In an exclusive interview with HANSA, Carl Schou, CEO of Wilhelmsen Ship Management, and Michael Silies, CEO of Wilhelmsen Ahrenkiel Ship Management, warn against shortage of crews fit for dual-fuel operations.[ds_preview]
The worst of the pandemic and its disruptive impact on ship operations might be over. However, ship managers are not out of the woods, yet, as Carl Schou, CEO of Wilhelmsen Ship Management, and Michael Silies, CEO of its German affiliate Wilhelmsen Ahrenkiel Ship Management, explain. Motivation of seafarers has suffered while training requirements for alternative propulsion systems keep growing. A new qualification scheme at Wilhelmsen, which has around 250 vessels under full technical management, is to help supply competent crews for dual-fuel ships.
It’s two years since the pandemic broke out, causing havoc across trade and shipping. How have you managed?
Carl Schou: In the beginning we were alarmed about possible commercial and financial impacts on our business. We drew up contingency plans and braced for the worst, but it never really happened. In terms of sales and management contracts, our business was stable. Of course, it was different on the operational side. As all the world is aware by now, by far the biggest problem was the crew change situation. The second big issue was logistics and getting the necessary spare parts to the ships.
What’s the level of disruption right now?
Schou: In Europe the situation is pretty stable which allows us to perform crew changes in a reliable manner. Governments stick to the rules they put in place, not coming up with new ones all the time. By contrast, in the Far East, it’s still quite a challenge to visit the ships. We are forced to do a lot of work remotely, carry out surveys and ship inspections online rather than on site. In terms of crew change, we have a small backlog across our fleet as of right now following the latest two pandemic waves. We are doing our best to clear it out.
Michael Silies: At Wilhelmsen Ahrenkiel Ship Management we found that in China, especially before the Olympic Games, it was very difficult, at times impossible, to get our vessel managers into the ports or to the shipyards to support dry-dockings. On the manning side, the situation has certainly improved. The list of vessels with seafarers that were overdue has dropped from 15–20 at the start of the pandemic to just 2–3 today.
How often do you get Covid cases on board of your ships?
Schou: The numbers are very low, in the single digits. We have a very strict protocols for seafarers signing on, with Covid tests in their origin countries before departure of their flights and after arrival at the port. Infections rarely slip through during the process.
Silies: We have maybe 1–2 ships with Covid cases at the same time within a fleet of 60. The good thing is that a vessel is a natural quarantine station for a certain time. The main risk for our container vessels is contact with external people in the ports – not the seafarers that are signing on.
What are the most urgent issues that remain to be solved?
Schou: Mobility of seafarers and making sure they get back to their home countries as quickly as possible is still high on the list. Travelling for them continues to be hampered by government restrictions and a lack of commercial air travel. The first step would be to recognize seafarers as key workers.
What kind of hubs and flight routes are the most important for you for crew changes?
Schou: Singapore as a port and then the Philippines and India as seafarer origin countries.
Were there any positive highlights or advances lately towards fairer treatment of seafarers during the pandemic?
Silies: We had cases where the US were quite flexible in vaccinating crew members and ensuring full vaccinations, allowing doctors on board at reasonable costs or supply vaccines with just one shot. The problem is that seafarers often cannot return to the same place for a second or third shot depending on their schedule. So it takes some international cooperation to ensure full vaccinations. The level of vaccination among our crews is just over 70 % which is not so different from the level in Germany. This is quite an achievement given the more difficult circumstances.
Schou: Yes, the US was the first country to allow vaccination of seafarers in their ports, that was a tremendous help to get the process started. I would also like to mention Singapore where the maritime and port authority quickly established a joint working committee with ship managers and shipowners to work on safe procedures that allowed crew changes to be resumed quickly. The rules were strict but the system was reliable and it worked well.
How much more expensive has it become to operate ships?
Schou: The biggest hit was specifically to crew change costs. Our calculation showed that it cost around 1,500 $ more per seafarer each time than before the pandemic. That’s significant.
Silies: In many cases ticket prices for long-haul flights have at least doubled. On top of that, flights had to be cancelled or rebooked at short notice because of quarantine provisions etc. Travel costs overall have increased considerably.
Isn’t it a blessing at least that shipping earnings have improved so much that the industry can easily afford the extra expenses?
Silies: Yes and no. It’s good to have shipowners as clients who are financially stable again after years of earnings around opex levels. However, neither Wilhelmsen Ship Management nor Wilhelmsen Ahrenkiel earn more money today simply because freight and charter rates have gone up. Ship managers work for a fixed fee so they don’t get more money for the challenges they are struggling with right now.
What are the long-term effects of the pandemic even when it’s over?
Schou: I think seafarers have endured the brunt of the pandemic, thus their motivation has suffered. A career at sea will not be the first choice for people anymore which means that supply of labour could become an even bigger problem for the industry in the future.
Silies: As far as work processes, recruitment and training are concerned, we have found out that more can be done remotely. That’s a takeaway for the future. Generally, there is much bigger alertness among ship managers to crisis situations like today.
What are the projects that you like to focus on more?
Silies: For us within the joint venture Wilhelmsen Ahrenkiel, integration is number one. We want ourselves to be fully harmonized with the Wilhelmsen systems as quickly as possible. The transition to the new systems was completed at the start of the year but there are still some adjustments and fine-tuning to be done throughout the year.
Schou: The importance of digitisation in ship management was highlighted very much during the pandemic, the need for visibility and being able to follow up quickly on all operational aspects. This also ties in with decarbonisation and the upcoming requirements for energy efficiency and incorporation into the EU emissions trading system. During the last couple of years we spent a lot of work on developing a sensor and reporting system for emissions, supported by a central performance management team. The system based on sensors, flowmeters and some manual input on board, which we call »Spark«, gets rolled out to some pilot clients now, some ten ships. If all works well, we plan to implement it across the whole fleet.
2023 will see the implementation of the IMO’s EEXI (Energy Efficiency Existing Ships Index) – a major step in getting emissions reductions under way. How are shipowners prepared?
Schou: We are in talks with all clients to offer them a full package of services relating to the EEXI and carbon intensity indicator (CII) from next year. We have established a team and the necessary processes for it, so we can take care of the EEXI implementation and give them options for carbon reductions through hardware changes and soft measures including speed reductions. We are definitely ahead of the curve on this.
Many in the world of seaborne trade are concerned that speed reductions to bring down emissions will also aggravate the tonnage shortages? Are they right and when will markets feel the pinch?
Schou: When CII kicks in by 2026, that’s when the speed reductions will start. I believe that a majority of ships will slow down for compliance because investments in engine modifications and retrofits will be hard to justify within the limited remaining vessel lifetime.
The next generation of ships will need different designs and propulsion systems, though. What can you as ship manager do?
Silies: We are working closely with owners on big projects for use of alternative fuels. Owners first have to make up their mind what technology they want to bet on if they study newbuilding projects. The solutions might vary from client to client, but all of them will turn around to the ship manager for advice. Within the Wilhelmsen Group we are involved in a number of innovation projects as far advanced as autonomous and battery-driven vessels. We also have the MPC Group as a strong sparring partner who are working with their own experts on solutions for alternative fuels.
Schou: There are huge synergies within the Wilhelmsen Group with its »new energy« division that deals with new fuels and engine solutions. It is co-operating with the Singapore decarbonisation centre just like our partner MPC works with the Maersk McKinney Møller Center for Zero Carbon Shipping. On our part, we are about to partner up with another major stakeholder to drive R&D development in new fuels and engines soon. Another important factor is crew competence – you have to make sure people are qualified to operate the new advanced vessels. This is a big training challenge especially for us as ship manager. It will take a whole new set of competencies which will be time-consuming and costly. We have finalized a new training scheme specifically for dual-fuel operations which will go live in the coming months. The industry could be facing quite a gap here. From this year and onwards we already see quite a few dual-fuel vessels getting delivered, either for LNG or for methanol or ammonia. Will there be enough supply of trained and certified crew to perform those bunkering operations? I doubt it, I fear the ships will be there before all the necessary crews are trained.
Interview: Michael Hollmann
