www.gl-group.com | www.gl-maritime-software.com
Best practice shipmanagement study 2013
Overview and study results, Hong Kong – 07 August 2013
Kevin M. BrunnDirector Clients & Markets
Ivan TamManager Clients & Projects
GL Maritime Software
Introduction
Best Practice Ship Management Study | 07 Aug. 2013 | No. 2
GL Maritime Software
• Best Practice comprises all approaches, procedures, business models or tools that ship managers use to do their business smarter, safer, and greener – i.e. to be on top of competition.
• Ship managers are under increasing pressure. Overcapacity in the market is driving charter rates down. Ship owners face higher costs to finance vessels. Ship operators fight for cargo and drive down their main cost block, which is fuel. Ship managers sit in the middle with increasing burdens for the same management fees.
• In 2013, GL (Germanischer Lloyd) and Fraunhofer Center for Maritime Logistics and Services conducted a study involving around 100 ship management companies worldwide to find out what they are doing to improve their operations and what they consider as “best practice” in the industry.
• We would like to share these best practices with you and to give you the chance to reflect against your own operations and get inspiration and ideas on additional improvement areas.
• Presenters:
• Ivan Tam, MSc – Manager Clients & Projects, GL Maritime Software, Hong Kong
• Kevin Brunn, MBA, BSc – Director Clients & Markets, GL Maritime Software, Hamburg
GL Maritime Software
� GL Maritime Software is the software
provider and system integrator for the
maritime industry. We improve our clients’
processes and decisions in ship
operations and fleet management, both
onboard and onshore.
� GL-Group is the world class technical
advisor and trusted partner in
assurance, consulting and classification
for the maritime and energy industries.
We enable our clients to build and
operate their assets smarter, greener
and safer.
Key Figures
7,900 Vessels Served
6,700 Employees
200 Offices Worldwide
Co
nte
nts
A Market Overview and InsightsIvan Tam
B Results of the Best Practice StudyKevin M. Brunn
D Drinks receptionShare your experience on Best Practice with us and others
C Q&A / Distribution of your personal copy of the study
GL classed “Shanghai Express”, 13.000 TEU, 366m long, delivered March 2013
• After only four months, Asia – Northern Europebox rates reached their lowest level in more thana year.
• Spot rates have fallen by more than 40% sinceJanuary 2013.
• The intended rate increase by carriers failed
• Despite the state of the market, newbuildingordering has not halted. “Giants” abound - Largeliner companies are focussing on maximisingeconomies of scale.
• More and more smaller container lines are forcedout of the East-West trades, because they are nolonger competitive
• Trend towards consolidation of services
• Nevertheless, containerised trade to grow by5.5%
• With newbuild prices down, and advantages of
new “efficient” ships, vessel deliveries forecastedat 1.4 m TEU for 2013 (up 10%)
Market Summary – First half-year 2013
Liner companies suffer from low rates CONTAINER
Global Containerised Trade
200
150
100
50
2014201320122011201020092008200720062005
Other
North-South
Non-Mainlane East-West
Transatlantic (EU-US)
Far East-Europe
Transpacific (FE-US)mTEU
+ 7% + 4%+ 6%
+ 6%
*
(Expected) Contracting
mTEU
2,0
1,5
1,0
0,5
20112008 20102009 2015201420132012
<3k TEU>12k TEU 3-8k TEU8-12k TEU
Best Practice Ship Management Study | 07 Aug. 2013 | No. 5
GL Maritime Software
GL classed “Shanghai Express”, 13.000 TEU, 366m long, delivered March 2013
• Stable growth of oil & product trade around4%
• Overcapacity of fleet continues
• Earnings are at bottom, bunker pricessoaring
• Time charter and spot rates continue to
decrease (both falling by further 2%compared to 2012)
• But, declining orderbook (down 11% from2012) could diminish supply – demand gap
in 2014
• Future contracting is key to market balance
• Newbuilding prices stable but low
• Second hand market picking up (+10%)
Market Summary – First half-year 2013
Positive demand forecast, but still slowTanker
(Expected) Contracting
10
40
20
30
2011 20142012 20152013201020092008200720062005
Aframax
Suezmax
VLCC
Panamax
HandymGT
-6
-4
-2
0
2
4
6
8
20152014201320122011201020092008
Fleet Expansion vs. Demand Growth
Demand Growth Rate
Fleet Growth Rate
% p.a.
Best Practice Ship Management Study | 07 Aug. 2013 | No. 6
GL Maritime Software
GL classed “Shanghai Express”, 13.000 TEU, 366m long, delivered March 2013
• Despite demand growth (7%) driven by ironore and coal, overcapacity in almost allsegments keeps market down
• 3 consecutive years of double-digit fleetgrowth
• 2013 deliveries significant, but declining
• Calm contracting and melting orderbook willbalance supply and demand after 2014
• Earnings currently at or below operationalcosts, but rates expected to improve after
supply – demand gap closes
• But certain owners with good cash / fundingposition (e.g. Frontline) are able to leveragelow newbuild prices to replenish fleet with
efficient vessels
• Secondhand prices increasing
Market Summary – First half-year 2013
Bulker market to remain down Bulkers
(Expected) Contracting
100
80
60
40
20
20152014201320122011201020092008200720062005
Handysize
Handymax
Panamax
CapesizemGT
Time Charter Rates
.000 USD
per day
100
50
150
2012201120102007 2008 2009 2013
Capesize
Handy
Panamax
Handymax
Best Practice Ship Management Study | 07 Aug. 2013 | No. 7
GL Maritime Software
Co
nte
nts
A Market Overview and InsightsIvan Tam
B Results of the Best Practice StudyKevin M. Brunn
D Drinks receptionShare your experience on Best Practice with us and others
C Q&A / Distribution of your personal copy of the study
The best practice study serves as a guide to reflect own
ideas, priorities and have a look “over the fence”
• Collection of over 50 common qualitative observation and quantitative statistics across all companies
• Derivation of 30 best practice measures in the 5 key areas of all ship managers
• Many connected context boxes with subjects that came up
A “Best practice” is not understood as recipe that fits in all circumstances to all companies.
Best Practice Ship Management Study | 07 Aug. 2013 | No. 9
GL Maritime Software
Shipping companies are using the crisis to sort
themselves – our study should help
We have asked around 100 shipping companies around the globe:
• What are the areas you are working on to improve your business?
• What have you seen in other companies you consider as “best practice”?
“Best practice” in this study comprises all approaches, procedures, business models or tools that ship managers are using to do their business smarter, safer and greener, i.e. to be on top of competition.
Best Practice Ship Management Study | 07 Aug. 2013 | No. 10
GL Maritime Software
Recap: Is ship management an attractive market to be in?
• 3-5bn USD annual fee volume for ship management services (not all 3rd
party)
• Growing fleet with
• technically more challenging assets
• underlying stricter regulations
• with more difficult to find crew and
• increasing pressure and costs and quality
• will nurture professional ship management be they 3rd party or in-house.
Growing, but... ... highly competitive
1 Clarksons Research, 2013
Best Practice Ship Management Study | 07 Aug. 2013 | No. 11
GL Maritime Software
• More than 1500 companies are managing 10+ vessels
• Only 150 manage 40+
• Many midsize and small companies in the market
Is looking at best practice common?
Best Practice Ship Management Study | 07 Aug. 2013 | No. 12
GL Maritime Software
Where are the biggest perceived challenges?
Best Practice Ship Management Study | 07 Aug. 2013 | No. 13
GL Maritime Software
Results summary: Best practice in crewing
• In 2010, there were around 1.4 million active seafarers
Best Practice Ship Management Study | 07 Aug. 2013 | No. 14
GL Maritime Software
• There is particular concern over current and future availability of senior officers, especially engineers, in the Far East and Indian subcontinent
Results summary: Best practice in crewing
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Of all respondents are actively looking at best practice measures in crewing
• 77% - organizational measures
• 73% - process measures
• 52% - IT measures
69%
Results summary: Best practice in crewing
Best Practice Ship Management Study | 07 Aug. 2013 | No. 16
GL Maritime Software
Getting the same senior officers back onboard of the same vessel is
the ultimate goal of crew planning. Fewer crew changes mean lower
costs and more commitment from senior officers for ‘their’ vessel.
Representative quotation:
Results summary: Best practice in crewing
• Organizationally, many shipping companies re-insource crewing activities
again
• Culturally, a lot of focus is given to training, development,
welfare package and teamwork.
• Process-wise, re-insourced
crewing processes need proper system support
Common observations Best practices
• Invest in culture and teamwork
• Invest in crew welfare packages
• Integrate training, appraisal and development management systems
• Use a combination of personal and computer-based training
• Use an integrated crewing solution onboard and onshore
Best Practice Ship Management Study | 07 Aug. 2013 | No. 17
GL Maritime Software
Best Practice Ship Management Study | 07 Aug. 2013 | No. 18
GL Maritime Software
Of all respondents are actively looking at best practice measures in technical management
• 77% - organizational measures
• 85% - process measures
• 69% - IT measures
65%
Results summary: Best practice in technical mgmt.
Best Practice Ship Management Study | 07 Aug. 2013 | No. 19
GL Maritime Software
Life Cycle Management is a growing trend in Technical Management
• 82% - focus on machinery
• 74% - focus on hull structures
Results summary: Best practice in technical mgmt.
Best Practice Ship Management Study | 07 Aug. 2013 | No. 20
GL Maritime Software
We have focussed too much on ‘papers’ and we are asking every day
for more and more paperwork, forgetting the ‘hardware’, i.e. the
ship’s structure.
Representative quotation:
Results summary: Best practice in technical mgmt.
Results summary: Best practice in technical mgmt.
• Different organisational options are tried out, “fleet teams” becomes common
• Planned Maintenance Systems standard
• Life cycle management view
with increasing importance
Common observations Best practices
• Organize along processes
• Build processes around a state-of-the-art planned maintenance system
• Harmonize and centralize the management of master data
• Manage a key element of your maintenance budget: dry dockings
• Pay attention to hull maintenance
• Embrace condition based maintenance
Best Practice Ship Management Study | 07 Aug. 2013 | No. 21
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Best Practice Ship Management Study | 07 Aug. 2013 | No. 22
GL Maritime Software
Of respondents are actively looking for best practice measures in Financial Management
• 55% - process measures
• 55% - IT measures
• 50 % - organizational measures
45%
Results summary: Best practice in financial mgmt.
Results summary: Best practice in financial mgmt.
Best Practice Ship Management Study | 07 Aug. 2013 | No. 23
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Growing trend towards business intelligence applications in shipping to integrate data and automate reporting
Best Practice Ship Management Study | 07 Aug. 2013 | No. 24
GL Maritime Software
Managers with field experience should be employed in Finance.
Representative quotation:
Results summary: Best practice in financial mgmt.
Results summary: Best practice in financial mgmt.
• Separation of finance from operations seen as issue
• Too much complexity built up in last years
• State-of-the-art finance systems not common
Common observations Best practices
• Integrate Operations with Finance
• Simplify and harmonize the accounting structures
• Centralize the invoice registration process
• Harmonize and automate reporting
• Invest in cash management procedures
Best Practice Ship Management Study | 07 Aug. 2013 | No. 25
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Best Practice Ship Management Study | 07 Aug. 2013 | No. 26
GL Maritime Software
Fires and explosions are 3rd greatest reason for total loss of vessels, 5th largest reason for accidents at sea, and fire safety is no. 1 in PSC findings (every 5th detention)
Results summary: Best practice in quality & safety mgmt.
Best Practice Ship Management Study | 07 Aug. 2013 | No. 27
GL Maritime Software
Of respondents are actively looking for best practice measures in Quality & Safety Management
• 79% - organizational measures
• 73% - process measures
• 58% - IT measure
45%
Results summary: Best practice in quality & safety mgmt.
Best Practice Ship Management Study | 07 Aug. 2013 | No. 28
GL Maritime Software
The critical success factor is awareness of the individual crew
member that he can make a difference in both quality and safety, and
all focus of a Quality & Safety Management system is directed
towards this.
Representative quotation:
Results summary: Best practice in quality & safety mgmt.
Results summary: Best practice in quality & safety mgmt.
• Dedicated QS teams reporting to MD common
• Staff awareness on QS issues is critical success factors
• Process supporting systems start to come in
Common observations Best practices
• Move from QS to QHSE
• Deploy and monitor regular crew training on safety issues
• Nurture a “no accusation / blame” culture
• Use integrated Quality & Safety solution
• Automatically produce regular quality and safety KPI reports fleet-wide
• Have risk assessment integrated in regular processes
Best Practice Ship Management Study | 07 Aug. 2013 | No. 29
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Results summary: Best practice in procurement
Best Practice Ship Management Study | 07 Aug. 2013 | No. 30
GL Maritime Software
Results summary: Best practice in procurement
Best Practice Ship Management Study | 07 Aug. 2013 | No. 31
GL Maritime Software
Our goal is to move from “just purchasing” to a more strategic supply
chain management perspective. This includes materials and vendor
management as well as the whole transportation, storage, material
and information flow.
Representative quotation:
Results summary: Best practice in procurement
• Organisational and process measures common to increase data quality
• Purchasers are bound into processing and have too little time for sourcing activities
• Supplier treatment changes to a more long-term partner approach
Common observations Best practices
• No purchase outside the system (no “maverick buying”)
• Harmonize and centralize the management of master data
• Communicate with suppliers electronically
• Plan demands fleet-wide
• Embrace strategic sourcing activities
• Reduce number of suppliers
Best Practice Ship Management Study | 07 Aug. 2013 | No. 32
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The role of information and communication technologies
• Shipping has in the past largely underinvested into IT (e.g. compared to Oil & Gas industry)
• Despite crisis majority of respondents do not cut back IT budgets
• Enabling function for best practices is well understood among respondents
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The role of information and communication technologies
Trends:
1. IT budgets are not being cut
2. A generation change in management is lowering barriers
3. Software usage strategies vary but come closer together
4. Buying criteria are stable
5. Many implementation projects fall short of expectations
6. The need for services around software is increasing
Best Practice Ship Management Study | 07 Aug. 2013 | No. 34
GL Maritime Software
Co
nte
nts
A Market Overview and InsightsIvan Tam
B Results of the Best Practice StudyKevin M. Brunn
D Drinks receptionShare your experience on Best Practice with us and others
C Q&A / Distribution of your personal copy of the study
Good fleet management solutions build in and support a
lot of shipping best practices
Best practice GL Solution
GL Maritime Software | 10.08.2013 | No. 36
Central and fleet wide management of master data (equipment, spares, jobs, certificates etc)
“Fleet Equipment register” in GL ShipManager
Use all available information to specify and execute dry dockings
New Dry Docking tool in GL ShipManager
Deploy a central purchase platform and communicate with suppliers electronically
Procurement module with e-commerce interface in GL ShipManager
Focus maintenance also on hull integrity GL HullManager
Connect available data in business systems to management reports and KPIs
GL FleetAnalyzer
Reduce the own investment into onshore IT environment
Managed Server solution
Examples
Ship management Ship operations
The most comprehensive and innovative portfolio in
the industry
GL CrewManager
Complete crew management
package supporting planning, dispositioning, data / certifi-cates mgmt., rest hours, ...
GL HullManager
Advanced hull integrity
solution supports inspections and thickness measurement processes based on interactive 3D ship model
GL FleetAnalyzer
Business Intelligence solution,
gets you information out of your different operational data for flexible and powerful reporting & analysis
GL ShipManager
Shipmanagers workbench to
support all key processes (maintenance, procurement, quality / safety, onboard administration, etc)
GL SeaScout
Navigational decision support
system helps you navigate through bad weather without damages on shortest route
EcoAssistant
Software system to save fuel
without modifying your vessel by optimal trim
GL MachineryManager
Integration platform for all
condition monitoring machinery information (e.g. visual inspections, vibration, oil analysis, perf. monitoring)
GL FleetManager -Finance module
Complete finance system incl. Accounting, Controlling, Cash, Intercompany for shipping CFOs
GL EmissionManager Smart solution for onboard voyage reporting and onshore emission- and fleet performance analysis
Provided By FutureShip
GL Maritime Software | Software solutions for increased performance | Slide 37
Currently in pilot stage
Co
nte
nts
A Market Overview and InsightsIvan Tam
B Results of the Best Practice StudyKevin M. Brunn
D Drinks receptionShare your experience on Best Practice with us and others
C Q&A / Distribution of your personal copy of the study
www.gl-maritime-software.com
Thank you!
[email protected] www.gl-maritime-software.com
Ivan TamManager Clients and ProjectsTel. +852 6111 4320Email: [email protected]
Kevin BrunnDirector Clients and MarketsTel. +49 381 673 11 37Email: [email protected]
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