Shipowners are looking to ship managers to be partners, delivering on transparency, trust and reliability, digitalisation, sustainability and ESG in the energy transition, writes Viridian Maritime managing director Arvind Mohan
Traditionally, the qualities shipowners and operators looked for in ship managers were transparency, trust and reliability. Now, owners are looking for larger, more impactful expectations from a manager, namely digitalisation, sustainability and ESG.
In this rapidly evolving, digitalised, eco-friendly shipping environment lies the ship manager’s challenge to adapt and be prepared to work with these changes. When we established Viridian Maritime, our entire aim was to change the manner in which ship management was historically operated. There was certainly a requirement for a breath of fresh air on how assets are managed and how operational teams delivered on their promises to asset owners and agreed operating cost budgets.
Words like transparency and trust need to have real meaning — not just be words on paper. How does a ship manager prove to a prospective owner that he is trustworthy and transparent when one is not yet managing their assets? This is the proverbial ‘chicken-and-egg’ situation.
Viridian Maritime changed this outlook. We spoke more about tangible and measurable benefits, about each team member’s experience, what they brought to the table, how cash flow was prudently managed, how KPIs were agreed, how our forward-looking monthly management reports worked and gave a snapshot and a bird’s-eye view to all stakeholders in the business. As a niche provider of services, this has allowed us to exceed asset managers expectations. Changing the equation between an owner and ship manager from a pure transactional service to partners, achieving well-defined objectives, makes the relationship stronger and the growth organic.
Processes
Technology and systems are as good as the people who use them; those who input the data and those who eventually receive the data. We instead opted for a simpler solution, as people at both ends need to review and know whether the data and information they are churning out is of any use in the first place. Additionally, one size does not fit all; the amount of information required for a fleet of vessels versus two or four vessels is different. These variables need to be understood at the beginning and adjusted as the vessel management progresses.
As partners with shipowners, Viridian Maritime has discussed with our clients a KPI structure whereby the management fee agreed is based on an outcome of the performance, measured quarterly or bi-annually. The structure is built such that there is both an upside and a downside for meeting or not having met the agreed parameters, respectively. Additionally, as the surrounding dynamics change, say for instance Covid-19, and associated costs surrounding this, a mechanism is in place to have these reviewed and updated.
KPIs without context and irrelevant data do not reflect the true picture. Agreed KPIs should be different for different vessels, or even at times for vessels within the same type, as the trading and end clients’ requirements could be very different. This amount of agility is required.
Seafarers and personnel
Seafarers and seafaring continue to change and evolve. Indeed, we would not be surprised if the current pandemic leads prospective young entrants to think twice about a seafaring career. The pandemic has left many unable to get home on time, endlessly quarantined in countries where they travel to embark a vessel, and much talk but little action on recognising seafarers as essential workers. All this will have a cascading effect in the years ahead, posing a challenge to quality.
Further challenges will come with the advent and improvement of technology and automation on vessels. This will result in a lower number of crew on board, higher level of interactions with shoreside personnel and new sailing routes in line with the changing demographics of the world.
The industry needs a plan in place now to proactively manage these upcoming requirements and mitigate some of these challenges in the future; a siloed approach will not work now to deliver these future expectations.
Future fuel challenges
The next generation of seafarers will be critical to operating future fuel-efficient vessels that burn ammonia, methanol and LNG. The industry does not currently have a pool of seafarers experienced enough to manage these requirements. Additionally, there is a dearth of experienced personnel ashore to manage these possibly complex assets. This will create more opportunities for those on board to move ashore, further exacerbating the shortage of seafarers.
The focus of remotely controlling the vessel instead of supporting the crew is also impacting crew behaviour, making them more reliant on shore support rather than improving their own capabilities.
At Viridian Maritime, we emphasise empowering our seafarers to increase their potential and their mentoring capabilities. Many of the new vessels and emissions technologies are not being designed or built with input from the seafarer or from shore-based ship managers — who must adapt to safely operate these vessels. It remains essential that in consultation with all stakeholders, we work to plan ahead, instead of preparing at the very last stages.
These discussions involve discussing risks and mitigating actions for what could possibly lie ahead to remain one step ahead of this rapidly evolving business. This is an indispensable requirement for our business and a crucial one for anyone who is part of our organisation.
Markets
Ship management markets in our view are a ‘zero-sum balance’ service business. For example, if 10 vessels exit a managed fleet of 500 vessels, this effectively impacts 2% of a ship manager’s fleet. However, if the same number of vessels exits a mid-sized manager with 20 vessels that is effectively wiping out 50% of his business. The differences and impact are stark. The point is a mid-size manager, as a result, will go the extra mile to meet expectations and ensure vessels do not leave their management. We take pride in delivering our services and manage vessels like our own — akin to what an owner would do themselves.
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