»We have to be forward looking«

After the merger the new classification society DNV GL is setting the course for the future. In an exclusive interview with HANSA, Knut Ørbeck-Nilssen, Chief Operating Officer at DNV GL – Maritime in Hamburg, talks about trends, strategies and the integration process
What do you see as the most important trends in the future – for instance LNG as fuel, battery propulsion[ds_preview] or information technology?

Knut Ørbeck-Nilssen: We expect that the push for shipping to become greener will persist. But I think it’s unlikely we see the industry adopt just one solution to enhance efficiency and environmental friendliness. LNG as ship fuel will continue to grow, even though the uptake has been slower than we predicted with less than 150 gas-fuelled vessels operating or on order. Challenges like the underdevelopment of bunkering infrastructure remain, but there do seem to be positive moves in this direction.

Battery and hybrid applications are very promising in some niche markets like offshore support or ferry shipping. With the automotive industry heavily invested in this technology this development will continue. Overall, it looks as if the variety of fuels being used and propulsion concepts in shipping will be much greater in the future than today.

It is important to mention that the development in all these technologies will also continue to be driven by international, national and regional regulations.

Do you expect even more regulation?

Ørbeck-Nilssen: The industry is really facing a tsunami of IMO and national regulations. For DNV GL as a classification society we have to be forward looking to find practical solutions to support the industry in dealing with these rules, for example the stricter ECA requirements. This is why we invest 5% of our revenue every year in research & development and in parallel offer a wide range of value-added advisory services which help shipowners cope with today’s and future regulatory challenges.

Is there still a lot of work for the shipping industry to do in terms of monitoring and efficiency?

Ørbeck-Nilssen: Yes, there is still a lot we can learn and a lot of gains to be made in operational efficiency. Learning from our experience and handling data more effectively will be crucial for further efficiency gains. At the moment, we are still very much relying on noon reporting. I think over the next 15 years, there will be an enormous focus on working out how we can utilise the huge volumes of data which are becoming available. The amount and the importance of this data will only increase over the coming years as ship-to-shore connectivity grows. In recognition of this, last year we launched EcoInsight. This solution gives shipowners a comprehensive overview of their fleet performance. Already eight large customers have signed up some 250 vessels. Another good example is the weather and routing analysis provided by Storm Geo and Applied Weather Technology in which DNV GL has a stake in.

What about unmanned shipping?

Ørbeck-Nilssen: It is interesting from a research perspective. But I don’t see it having much of a practical application in the next 20 years. On the other hand it makes a lot of sense to have much more interlink between the competences onboard and onshore. However, in my view you still need to have someone at the bridge.

Are there plans to change the balance of offshore and merchant shipping activities at DNV GL?

Ørbeck-Nilssen: We do not plan to change our focus as the balance is always driven by the market. A few years ago, we saw big growth in the offshore industry. In 2013 this changed again and the recent drop in the oil price has seen offshore activity tail off significantly.

In which markets do you see the biggest potentials for DNV GL?

Ørbeck-Nilssen: Our biggest markets are Europe-based. But we are looking to grow further in American and Asian markets. We see ourselves as an international classification society and part of the strategic rationale behind the merger was to be able to expand and better serve these markets.

What is your strategy for the future in general?

Ørbeck-Nilssen: We want to keep our position as the leading global classification society. But leading does not necessarily mean being the biggest in terms of gross tonnage. It means leading in quality, innovation, customer service, and safety.

What is the state of affairs of the integration process after the merger?

Ørbeck-Nilssen: The integration is going very well, most of the activities were either completed last year or coming to an end this year. Basically, we are delivering to the schedule we set ourselves.

The big task in the maritime segment is finalising the new rule set. Currently we are holding a hearing process and talking with the industry about our work. Collecting and integrating customer and stakeholder feedback into the rules is a very important aspect of the whole project. The final rules will then be in force in January 2016. However, we will keep the »old« DNV and GL legacy rules in place for the foreseeable future, to allow our customers a soft transition.

Were you able to refute concerns of existing clients about possible interruptions of the regular service during the integration process?

Ørbeck-Nilssen: When you go through a merger on the scale we have, quite naturally you become inward looking for a time. And we did receive feedback from our customers that some things had become a little bit slower. But we have addressed this now.

Did you lose customers during the process?

Ørbeck-Nilssen: Yes, we lost some customers, partly due to clients who had dual class policies with DNV and GL, but also as a result of very aggressive pricing from competitors, in the German market especially. It is important to mention here that after a merger you cannot hope to keep the combined market share of the two companies. This is unrealistic. Also, it was never the merger’s main goal to become number one in size, but to join two quality-focused companies, with complementary business segments, in order to deliver even better services to the customers. I think we are already demonstrating some real merger benefits and we have won new customers because of them.

What is your strategy to win customers?

Ørbeck-Nilssen: We have quite a few innovative approaches that provide added value. For example our new system for the fleet in service, called »Direct access to technical experts« (DATE). We have set up five support hubs worldwide, not call centers, but a team of real experts who are authorised to make decisions to solve customer challenges. These teams can also share the work to get technical problems fixed, so we are able to meet our customer’s needs for a quick response. Tests have shown that, in most cases, we can deliver within six hours. Furthermore, we are introducing the new portal MyDNVGL.com. This is a customer interface with online access to many features. In general we are trying to become even more responsive to our customers and to bring services of real value to them.

How do you see competition in the classification market?

Ørbeck-Nilssen: It hasn’t changed that much over the last years. But we have seen the emergence of some ambitious national classification societies, which could change the picture somewhat. But overall the competitive landscape remains well defined.

Do you expect this market conditions to remain stable or will we probably see another merger?

Ørbeck-Nilssen: I have no inside information about this, but I think it would be a surprise if we saw another merger involving any of the major players.

Interview: Michael Meyer