were accelerated into 2009's maintenance activities as unbudgeted expenses. These unbudgeted expenses include $257,000 in dry-dock expense for the M/V Nantucket and M/V Iyanough; $1,376,000 in engine parts and repairs primarily for the M/V Governor, M/V Sankaty, M/V Gay Head and M/V Iyanough; and $995,000 in miscellaneous repairs for the M/V Martha's Vineyard, M/V Nantucket and M/V Iyanough."
Vessel operating expenses fell by $4 million, or 16.6 percent, compared with 2008.
"This decrease was chiefly due to lower payroll expense and fuel oil expense," Mr. Davis reported. The boatline ran 351 fewer trips to and from both islands during 2009. The schedule reduction affected both fuel and personnel costs, and fuel cost reductions added substantially to the savings.
"Vessel payroll expense in 2009 decreased by $61,000, or 0.4 percent, versus 2008 payroll expense," according to Mr. Davis. "Vessel fuel oil expense was $5,511,000, which was $3,765,000, or 40.6 percent, lower in 2009 than in 2008."
Fuel conservation and the reduced schedule saved 126,000 gallons of fuel year over year.
The current year budget, built on results from the 12 months ended in July 2009, finds the line ahead of its projections, at least in January, Mr. Davis said this week. February performance fell off. Advance auto reservations early this year, which had been off the 2009 pace, have begun to pick up, the treasurer reported. And, fuel costs have been climbing as the economy has improved, here and elsewhere in the world. The Steamship Authority, Mr. Davis said, has bought call options on fuel oil as a hedge strategy designed to cap the boatline's exposure to fuel price hikes.
Looking ahead, Steamship Authority traffic statistics through March 14 show continuing year over year improvement in both passenger and automobile volume and a halt to the decline in truck (freight) volume. That's true on the Vineyard runs.
Vineyard passengers are 3.1 percent higher this year through mid-March. That's a total of 6,667 more passenger trips. Cars are up 4.3 percent, compared with the same year-to-date period. That's a total increase of 1,948 autos. There has been no change in freight numbers year to date compared with 2009.
For Nantucket, the news is not as good. Passengers to and from Hyannis are off one tenth of one percent, cars five tenths of a percent, and trucks down 9.1 percent.
Despite the mixed results for the two islands, for the line as a whole, revenue has increased 2.2 percent for passengers and 3.3 percent for cars. Freight revenue is down 6.1 percent for the two islands during the period.