ECONOMY

Ferry firms facing dire straits

Some ferry operators are at risk of being forced out of business in the months ahead, an annual report released Monday warns.

According to the study, prepared by XRTC, the coastal shipping sector is under strong pressure from many negative factors for a fourth straight year. Operators are faced with a serious drop in business, on some routes approaching 15 percent for vehicles and 25 percent in passenger traffic in the 2009-11 period, and the falling trend is continuing. The situation is being exacerbated by the high cost of fuel, which represents more than 50 percent of ferries? daily operating costs.

Moreover, the government has been delaying the disbursement of subsidies for the unprofitable routes for long periods reaching up to eight months. This is increasing ferry operators? liquidity problems and they occasionally have difficulty paying for fuel.

The problems of the banking sector are adding to the woes.

?With the country?s biggest banks choked of liquidity and using auxiliary capital, it is easily understood that additional liquidity problems arise for ferry operators, with credit becoming increasingly scarce,? XRTC?s report notes.