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Knowledge management in the shipping industry
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Chapter 10
Knowledge Management in the Shipping Industry

Jiangang Fei, Livingstone Divine Caesar
INTRODUCTION
While knowledge management principles have been

applied to many industries, the shipping industry in
general has been slow in adopting knowledge
management. Since the industry is very much capital
intensive, attention has always been on managing the
tangible assets of shipping companies. Due to the
lasting skill shortage problem and concerns about
shipping safety associated with the human factor,
much efforts have been made to improve both the
quantity and quality of the workforce of the
industry. The very high level of personnel mobility
and difficulties in attracting new people faced by the
industry challenges the effectiveness of some
conventional human resource management
practices. Knowledge management may provide the
industry an opportunity to address the skill shortage
problem from a new perspective. For example, the
proposed knowledge retention goes beyond
conventional human resources management
practices to seek new ways of maintaining and
developing a competent and sustainable workforce
given the prevailing industry-level competition for
talent. This chapter discusses what knowledge
management is; why it is important to the shipping
industry; and how it may be applied. A brief
discussion of the differences and linkages between
human resource management and knowledge
management is also provided.
1
2 Jiangang Fei, Livingstone Divine Caesar
WHAT IS KNOWLEDGE MANAGEMENT
While there are many definitions of knowledge

management and consensus is hard to reach,
knowledge management can be described as a
process of developing and applying a systematic
approach to create, capture, structure, manage,
disseminate, and utilise knowledge assets
throughout an organisation to enhance
organisational performance. According to Wiig
(2000), two aspects of knowledge management are
vital – knowledge assets and the process. Adequate
knowledge assets provide an organisation the
capability and competence to excel in a competitive
business environment while the process ensures that
knowledge assets of an organisation are constantly
created, updated, and efficiently utilised to create
competitive advantages for the organisation. The
identification of knowledge assets in an organisation
is the first step towards effective knowledge
management. It not only provides a stocktake of
what the organisation has but also determines what
and how to manage. The knowledge management
process consists of a series of activities and actions to
nurture, organise, disseminate, and apply knowledge
so that value can be created for the organisation. All
Knowledge Management in the Shipping Industry 3
areas of the two aspects must be carefully managed

to achieve the desired outcomes from knowledge
management.
There are two schools of thought towards knowledge

management in the literature. The first school of
thought sees knowledge management as equal to
information management. The main focus of
knowledge management is on the development and
application of information technologies and systems
with a belief that technology can provide all
solutions. This view prevailed in the late 1990s when
information technologies achieved great
advancement. The other school of thought, however,
takes a clear distinction between information and
knowledge and acknowledges that technology,
especially information technology, is only one of the
means to facilitate knowledge management. The
second school of thought recognises the tacitness
(Kogut & Zander, 1993) of knowledge and the
complexity of managing it and is considered as the
second-generation of knowledge management with
dominant adoption (McElroy, 2003).
Compared with other management disciplines,

knowledge management has a relatively short
history although the idea of ‘knowledge’ was well
recognised a thousand years ago. The importance of
managing knowledge was strengthened with the

realisation of ‘knowledge economy’ at the end of
20th century. Since then, knowledge management
principles have been applied, to different extent and
in different scale, in businesses of all industries,
government agencies, and non-profit organisations.
There have been overwhelming benefits resulted
from the shift of attention from tangible assets to
intangible knowledge and long-lasting implications
to the business environment, innovations in
industries, and the development of economies.
KNOWLEDGE IN THE SHIPPING CONTEXT
Data, Information, Knowledge, and Organisational

Knowledge Base
To discuss knowledge management, it is necessary to
clarify what knowledge is and how it is different
from information and data. Data is a collection of
facts that are syntactic and invariant with a
potential meaning to those who can interpret them.
Once interpreted and attributed with meaning, data
becomes information (Hirschheim, Klein, &
Lyytinen, 1995). Distinctions can be drawn between
information and knowledge based on their
interdependency from their owner and relative
stability over time. While information is invariant
and independent of its knower, knowledge is
embedded in people or organisations and based at
least partially on experience (Leonard & Sensiper,
1998; Sveiby, 1997). Information tends to be
relatively static in time and linear in nature,
knowledge is dynamic and evolves over time.
The relationship between data, information, and

knowledge can be illustrated through a hierarchical
structure where data sits at the bottom, information
in the middle, and knowledge at the top (Knight &
Howes, 2003). The hierarchical structure shows how
data can become information through a semantic

and meaning-attribution process and how
information can be converted to knowledge through
individual process and interpretation of information.
The structure, however, does not imply a one-
direction conversion, that is, from data to
information, then to knowledge. The conversion can
be reversed. In fact, in many cases, knowledge needs
to be presented in symbolic forms so that it can be
articulated and shared (Alavi & Leidner, 2001).
In addition to the distinctions between data,

information, and knowledge, the classification of
knowledge is equally important in discussing
knowledge management. Knowledge can be
classified according to its epistemological and
ontological dimensions. Epistemologically,
knowledge can be either explicit or tacit (Lubit,
2001; Nonaka, 1994; Nonaka & Takeuchi, 1995;
Polanyi & Sen, 2009; Spender, 1996; Zack, 1999).
Ontologically, knowledge can exist in an individual,
a group or an organisation (Nonaka, 1994; Nonaka
& Takeuchi, 1995). Explicit knowledge refers to
knowledge that is structured and independent of the
knower (Kidd, 1998). In organisations, explicit
knowledge exists in forms of instructions, standard
operating procedures, and manuals (Spender, 1996).
The tacit nature of knowledge suggests that
knowledge is deeply rooted in action and specific

context and is situational and intimately tied to the
knower’s experience. Thus, it is difficult to express,
formalise or share in an explicit way (Kidd, 1998).
In organisations, tacit knowledge is embedded in
organisational value and brief, culture, and routines.
Since tacit knowledge is intangible and difficult to
imitate, it is considered a source of competitive
advantage of an organisation (Barney, 1991; Barney,
2001; Barney & Clark, 2007). The ontological
dimension classifies knowledge into individual and
organisational knowledge. While knowledge is
created by individuals,
through a spiral of knowledge creation individual

knowledge is amplified and integrated into
organisational level (Nonaka & Takeuchi, 1995).
The classification of knowledge into epistemological

and ontological dimensions allows management to
identify relevant enablers and barriers in knowledge
creation, transfer and utilisation. The
epistemological dimension reveals the stickiness of
knowledge (Szulanski, 1996), which is considered as
one of the major barriers of knowledge transfer. For
tacit knowledge to be shared and transferred, a
process of socialisation, externalisation,
combination, and internalisation (SECI) is suggested
(Nonaka & Takeuchi, 1995). The ontological
dimension coincides the distinction between
individual and organisational learning (Kim, 1998).
The integration of individual knowledge into the
organisational level is considered the most important
and yet challenging task for organisations to develop
organisational knowledge for competitive
advantages. The process of integration requires
commitments from both the organisation and
employees.
Based on the two-dimensional classification of

knowledge, a matrix can be used to illustrate the
total knowledge assets of an organisation, i.e.

organisational knowledge base (Figure 10.1) (Fei,
2009). Individual knowledge is temporal to a hosting
organisation as it goes with individuals when they
leave the organisation. Organisational knowledge is,
however, independent of any individual employees.
To create competitive advantages, knowledge needs
to be managed so that it is fully utilised and there is a
continuing process of integrating individual
knowledge to the organisational level.
Figure 10.1 A matrix of organisational knowledge base
Individual tacit Organisational tacit

Epistemologic
knowledge knowledge
Individual explicit Organisational

knowledge explicit knowledge
Ontologica
l
The conceptualisation of organisational knowledge

base as represented in the matrix (Figure 10.1)
allows the components of each cell to be identified.
Based on a comprehensive literature
review of knowledge-related constructs and

measurement approaches on knowledge assets, Fei,
Chen, and Chen (2009) identified the major
components of an organisational knowledge base
which covers both explicit and tacit knowledge and
at both individual and organisational levels. For
individual explicit knowledge, academic and
professional qualifications are indications of the
extent and level of explicit knowledge individuals
have obtained through education and training
programs. Individual tacit knowledge consists of
skills and expertise, experience, and attitudes. At
organisational level, explicit knowledge is contained
in technology and information system an
organisation has developed, process manuals, and
intellectual property that has been created through
operations or research and development activities.
Organisational tacit knowledge is embedded in
organisational culture, image, tacit rules, and
external relationships including relationships with
customers and suppliers. A modified matrix of
organisational knowledge base is presented in
Figure
10.2 and its components and indicators are provided in
Table 10.1.
Figure 10.2 A modified matrix of organisational
knowledge base
Culture
Skills/expertise Image
Experience Tacit rules
Attitudes External relationships
Epistemologic
- Academic T
- echnology and
qualifications Professionalinformation
qualifications
systems
- Process manuals
Intellectual property
Ontologica
l
Knowledge in the Shipping Industry

Formal education is the first important step for
knowledge acquisition. In the shipping industry, a
large percentage of personnel, especially those in
officer positions (including deck officers and
engineers), have tertiary qualifications. Formal
education provides prior knowledge for individuals
to learn efficiently in the real world and to develop
the ability to explore complex issues and develop
solutions in their workplace. In addition to academic
qualifications, officers on board ships are required
to hold relevant Certificates of Competence (CoC)
to perform prescribed duties. The attainment of
CoC requires a combination of formal academic
education and training and adequate sea time as
required by
the International Convention on Standard of

Training, Certification and Watchkeeping for
Seafarer (STCW). A CoC is an indication of the
ability and competence of the holder to perform
prescribed tasks on board ships.
While academic and professional qualifications are

considered as explicit knowledge individuals acquire
through education and training, they are also the
foundation for individuals to develop tacit
knowledge such as problem-solving capability and
innovation ability. It is a commonly accepted fact
that high academic qualifications do not always
mean strong ability in innovation and problem
solving in workplace. The development of individual
tacit knowledge depends on the commitment and
dedication of individuals in applying explicit
knowledge learned through education and training
to real world problems. Work experience as
reflected by length of services, position held, types of
ships and ocean routes experienced, and exposure to
multicultural workplace of seafarers is a good
measurement of tacit knowledge an individual may
have. In addition, work attitude is also considered as
part of individual tacit knowledge as it has close
relationship with individual performance (Macky &
Boxall, 2007). In the shipping industry, work
attitude has great implications to the wellbeing of

those working on board ships and the safety of ship
operations.
At the organisational level, knowledge assets exist in

both tacit and explicit forms. Explicit knowledge
assets include instructions, procedures, manuals,
and articulated best practices that can help improve
organisational efficiency and safety of shipping.
Information communication technologies including
information storage and retrieval, access, and
communication are an indication of the capacity of
an organisation in developing organisational explicit
knowledge and facilitating the sharing of such
knowledge among the employees. Compared with
explicit knowledge, tacit knowledge at an
organisational level is much more valuable and takes
more time to develop. Tacit knowledge is also
considered as the only source for sustainable
competitive advantages due to its rareness and
inimitability. Organisational culture,
image/reputation, and external relationships are the
most important components of organisational tacit
knowledge. The development of organisational tacit
knowledge depends on the commitment of top
management and the willing contributions of
employees.
Table 10.1 Components and indicators of an

organisational knowledge base
Classifica Component Indicators
tion s
Indiv Acade Years of school, attainment
idual mic of certificates, diploma or
explic qualifi degrees
it cations
Professiona Attainment of certificates
know l including Certificate of
ledge qualificatio Competence
ns
Problem Ability to identify

solving problems and the
capabili applications of knowledge
Individ ty to develop solutions
ual Innovation Ability to develop new
ability applications based on prior
tacit knowledge
knowle Work Length of services,
dge experience positions held, types of
ships and oceans routes
experienced, exposure to
multicultural
workplace
Work Overall satisfaction with
attitude current job, feeling of one’s
own work, value sharing,
and intention to stay within
the current company or the
industry
Organi Technolog Information storage and
sationa y and retrieval, information
l informatio access technologies, and
explicit n systems communication
knowle technologies
dge Process Written instructions or
procedures, identified and
manuals articulated best practices
Organisatio Hofstede et al. (1990):
nal culture results-oriented vs.
Organis process- oriented;
employee-oriented vs.
ational job-oriented; professional

tacit vs. parochial; open vs.
knowle closed system;
dge loose vs. tight control;
normative vs. pragmatic
Image Organisation’s reputation
known to the communities
and the industry
External Formal or informal
agreements/arrangements
relationship with
clients, suppliers,
s partners/competitors
KNOWLEDGE MANAGEMENT AND HUMAN

RESOURCE MANAGEMENT
Knowledge management has its root in information

management and with predominant emphasis on
information technology in some early literature.
However, it has become a common understanding
now that there are distinct differences between
information management and knowledge
management. Some scholars question the legitimacy
of knowledge management being an independent
discipline arguing that knowledge management
(KM) has much to do with human resource
management (HRM) and should be part of HRM.
Therefore, the purpose of this section is to discuss
the relationship between KM and HRM, their
differences, and how both, in different ways,

contribute to achieving organisational objectives and
goals.
As important management functions, HRM and KM

have a fundamental common goal, that is, to
contribute to improving organisational
performance through well-defined processes and
strategies in their respective areas. The development
of strategies and policies in HRM and KM must
align with the overall organisational objectives and
goals. The primary role of HRM is to increase
employee performance to their highest level
corresponding to their
specific role in an organisation. The focus of HRM is

human resource, that is, individuals. Knowledge
management is concerned with creating and using
knowledge to deliver value and sustainable
competitive advantages to the organisation. The
main focus of KM is human capital and knowledge
assets. HRM consists of a series of well- defined and
developed activities including workforce planning,
work/job design, attraction and selection, retention
and development/training, performance appraisal,
reward and compensation, and workplace or
occupational health and safety (Table 10.2).
Knowledge management starts from a gap analysis
of what an organisation knows and what an
organisation must know in order to fill the strategic
gap between what an organisation can do and what
an organisation must do (Zack, 1999). KM aims to
facilitate the creation and capture, sharing and
dissemination, application and reuse, of knowledge
in an organisation. The evaluation of performance is
concerned more with the overall outcomes at an
organisational or team level rather than at an
individual level.
The relationship between HRM and KM is such that

the achievement of KM objectives requires
compatible HRM practices. The facilitating role of
HRM in KM has been extensively explored, for

example, Soliman and Spooner (2000), Yahya and
Goh (2002), Cabrera and Cabrera (2005), and
Armstrong and Taylor (2014). The discussion of the
relationship between KM and HRM can follow the
main functions of these two management disciplines.
Knowledge acquisition may be achieved through
internal creation of new knowledge or external
recruitment of employees with knowledge that did
not exist previously in the organisation. For KM,
recruitment does not only fill up job vacancies. It
brings needing knowledge to the organisational as
well. HRM can facilitate KM through recruiting
people who have compatible values with the existing
organisational culture (Robertson & Swan, 2003;
Swart & Kinnie, 2003). Since individuals are
knowledge carriers, the sharing and dissemination
of knowledge very much relies on the motivation and
willingness of employees. Good HRM practices such
as performance and reward management should
encourage employees to share their expertise rather
than hoarding what they know. On the other hand,
individual learning is encouraged if HRM supports
and acknowledges learning through resource
commitment and proper rewarding.
Employee retention plays a critical role in HRM due

to the difficulty to attract talented people, high cost
involved in the recruitment process, and loss of

productivity associated with high turnover
(Davidson, Timo, & Wang, 2010; Hillmer, Hillmer,
& McRoberts, 2004). Employee retention may be
achieved through various methods including
monetary (e.g. salary, bonus, and stock share) and
non-monetary (e.g. promotion and training)
rewards, effective employee communication,
teamwork, and supportive corporate culture.
Employee retention contributes to knowledge
retention when it is successful. However,
acknowledging the high mobility of the modern
workforce where loyalty and life-long commitment
to a single organisation is rare, knowledge retention
focuses on retaining the knowledge of the
employees while they are still with the organisation

rather than physically keeping these employees in
the organisation. Knowledge retention is achieved
through effective knowledge sharing and
dissemination which in turn relies on compatible
HRM practices as discussed earlier.
Table 10.2 Comparison between HRM and KM
HRM KM
Purpose  Contribute to organisational
and performance
strategy  Align with organisational
objectives and goals
Focus Human Human capital
resourc and knowledge
e assets
Process and  Planning &  Gap analysis
activities design  Creation &
 Attraction & capture
selection  Sharing &
 Retention & dissemination
development  Application &
Performa reuse
  Evaluation &
nce & monitoring

 Legal & ethical
reward aspects
managem
ent
 Health & safety
KNOWLEDGE MANAGEMENT IN THE SHIPPING

INDUSTRY
The driving force for knowledge management

The driving force for knowledge management comes

from the continuous quest of organisations for
business success. From the scientific management
theory of Frederick Winslow Taylor (2004) to the
bureaucratic management theory of Max Weber
(2009) and to the present management theories
focusing more on unlashing individual capabilities to
develop sustainable competitive advantages, both
academia and practitioners have been constantly
seeking ways for organisations to succeed in an
ever competitive environment since the industrial
revolution. Along with the history of management
theories, a major paradigm shift has occurred on the
view of what resource is critical to organisational
success. The days when capital and physical assets
were considered the most important resource have
long gone. A knowledge society and economy has
arisen since 1980s in which knowledge is considered
the only meaningful resource (Drucker, 1988;
Drucker, 1994) to replace other resources (Quinn,
1992; Toffler, 1990) and provide organisations
sustainable competitive advantages (Drucker, 1994).
Knowledge management has its foundation in a
resource-based view theory of the firm (Barney,
1991; Prahalad & Hamel, 1990; Teece, 1998;
Wernerfelt, 1984), organisational learning (Hedlund,
1994; Wenger, 1998), and a knowledge-based view of
strategy (Nonaka, 1994; Spender, 1996).
The Need for Knowledge Management in the Shipping

Industry
Since mid-1990s, extensive research has been done in

almost all industries exploring a wide range of topics
in relation to the application of knowledge
management principles in practice. Compared to
other industries, the shipping industry has been slow
in response to this new management discipline. The
need for knowledge management in shipping arose
from the severe skill shortage faced by the industry
and the predicted worsening situation in the near
future (BIMCO/ISF, 2010, 2015) due to the difficulty
of attracting new entrants to fill the skill base and
the on-going outflow of highly experienced personnel
from the shipping industry to other shore-based
industries (Fei et al., 2009; Fei & Lu, 2015).
Personnel with extensive seafaring experience are
well sought after to occupy a range of shore-based
positions such as: management positions in shipping
companies including professional ship managers,
marine surveyor, jobs associated with classification
societies and marine insurance. The skill shortage
will significantly impact the ability of the shipping
industry to provide adequate maritime transport to
meet the ever increasing international trade in a
safe, efficient, and cost-effective manner.
Historically, personnel movement across industries

has been very high due to the shipping industry’s
unique characteristics (Moreby, 1975). The

personnel movement has always been characterised
as a one-way direction with the shipping industry
constantly losing its expertise to other industries
(Gardner, Naim, Obando-Rojas, & Pettit, 2001;
Gardner, Marlow, Naim, Nair, & Pettit, 2007). This
problem is further compounded by the difficulty in
attracting personnel into the industry for various
reasons (Dinwoodie, 1996; Leggate, 2004;
McLaughlin, 2012; Moreby, 1975). Extensive efforts
have been made to make seafaring attractive
through employment branding strategy (Thai &
Latta, 2010), compensation management (Çakir &
Nas, 2013), and improving work-life balance
(Caesar, Cahoon, & Fei, 2015) and the overall image
of the industry (Fafaliou, Lekakou, & Theotokas,
2006). More recently attention has been paid to
retaining active seafarers within the industry
(Caesar, Cahoon, & Fei, 2014; Caesar et al., 2015).
The conventional approaches from a human
resource management perspective, however, cannot
effectively solve the shortage problem in the
shipping industry due to, not only the high cost
involved in retaining leaving personnel, but also the
initial motives of leaving being irrelevant to any
retention incentives (Abbasi & Hollman, 2000; Fei &
Lu, 2015; Mitchell, Holtom, Lee, Sablynski, & Erez,
2001). This calls for a different approach to address
the skill shortage in the shipping industry.
The underlying rationale to use the knowledge

management approach is to regard the high
personnel mobility in the shipping industry as an
opportunity rather than a problem. As individuals
are knowledge carriers (Polanyi & Sen, 2009; Von
Krogh, 1998), their movement across organisational
and industry boundaries is widely recognised as a
mechanism for disseminating tacit knowledge and
skills across space and time (Almeida & Kogut,
1999; Almeida, Song, & Grant, 2002; Cooper, 2001;
Gruenfeld, Martorana, & Fan, 2000). New
employees bring new knowledge that the
organisation previously did not have and is thus
considered positive to the organisational knowledge

base. Out-flow of personnel, on the hand, leads to
the loss of knowledge if the knowledge of the leaving
personnel is not known to others in the organisation.
Therefore, the impact of personnel mobility largely
depends on whether there are mechanisms in place
to manage the knowledge flows for the best interest
of the hosting organisation. The application of
knowledge management in the shipping industry
provides a new opportunity and perspective to
address the long-lasting skill shortage in the
shipping industry.
From Employee Retention to Knowledge Retention
Given the high mobility of seafarers and a range of

issues associated with employee retention at an
organisational level, a shift of attention is needed. If
employee moving or leaving is unavoidable, how can
organisations or industries make the best use of the
knowledge of their employees while they are still
around? The shift requires a change of perspective
when examining the employee retention issue.
Instead of seeing employee turnover a problem,
knowledge retention advocates regard this an
opportunity. Out-flow of personnel, especially those
caused by voluntary turnover, has been seen a net
loss to the hosting organisation. However, when

taking a knowledge management view, personnel
movement is regarded as knowledge flow
continuously moving through organisations and the
industry. Thus, it provides the opportunities for
organisations to develop and update their
organisational knowledge base through knowledge
retention which consequently leads to improved
organisational competitiveness. The benefit of
taking a knowledge management perspective is that
knowledge retention works with the prevailing
personnel mobility rather than against it. This will
further strengthen the attractiveness of the industry
through well- defined and managed career
pathways.
Three principles underpin the advocacy for

knowledge retention in the shipping industry.
Firstly, knowledge is the ultimate resource for
sustained competitive advantage (Barney & Clark,
2007). The shipping industry is a capital-intensive
industry and financial resource for example, is
critical for every shipping company. However, the
success of a shipping business relies more on how the
available resources are deployed and managed to
create sustained competitive advantage. While most
resources are imitable and thus cannot lead to
sustained competitive advantage, knowledge is
difficult to be imitated (Kogut & Zander, 1992) and

once integrated into an organisational level, it
becomes a competitive advantage. Secondly,
knowledge is embedded in people which means
individuals are knowledge carriers (Argote &
Ingram, 2000). When individuals move, the
knowledge carried by them moves. The final
principle is organisational learning (March, 1991).
Individual learning advances organisational learning
through interaction with shared mental models
(Kim, 1998). To create and maintain competitive
advantage to succeed in the volatile shipping market,
it is important for shipping organisations to develop
their unique knowledge assets.
Acknowledging the high personnel mobility in the

shipping industry and the fact that individuals are
knowledge carriers, a framework can be developed
to illustrate the flows of knowledge as personnel
move among shipping organisations and across
industry borders (Figure 10.3). Applying the
concept of organisational knowledge base (OKB)
developed by Fei et al. (2009), the key to creating a
competitive advantage is to develop the
organisational knowledge base. As discussed early in
this chapter, a shipping organisation has a dynamic
knowledge base consisting of individual knowledge
(carried by employees) and organisational
knowledge in the form of routines, instructions,
procedures, organisational culture, and other tacit
knowledge that has been embedded into the day-to-
day organisational operations. The outward arrows
in Figure 10.3 represent the knowledge flow from
individuals to the organisation and is retained within
the OKB while the inward arrows represent new
knowledge individuals learned and developed
during their employment in the organisation. When
employees
Educatio
work in different positions in a shipping
organisation,
n they bring with them their skills and
expertise.
Other
Individually, employees use their
industries
knowledge to fulfil their duties and contribute to the

organisation. At the same time, they also learn from
performing various tasks, applying their prior
knowledge to solve current problems, and even
creating innovative ideas. The purpose of knowledge
retention is to retain as much personal knowledge as
possible before they leave the organisation. This can
be achieved through encouraging and facilitating
knowledge sharing and transfer among seafarers in
the workplace, e.g. mentoring programs as well as
structured processes such as briefing (Hoegl &
Schulze, 2005) and exit interviews (Mishra & Uday
Bhaskar, 2011). A well-managed knowledge
retention process allows more knowledge to be
shared and transferred from individuals to the
organisation, and eventually integrated into the
organisational level.
Since knowledge retention does not focusing on

physically retaining employees within the
organisation, it provides several advantages to the
retaining organisation as well as the shipping
industry in general. Knowledge retention does not
usually use monetary measures thus less costly than
Organisation
traditional employee retention,

Competitors OKB
especially in times of
seafarer shortage. The principles of Competitors knowledge
retention do not deter personnel mobility, Educatio rather,
n
they leverage the mobility
Knowledge Flow for mutual benefits.
institutio
ns
Furthermore, knowledge retention encourages
learning at
both individual and organisational levels. It not only

benefits organisations, but also improves individual
skill base thus their employability. With knowledge
retention, the movement of personnel within the
shipping industry and across industry borders is no
longer seen as a problem. It becomes an opportunity
for the shipping industry to improve its image and
thus making seafaring more attractive to the young
generation.
FIGURE 10.3 KNOWLEDGE FLOW AND
KNOWLEDGE RETENTION (ADAPTED FROM FEI
(2009))
Knowledge Management and a Sustainable Workforce
A sustainable workforce maintains a dynamic

balance of in- and out- flows of personnel and
ensures that adequate knowledge and skills are
developed and retained with continuous update to
meet industry and organisational needs. As
illustrated in Figure 10.4, the constant movement of
personnel across organisation and industry
boundaries creates both challenges and
opportunities. The key to developing and
maintaining a sustainable workforce is to attract
talented people, retain them, and facilitate learning
at both individual and organisational levels. For the
shipping industry, attracting talented people

requires the efforts of all stakeholders to promote
the industry through portraying a positive image of
the industry to the public. While there are many
important factors affecting employee retention in
general, two factors, work-life balance and
wellbeing, are considered critical for employee
retention in the context of shipping (Fei & Lu,
2015). Due to the increasing applications of new
technologies and introduction of international
conventions, learning at both individual and
organisational levels are imperative to keep abreast
of the industry needs. Learning at dividual level
occurs when individuals take structured training
programs or apply newly acquired knowledge (e.g.
through observations) into practice. Organisational
learning is best facilitated when there is a culture of
knowledge sharing and application. Among a range
of management approaches, the development and
provision of diverse career pathways play a
significant role in attracting and retaining talented
people, especially in the shipping industry where
career options have always been considered lacking.
In addition, a knowledge retention approach not
only promotes learning. It supports and strengthens
the development and management of career
pathways for current and future employees thus
further increasing the attractiveness of the industry.
It is clear that personnel movement across

organisation and industry boundaries does create
challenges to organisations and industries in general.
The increasing employee mobility can be attributed
to the decreasing organisational commitment,
eroding employee loyalty, and pursuing employment
flexibility by the young generation. Taking a
knowledge management perspective, the movement
of people brings opportunities for organisations to
develop their competitive advantages. This approach
can also make a significant contribution to
developing and maintaining a sustainable workforce.
Career
Pathways
Sustainable Workforce
Organisation or industry
Organisation or industry
Attracting
Retaining
Learning
Knowledge
Retention
FIGURE 10.4 A SUSTAINABLE WORKFORCE IN

THE SHIPPING INDUSTRY
CONCLUSIONS
Knowledge management is a relatively new

discipline. The adoption of its principles varies
significantly across industries with the shipping
industry being one of the slow movers. The
argument for knowledge management in the
shipping industry is multifaceted. Firstly, the
competition for talent goes beyond organisational
level and becomes an industry goal and priority. The
development of transferable skills among individuals

and their desire for career flexibility make the
modern workforce extremely mobile. The outcomes
of competition for talent at an industry level will
significantly affect the industry’s ability to innovate
and prevail in the rapidly changing socio-economic
environment. A knowledge management perspective
helps the shipping industry reflect on many of its
inherited practices which may impede the
development and applications of knowledge assets.
Secondly, a knowledge management perspective

changes the way we see current problems and
challenges in the shipping industry. The skill
shortage has been caused by a range of factors
including upstream factors such as attraction and
recruitment; downstream factors such as
competition for experienced seafarers from shore-
based industries; and internal factors such as
retention and development. A knowledge
management approach may improve attraction and
recruitment through providing potential candidates
various career
pathways. Recognising the mobility of the

workforce, a knowledge retention approach works
with personnel mobility and leverage the knowledge
flows associated with the movement of people. This
approach encourages and facilitates learning at both
individual and organisational levels, thus increasing
the competitiveness of the industry.
Finally, applying knowledge management principles

may contribute to the development of a sustainable
workforce for the shipping industry. A sustainable
workforce requires dynamic flows (both in- and out-
flows) of knowledge and skills and can constantly
update and develop new knowledge and skills to
meet the industry needs. With its emphasis on
intangible resources, knowledge management
promotes learning, facilitates knowledge sharing and
dissemination, and improves utilisation of
knowledge assets to create sustainable competitive
advantages. The development and maintenance of a
sustainable workforce is the key for the shipping
industry to continuously operate in a safe and cost-
effective manner.
Discussion Questions
1. Think about your current workplace or an

organisation that you are familiar with, what are
the key knowledge assets in the workplace or the
organisation?
2. What frameworks or models are available for
the identification and measurement of
knowledge assets? Which one is suitable for your
current workplace? Why?
3. Why is knowledge management important to the
shipping industry? Can you find some examples
of knowledge management applications in the
shipping industry or other industries?
4. How can HRM and KM complement each other
to contribute to organisational objectives?
5. How a sustainable workforce may be developed
and maintained in the shipping industry and
what is the role of KM?
CASE STUDY
Straits Ship Management Pte Ltd is a Singapore-

based private company. The company has 25
employees and provides crew and technical
management services for ship operators. In the last
15 years since its establishment, the business had one
major change five years ago when the business was
expanded from only providing crew management to
the technical management area and the total

number of employees almost doubled as a result.
Out of the 25 employees, 20 of them have extensive
seafaring experience and some of them still hold
valid certificates of competence. The company has

been providing management services for ship
owners operating dry bulk carriers and general
cargo ships with 82 ships and about 3,000 qualified
seafarers under management. The business has been
growing in the last 10 years albeit in a slow rate.
There are opportunities for the company to increase
its existing client base and even expand to other
sectors such as container and tank shipping.
Expansion has also been the intention of the
business owner (also acts as the Chief Executive
Officer), Mr Lim, in the last three years, including
setting up a new office in Shanghai. However, there
are some major challenges that Mr Lim has to
address.
The greatest challenge to Mr Lim as the CEO and

the business owner has been the high personnel
turnover since the establishment of the company. On
average people only stayed for three and half years
before they left with the longest serving people being
Mr Lim’s two friends who helped him establish the
business 15 years ago. This represents over 30 per
cent of employee turnover per annum. Due to the
strategic location of Singapore, there are numerous
shipping businesses opening every year. The
competition for ship management experts is fierce.
Recruiting experienced personnel has always been

difficult and expensive, especially at management
level (e.g. operations manager and fleet manager).
Since managers and operators sometimes develop
and maintain their own respective clients, the
departure of these people often results in the loss of
clients as well. This has been also the main reason
for the slow growth of the business. As the CEO, Mr
Lim has tried many human resource management
strategies such as providing attractive salary,
generous end-of-year bonus, and rewards for highly
performing staff. These strategies have had only
marginal effect and have not fundamentally
improved the turnover rate and the skill base of the
company.
The other major challenge comes from the crew

management. While the company manages about
3,000 qualified seafarers, every year significant
effort is made to recruit new crew due to the loss of
large number of seafarers. The high mobility of
qualified seafarers in the shipping industry is
considered as a normal phenomenon. It does add
high cost and cause disruptions to ship management
companies such as Straits Ship Management Pte
Ltd. Due to the very weak linkage between seafarers
and the crew management department of the
company, no commitment from either side exits.
This weak linkage results in very limited, if any,

mechanism from the human resource management
toolbox to effectively manage a large number of very
mobile and qualified seafarers. If the company
intends to expand to other shipping sectors, the
initial recruitment and the on-going maintenance of
the seafarer workforce will be a great challenge.
To properly address the two major challenges, Mr

Lim approached a consulting company and was
recommended to consider using a knowledge
management approach. The rationale behind the
recommendation is that the competitive advantages
of Straits Ship Management Pte Ltd can be only
derived from its knowledge assets, that is, the
expertise of the managers
and operators in developing and maintaining their

client base, providing customised services to the
clients, the company’s ability to retain the key
relationships developed and managed by
individuals, and the competence of the seafarer
workforce. The company is currently vulnerable to
the loss of key relationships with clients resulted
from the departure of key personnel and to the very
high personnel mobility of the seafarers. It has been
suggested that the following activities are to be
undertaken:
 Conduct an audit of knowledge assets that
Straits Ship Management Pte Ltd currently has;

 Develop strategies to integrate personal
knowledge into organisational level so that the
company is no long vulnerable to the loss of key
personnel;
 Develop strategies to improve the linkage of
seafarers and the company including supporting

training, providing alternative career pathways,
and offering a more balanced work-life for
seafarers;
 If an office is to be set up in Shanghai, propose
the best way forward from a knowledge

management perspective.
Discussion Questions of the case study

Based on the suggested activities above, complete the

following:
1. What tool(s) may be used to identify the current
knowledge assets of Straits Ship Management

Pte Ltd?
2. With the tool(s) you identified, what are the current
knowledge assets of the company?
3. Given the silo mentality of personnel in the
company, how can individual knowledge be

retained and integrated into the company level?
4. Given the high mobility of qualified seafarers,
would the effort in providing training

opportunities, career pathways, and more
balanced work-life be effective in maintaining
and developing the seafarer workforce for the
company? Why?
5. What is the best way to provide qualified
personnel to operate the Shanghai Office from a

knowledge management perspective?
FURTHER READINGS
Wherever possible and appropriate, please provide a

list of further readings. The list should be numbered
and in the same style as the reference list of this
chapter (please refer to information below).
1. McLaughlin, H. L. (2012). Seafarers and
seafaring. The Blackwell Companion to Maritime

Economics, 11, 321.
2. Fei, J. (2009). Knowledge Management in the

Shipping Industry: The Effects of Human
Mobility on the Organisational Knowledge Base
and Effective Knowledge Transfer Practices– A
Perspective from China. University of Tasmania.
3. Gardner, B. M., Marlow, P., Naim, M. M., Nair,
R., & Pettit, S. J. (2007). The policy implications
of market failure for the land-based jobs market
for British seafarers. Marine Policy, 31(2), 117-
124.
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Knowledge management in the shipping industry

Chapter · April 2018

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Investigating the transformative role of Echo360 on

Strategic marketing View project

The user has requested enhancement of the downloaded

Knowledge Management in the Shipping Industry

While knowledge management principles have been

WHAT IS KNOWLEDGE MANAGEMENT

While there are many definitions of knowledge

areas of the two aspects must be carefully managed

There are two schools of thought towards knowledge

Compared with other management disciplines,

managing knowledge was strengthened with the

KNOWLEDGE IN THE SHIPPING CONTEXT

Data, Information, Knowledge, and Organisational

The relationship between data, information, and

data can become information through a semantic

In addition to the distinctions between data,

knowledge is deeply rooted in action and specific

through a spiral of knowledge creation individual

The classification of knowledge into epistemological

Based on the two-dimensional classification of

total knowledge assets of an organisation, i.e.

Individual tacit Organisational tacit

Individual explicit Organisational

The conceptualisation of organisational knowledge

review of knowledge-related constructs and

Knowledge in the Shipping Industry

the International Convention on Standard of

While academic and professional qualifications are

attitude has great implications to the wellbeing of

At the organisational level, knowledge assets exist in

Table 10.1 Components and indicators of an

Problem Ability to identify

ational job-oriented; professional

KNOWLEDGE MANAGEMENT AND HUMAN

Knowledge management has its root in information

differences, and how both, in different ways,

As important management functions, HRM and KM

specific role in an organisation. The focus of HRM is

The relationship between HRM and KM is such that

HRM in KM has been extensively explored, for

Employee retention plays a critical role in HRM due

involved in the recruitment process, and loss of

employees while they are still with the organisation

nce & monitoring

KNOWLEDGE MANAGEMENT IN THE SHIPPING

The driving force for knowledge management

The driving force for knowledge management comes

strategy (Nonaka, 1994; Spender, 1996).

The Need for Knowledge Management in the Shipping

Since mid-1990s, extensive research has been done in

Historically, personnel movement across industries

unique characteristics (Moreby, 1975). The

the skill shortage in the shipping industry.

The underlying rationale to use the knowledge

considered positive to the organisational knowledge

From Employee Retention to Knowledge Retention

Given the high mobility of seafarers and a range of

loss to the hosting organisation. However, when