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Ship support companies should embrace tech and increase transparency to avert a race to the bottom and all the risks[ds_preview] that entails, writes Frank Coles, CEO Wallem Group.

Ship management companies have earned a bad name by chasing market share at the expense of transparency, quality and customer service. Outsourcing the day-to-day running and maintenance of ships to dedicated asset managers was supposed to be a win-win: it would reduce the burden on owners – especially those holding a handful of vessels – while the manager could use the economies of scale by pooling technical resources and building centres of competency.

Whether as an unintended consequence or by a wilful act of self-harm, instead we have arrived at a situation where reducing cost – and undercutting your competitors – has supplanted service delivery as the primary goal. Apart from the long-term commercial risks of the business becoming commoditised, this trend is worrying from operational and safety perspectives.

It might be possible to manage a diversified fleet on a shoestring budget when everything is running smoothly, but it leaves little margin for error and makes it hard to respond and cope in an emergency.

Some would argue that the situation has been driven by the reluctance of owners to compensate for the value being brought. Or does this reluctance to pay for the value come from owners thinking managers are not transparent in their business. One thing is certain not all mangers are alike. Some clearly hold out for value and demand quality. Others have an agenda of growth for an ultimate equity event. There is a conflict between these approaches and safety, quality and customer support will suffer.

The only way to achieve …

There is, however, a way-out of the predicament that can avert a race-to-the-bottom and that is for ship managers to demonstrate to owners clearly and unequivocally the value they can and are providing. I believe the only way to achieve this is to increase transparency. If managers are hiding behind a veil of obfuscation, owners have every right to be sceptical: opaqueness invites suspicion, and in my opinion, is indefensible.

In earlier times, this smokescreen might have been ascribed to the technical challenges in collecting, codifying and presenting suitable performance metrics. Advances in technology and in ship-to-shore connectivity mean this is no longer a plausible excuse. It is now possible to monitor all the equipment and machinery systems that make a ship work in great detail. It is possible to get that data off the ship and in front of experts on shore quickly and easily. It is possible, thanks to algorithms and machine intelligence, to analyse it from more angles than ever before.

We shouldn’t stop there. Our plan is to make sure the insights gained from those processes are shared with owners. In that way, we can communicate the value we are delivering by showing the performance of vessels they’ve entrusted to our care. When areas of concern have been identified, we can demonstrate how we’ve grappled with and overcome those problems, and it gives us a tool for highlighting areas where, with the right support, further improvements might be made.

Allowing owners to compare their stats against industry benchmarks not only confirms the value we provide but can be leveraged as a bargaining chip by owners to present their ships in a favourable light during negotiations to win new charters. As you can see, this approach not only puts the brakes on price-only competition but sets the conditions for reversing the direction of travel and creating a positive feedback loop.

People who care …

It is also important we demonstrate that ships are being maintained by people who care. Similar technologies can play a role in helping maintain and continually developing the competency of ships’ crews – both the officers on bridge and the engineers working below deck.

The long-term goal here isn’t to turn human personnel into dumb automata who only follow the instructions issued to them by some all-knowing machine. On the contrary, the aim is to empower and equip them with new skills and develop new aptitudes and problem-solving abilities to ensure they operate at peak performance and are ready to attend to more sophisticated and automated onboard machinery.

The common theme is to make technology work for us – whether in strengthening the interface between the crew and their ship or by forming a closer relationship with our customers, the owners – and not the other way around. The future of ship management does not lie in replacing crew with robots or exchanging the human touch in customer service for bots and apps. In fact, this is quite the opposite. By leveraging technology for a smarter conversation, we end up with a better level of service, a quality collaborative and consultative support infrastructure.

Digitalisation has been talked to death in recent years. But to date, it hasn’t produced the advertised results because the implementation has been wrong. Ship managers – and, for that matter, owner operators – are forced into using too many systems from too many vendors. Each solution might be doing its individual job, but because they are not unified, the collective benefits of this technology stack are lost. The extra complexity and workarounds this multi-vendor approach necessitates subtracts values.

This ‘stack’ metaphor, which is commonly heard in IT circles, is remarkably apt for a company like Wallem, which in addition to technical management and crewing, offers services supporting the complete lifecycle of a vessel from newbuilding supervision to end-of-life recycling guidance, as well as an extensive portfolio of commercial, safety and compliance management and agency services. Many managers, like Wallem, have industry-leading expertise in supporting owners with legislative issues. Wallem also is providing technology support and consultancy to some of their clients.

I find it astonishing …

As a full-stack service provider, I therefore find it astonishing that after a fleet reaches a certain size, owners so often decide to bring technical management in-house. The benefits of outsourcing don’t diminish as a fleet grows in size; in fact, the opposite is true.

This behaviour is not evident in other industries. Businesses in all sectors happily outsource accountancy, HR and other functions. Airlines rarely care for their own aircraft anymore. In particular, today’s low-cost carriers wouldn’t remain in business long without third-party vendors able to carry out regular maintenance or periodic overhauls. In e-commerce, a new breed of online retailer doesn’t make or even touch products, instead using social media as a shop front and the likes of Alibaba and AliExpress to fulfil orders.

For the vessel owner acting primarily as an asset owner and commercial operator taking on technical services adds inertia to the business. It makes it harder to react to changes in the market to dodge downturns or seize new opportunities. Indeed, the complexities of the regulations, environment and operations of today would seem to demand an outsourced expert to support the business. Everyone else is doing it, but maritime has resisted it. Maybe the »third party ship managers« have to also change their model, to gain their creditability back.