GL Best Practice Ship MGMT - HKSOA - 20130708 PDF

Best practice shipmanagement study 2013
Overview and study results, Hong Kong 07 August 2013
Kevin M. Brunn
Director Clients & Markets
Ivan Tam
Manager Clients & Projects
GL Maritime Software
www.gl-group.com | www.gl-maritime-software.com
Introduction
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
Best Practice Ship Management Study | 07 Aug. 2013 | No. 2

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
A Market Overview and Insights
Contents
Ivan Tam
B Results of the Best Practice Study

Kevin M. Brunn
C Q&A / Distribution of your personal copy

of the study
D Drinks reception
Share your experience on Best Practice with us and others
Market Summary First half-year 2013
Liner companies suffer from low rates

Global Containerised Trade
mTEU
200
Transpacific (FE-US)
Non-Mainlane East-West *
Far East-Europe
North-South
Transatlantic (EU-US)
Other
+ 7%
150
+ 4%
+ 6%
CONTAINER
After only four months, Asia Northern Europe

box rates reached their lowest level in more than
a year.
+ 6%
Spot rates have fallen by more than 40% since

January 2013.
The intended rate increase by carriers failed
100
50
GL classed Shanghai Express, 13.000 TEU, 366m long, delivered March 2013
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
(Expected) Contracting
mTEU
>12k TEU
8-12k TEU
3-8k TEU
Despite the state of the market, newbuilding

ordering has not halted. Giants abound - Large
liner companies are focussing on maximising
economies of scale.
More and more smaller container lines are forced
out of the East-West trades, because they are no
longer competitive
<3k TEU
2,0
Trend towards consolidation of services
1,5
Nevertheless, containerised trade to grow by

5.5%
1,0
With newbuild prices down, and advantages of

new efficient ships, vessel deliveries forecasted
at 1.4 m TEU for 2013 (up 10%)
0,5
2008
2009
2010
2011
2012
2013
2014

2015

Tanker
Positive demand forecast, but still slow

Stable growth of oil & product trade around

4%
40
mGT
Overcapacity of fleet continues
30
Earnings are at bottom, bunker prices

soaring
20
Time charter and spot rates continue to

decrease (both falling by further 2%
compared to 2012)
Handy
Suezmax
Panamax
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Fleet Expansion vs. Demand Growth

8
% p.a.
Future contracting is key to market balance
Newbuilding prices stable but low
Second hand market picking up (+10%)
Aframax
10
2005
But, declining orderbook (down 11% from

2012) could diminish supply demand gap
in 2014
VLCC
2
0
Fleet Growth Rate
-2
Demand Growth Rate
-4
-6
2008

2009
2010
2011
2012
2013
2014
2015
Bulker market to remain down

100
mGT
Capesize
80
Panamax
Handymax
60
Handysize
Bulkers
Despite demand growth (7%) driven by iron

ore and coal, overcapacity in almost all
segments keeps market down
3 consecutive years of double-digit fleet
growth
40
2013 deliveries significant, but declining
20
Calm contracting and melting orderbook will

balance supply and demand after 2014
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Time Charter Rates

.000 USD
per day
Capesize
Panamax
150
Handymax
Handy
100
Earnings currently at or below operational

costs, but rates expected to improve after
supply demand gap closes
But certain owners with good cash / funding
position (e.g. Frontline) are able to leverage
low newbuild prices to replenish fleet with
efficient vessels
Secondhand prices increasing
50
2007
2008
2009
2010
2011
2012

2013
Contents
Ivan Tam

Kevin M. Brunn

of the study
D Drinks reception
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.

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.

Recap: Is ship management an attractive market to be in?

Growing, but...
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 inhouse.
... highly competitive
1 Clarksons Research, 2013

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?

Where are the biggest perceived challenges?

Results summary: Best practice in crewing

In 2010, there were around 1.4 million active seafarers
There is particular concern over current and future availability of senior officers,
especially engineers, in the Far East and Indian subcontinent

69%
Of all respondents are actively looking at best practice measures in
crewing
77% - organizational measures
73% - process measures
52% - IT measures

Representative quotation:
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.

Common observations
Organizationally, many
shipping companies reinsource 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

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
Results summary: Best practice in technical mgmt.
65%
Of all respondents are actively looking at best practice measures in
technical management
69% - IT measures

Life Cycle Management is a growing trend in Technical Management

82% - focus on machinery
74% - focus on hull structures

We have focussed too much on papers and we are asking every day
for more and more paperwork, forgetting the hardware, i.e. the
ships structure.

Common observations
Different organisational
options are tried out, fleet
teams becomes common
Planned Maintenance
Systems standard
Life cycle management view
with increasing importance

Best practices
Organize along processes
Build processes around a state-of-theart 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
Results summary: Best practice in financial mgmt.
45%
Of respondents are actively looking for best practice measures in
Financial Management
55% - IT measures
50 % - organizational measures

Growing trend towards business intelligence applications in shipping

to integrate data and automate reporting

Managers with field experience should be employed in Finance.

Common observations
Separation of finance from
operations seen as issue
Too much complexity built
up in last years
State-of-the-art finance
systems not common

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
Results summary: Best practice in quality & safety mgmt.
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)
45%
Of respondents are actively looking for best practice measures in
Quality & Safety Management
58% - IT measure

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.

Common observations
Dedicated QS teams reporting
to MD common
Staff awareness on QS issues
is critical success factors
Process supporting systems
start to come in

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
Results summary: Best practice in procurement

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.

Common observations
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

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
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

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

Contents
Ivan Tam

Kevin M. Brunn

of the study
D Drinks reception
Good fleet management solutions build in and support a

lot of shipping best practices
Examples
Best practice
Central and fleet wide management of master
data (equipment, spares, jobs, certificates etc)
GL Solution
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
GL Maritime Software | 10.08.2013 | No. 36
The most comprehensive and innovative portfolio in

the industry
Ship management
Ship operations
GL ShipManager
GL CrewManager
GL EmissionManager
Shipmanagers workbench to
support all key processes
(maintenance, procurement,
quality / safety, onboard
administration, etc)
Complete crew management

package supporting planning,
dispositioning, data / certificates mgmt., rest hours, ...
Smart solution for onboard

voyage reporting and onshore
emission- and fleet
performance analysis
GL HullManager
GL FleetManager Finance module
Advanced hull integrity

solution supports inspections
and thickness measurement
processes based on
interactive 3D ship model
Complete finance system incl.

Accounting, Controlling, Cash,
Intercompany for shipping
CFOs
GL SeaScout
Navigational decision support
system helps you navigate
through bad weather without
damages on shortest route
GL MachineryManager
GL FleetAnalyzer
EcoAssistant
Integration platform for all

condition monitoring
machinery information (e.g.
visual inspections, vibration, oil
analysis, perf. monitoring)
Business Intelligence solution,

gets you information out of
your different operational data
for flexible and powerful
reporting & analysis
Software system to save fuel

without modifying your vessel
by optimal trim
Currently in pilot stage
GL Maritime Software | Software solutions for increased performance | Slide 37
Provided By FutureShip
Contents
Ivan Tam

Kevin M. Brunn

of the study
D Drinks reception
Thank you!
Ivan Tam
Manager Clients and Projects
Tel. +852 6111 4320
Email: ivan.tam@gl-group.com
Kevin Brunn
Director Clients and Markets
Tel. +49 381 673 11 37
Email: kevin.brunn@gl-group.com
maritime.software@gl-group.com
www.gl-maritime-software.com
www.gl-maritime-software.com

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Best practice shipmanagement study 2013

Overview and study results, Hong Kong 07 August 2013

Best Practice Ship Management Study | 07 Aug. 2013 | No. 2

A Market Overview and Insights

B Results of the Best Practice Study

C Q&A / Distribution of your personal copy

Share your experience on Best Practice with us and others

Market Summary First half-year 2013

Liner companies suffer from low rates

After only four months, Asia Northern Europe

Spot rates have fallen by more than 40% since

Despite the state of the market, newbuilding

Trend towards consolidation of services

Nevertheless, containerised trade to grow by

With newbuild prices down, and advantages of

Best Practice Ship Management Study | 07 Aug. 2013 | No. 5

Market Summary First half-year 2013

Positive demand forecast, but still slow

Stable growth of oil & product trade around

Overcapacity of fleet continues

Earnings are at bottom, bunker prices

Time charter and spot rates continue to

Fleet Expansion vs. Demand Growth

Future contracting is key to market balance

Newbuilding prices stable but low

Second hand market picking up (+10%)

But, declining orderbook (down 11% from

Fleet Growth Rate

Demand Growth Rate

Best Practice Ship Management Study | 07 Aug. 2013 | No. 6

Market Summary First half-year 2013

Bulker market to remain down

Despite demand growth (7%) driven by iron

2013 deliveries significant, but declining

Calm contracting and melting orderbook will

Time Charter Rates

Earnings currently at or below operational

Best Practice Ship Management Study | 07 Aug. 2013 | No. 7

A Market Overview and Insights

B Results of the Best Practice Study

C Q&A / Distribution of your personal copy

Share your experience on Best Practice with us and others

The best practice study serves as a guide to reflect own

Collection of over 50 common qualitative

A Best practice is not understood as recipe that

Best Practice Ship Management Study | 07 Aug. 2013 | No. 9

Shipping companies are using the crisis to sort

Best practice in this study comprises all

Best Practice Ship Management Study | 07 Aug. 2013 | No. 10

Recap: Is ship management an attractive market to be in?

... highly competitive

1 Clarksons Research, 2013

Best Practice Ship Management Study | 07 Aug. 2013 | No. 11

More than 1500 companies are managing 10+

Is looking at best practice common?

Best Practice Ship Management Study | 07 Aug. 2013 | No. 12

Where are the biggest perceived challenges?

Best Practice Ship Management Study | 07 Aug. 2013 | No. 13

Results summary: Best practice in crewing

Best Practice Ship Management Study | 07 Aug. 2013 | No. 14

Results summary: Best practice in crewing

Best Practice Ship Management Study | 07 Aug. 2013 | No. 15

Results summary: Best practice in crewing