Tag Archives: shipmanagement

So poke me. Do seafarers really need always-on communications at sea?

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In the second part of my interview with Intermanager Secretary General Kuba Szymanski we get off topic. That is to say, beyond Intermanager’s work with VSAT vendors and into an area of arguably greatest interest for maritime satellite providers: crew communications and the use of social media onboard ship.

The latter appears to have the communications industry captivated. Crew are reportedly demanding greater access to the internet and the industry is responding, citing its importance in retention and the risks of ignoring such requests.

The perceived shortage of skilled and qualified crew is driving demand for bandwidth far in excess of that for business use. In doing so, it skews the VSAT demand figures, not least because the kind of applications seafarers would like to use are so bandwidth hungry.

To Kuba this puts the cart and horse in the wrong order. The potential of social media tools is huge and growing, but to use a shortage of seafarers as a driver to growth is to misunderstand the current situation.

“First of all, I don’t think this effect is happening as much as some journalists say and as much as some shipping industry ‘politicians’ claim. People are saying every day that the younger generation will not go to sea. I’m being very honest with you now, but the younger generation has no choice, because there is no other employment at the moment,” he says.

The popularity of cadetships at the UK’s Trinity House is growing year by year, not least because of the introduction of tuition fees but Kuba says across Europe, the realisation that a junior officer can earn £35,000 a year tax free is enough for them to make the leap and if that means no internet access, so be it.

“I’m not very popular for saying things like this. I’m seen as being controversial but this is how I see it,” he says. “I also believe that a lot of youngsters are clever enough to know how to communicate whenever the vessel is in port or near shore, so the periods with no communication might be quite limited depending on the trade they are in.”

The ‘bring your own device’ trend where more youngsters have their own laptops or smartphones means they are increasingly adept at getting online. But he says lack of signal is only half the problem.

Also at issue is that owners are increasingly looking to crew to share the cost burden of crew calling, providing the best possible way to accurately measure demand. “The owners are saying OK, but you need to pay half or a percentage and that immediately shows you that youngsters can do without it. If it is free of charge then everybody uses it, but as soon as you have to pay something, then all of a sudden you find that they can do without it,” he notes.

He mentions a large tanker company which put a lot of resources into free onboard internet for crew use but found the cost so prohibitive that they were forced to put more and more restrictions in place as the price for free access. The result, to coin a phrase is neither public nor convenient.

But Kuba’s iconoclasm doesn’t stop there. The industry needs to understand the simplest of drivers – supply and demand.

“I think it is very important to understand there is no shortage of seafarers,” he states. “There is a surplus of seafarers, even in the LNG sector. Owners are not struggling to get crew and some are asking why should I go the extra mile, they will come to me anyhow.”

That’s a big statement in an industry where ‘shortage of crew’, like ‘high fuel costs’ and ‘too much regulation’ is an article of faith. Is Kuba really saying the industry has all the skilled and competent seafarers it needs? Just as in communications, you get what you pay for, he thinks.

“If you want a good quality crew they are there. If you want the best, well, that’s hard because everybody is after them. If you pay the bottom of the market, that’s what you will get. It’s like having sex and not imagining you might have a child. Owners are getting very cheap crew and expecting to have excellent standards and quality,” he adds.

But as to their expectations, he sees the potential of social media as the glue that can bind seafarers together, and maybe let their would-be employers in on the game too. He contests whether Facebook and Skype are truly household names onboard ship, but says the effect on seafarers is immediate and obvious.

“If you think from the psychological point of view. I might work with you for four months and then there is a chance then I will never work with you again. But we became friends and we want to keep in touch. Facebook is a beautiful solution to that, which is why seafarers use it so much, along with things like CrewToo or MyShip.”

Intermanager is hardly the first industry body to have a Facebook page but he has noted that it gets double the traffic than the official website, primarily from seafarers.

“I was asking myself the question why and the answer is it comes with age. In shipmanagement, you’ve got people my age or older and onboard the vessels you’ve got people my age or younger and to these guys it’s what they grew up with.”

The desire to keep in touch and the availability of the tools to make it happen provides a natural win for an organisation so interested in the crew that make world trade go around.

“The most successful companies realise that Facebook does not have to be an enemy. It should be a tool to tap into seafarers, so listen to them, see how morale is, what is motivating them, to keep a finger on the pulse,” he suggests.

It is that – rather than outfitting the ship with a fat communications pipe and footing the bill – that he believes will make a difference in getting the best crew to work with your company. And as he adds, compared to Inmarsat or VSAT, the investment is far lower.

“Still, when I talk to people, people say Facebook gives you no return on investment. First of all, the investment is minimal; it’s time not money. But what it brings is a lot of traffic, a lot of interesting stuff. It is difficult to measure, but how much would you pay to get to five thousand people on your database, most of whom are potential employees? All I know is you would have to spend a lot of money on advertising to achieve anything similar.”

Smarter shipping means having communications you can rely on

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The opportunity for a conversation with Intermanager Secretary General Kuba Szymanski is not to be missed, but you do have to pick your moment. True, he is to be seen on many a conference platform, but he is equally likely to be en route to another airport and the other side of the world, or even home to his beloved Isle of Man.

My interest for catching up with him was prompted by his having taken part in the recent Satellite 2013 conference in Washington, illustrating a growing interest in communications on behalf of Intermanager members. Some 12 months previously he had given a rather effective dressing down to VSAT providers at the Global VSAT Forum just after MaritimeInsight got going, so I was keen to see what progress he had made in making the process of buying satcoms more transparent.

As always when talking to Kuba, the conversation took in related subjects and included some strong opinions. Nonetheless, this is an organisation that wants to change things, so a straight line is not always the most effective route from A to B.

Intermanager’s interest in satellite communications stems from not just from a desire to shake up the buying process. It is founded on the belief that communications form a vital and undervalued link in the business process as well as in crew welfare.

“Intermanager is always talking about crew and I thought it was time to start walking the talk,” he explains. “We really care about our crew and that means the crew as both a worker and as an employee.”

“What we wanted to bring forward is that communication is also extremely important for the viability of our businesses. Without good communication, without good core connection with vessels we will struggle,” he goes on. As a former fleet General Manager for MOL Tankship, his experience had convinced him that users were not getting what VSAT had promised them.

“For the last few years, we have been, let’s say ‘misled’ and we could not afford that anymore. When we only had Inmarsat everybody knew what the boundaries were, expectations were quite limited but Inmarsat was able to meet these expectations. As soon as VSAT came onboard, expectations have been blown out of proportion by the providers,” he adds.

The biggest problem was the assumption that maritime users made that they would soon be enjoying terrestrial broadband speeds. But his gripe was not that VSAT failed to usher in an era of social media and internet use but that VSAT services failed to do what they said on the tin despite running to big bucks.

“We were told we would get 365 days of connection but they forgot to say there would be no service between Australia and Cape Town. Intermanager said, OK, enough is enough. We can always whinge but this will not improve the situation. So we sat down with GVF and we gave them some very constructive criticism and they were happy to take the feedback.”

Suitably chastened no doubt, GVF got Intermanager involved in its events and brought the organisation together with the providers. Kuba happily admits this was not one way traffic, the managers had to improve their knowledge too.

To be fruitful, this could never be just a question of blaming the VSAT guys, but rather looking for sources of assistance and that meant shipmanagers could help themselves by deciding clearly what they needed.

The organisation commissioned Stark Moore McMillan to undertake a survey to gauge return on investment for shipmanagers, “so we could help our guys to see how much money they have to invest in order to achieve more, what were areas which could benefit most and which might benefit least from good communications” he explains.

In providing a tool to help in decision-making Kuba says managers have moved from ‘an educated guess to an educated management decision’ and he says the vendors have listened and moved too.

“I’m extremely pleased because it shows them we were right! There are cowboys in shipmanagement and the same applies to the VSAT system providers. The name of the game here is listening, so they sat down with us and said OK you tell us what your problems are and we together will try to work out the best possible solutions. That is what I was hoping for three years ago and we are some way to achieving that.”

He agrees there are members who decide they still know better but he says even the switched-on companies need help and advice so the opportunity to work directly with suppliers is welcome.

He says many on the sell-side realised they had to up their game if they wanted to sell to owners bumping along the bottom of a terrible market and for whom the to do list starts with the regulatory must-haves and works down to the nice to have add-ons.

“It’s not only VSAT, some of the bigger providers manage terrestrial communication, GSM, data exchanges so they are able to pull a lot of strings. I didn’t expect some of them to know as much about shipping as they did but I ended talking to one who said ‘what about ECDIS, we’ve got a nice solution for you guys’ and that was the icing on the cake.”

The Intermanager engagement strategy is simple, if demanding: be professional, do your homework, understand what makes a shipmanager tick and what can be done to make their life easier. Without that it’s best not to come to the table.

Isn’t it a problem though, that just as the industry sees light at the end of the tunnel, the broader satellite industry is regarding maritime as a potential pot of gold? The risk is that not just incumbents become more aggressive but that new players steam in and destabilise a market that is just getting back on its feet.

Kuba sees the same trend and a repeat of the original path of VSAT into maritime. Other markets have been already saturated and with revenues from government or land mobile under pressure and aero still emerging, shipping looks like a safe bet.

“A lot of them have a misconception in that they see shipping as the big passenger vessels so it is an eye-opener to discover there are only have 350 of those. That might have put them off but they don’t have many other places to go so suddenly the other 75,000 vessels look very tempting. But just because you can sell one million iPhones doesn’t mean all those ships want or can afford VSAT. Using your iPhone might mean paying $20 dollars a month not $5,000 a month for VSAT,” he says.

The number of commercial aircraft also compares poorly to ships, prompting a revival of interest at the point when potential customer advantage can be gained from better communication.

“Everybody has a vessel, everyone has crew but only very few can provide an excellent communication link with your customers so users now are demanding more. The charterer used to ask the manager or operator where is my vessel, what is the ETA, where should I put my trucks? These days the manager can say ‘don’t ask me, log in and you can see all that information.”

Coming up in Part 2 – why the crew calling trend could be overdone and whether there really is a shortage of seafarers.

Shipping’s money men get a lesson in seafaring

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Below is the follow-up installment of my ongoing grapple with social media and the image of shipping for my BIMCO column.Perhaps no great revelations here but kudos to Citi’s Robert Parker for asking the question and Scorpio’s Robert Bugbee for telling it like it is.

Marine Money is an orthodox institution in an unholy sea of maritime conferences. It does money and ships and aside from the occasional diversion into the underlying markets, it sticks to this self-imposed philosophy.

So it’s a sign of the times perhaps that the recent London Forum, always one of the most interesting of its events, encompassed not just the freight market and lending landscape but ended by going completely off message. Pleasingly, this diversion was into an area of interest outside finance – the image of shipping.

Perhaps this time, the great and the good had decided that it was an issue to important to ignore. If a panel comprising Roberto Giorgi of V.Ships, Philippe Louis-Dreyfus of Louis Dreyfus Armateurs, Robert Bugbee of Scorpio Tankers, Rajaish Bajpaee of Bernhard Schulte and Dagfinn Lunde of DVB Bank couldn’t sort this out then who could?

I suspect that to many of the wheelers and dealers present, these were unfamiliar arguments and all the better for it. For those of us who had, optimism might crudely be said to extend as far as the gangway.

Rajaish Bajpaee fondly recalled the feeling many years ago of “seeing oneself in a white uniform, with a cap and epaulettes, off to see the world. But I was 16 years old and the world has changed. I don’t think people go to sea for its charm or to see the world or to wear a uniform”.

As recently as the 1960s and 70s, he said, the best of breed might choose to go to sea. Today, shipping wouldn’t even appear on a list of options. “The sad fact is that those who have no other choice look to ship as a career.”

Shipping would be unable to attract the best and brightest as long as issues such as criminalisation, piracy and the isolation were not remedied. Some of the changes are structural – a week to cross the Pacific rather than a month, port stays of 8-10 hours rather than days. Ever smaller crews feel a greater burden of paperwork, by his estimates 80% of a senior officer’s time is taken up on paperwork, 20% on running and maintaining the ship. Not even the lenders should be happy to hear that.

“There is no real representation of seafarers. We take them for granted at a conference like this, we hear about the best yard, the best bank. The real act of transporting cargo safely is done by a seafarer,” he added.

Roberto Giorgi was quick to agree – and in typically forceful style.

“We have to re-establish respect, dignity and pride in this job. Seafarers should be accorded the same respect as airline pilots, not treated with hostility as if they were terrorists. Without crew there are no bankers, no private equity, no ships and we would all starve to death!”

While the other half of the world froze, of course. This prompted an observation from Citibank’s Michael Parker, the panel’s unofficial sixth member. In his reasoned style, Parker wondered why such an important industry, one which only a few years ago was making huge profits, put no effort into improving its image, lobbying politicians and regulators while it had the cash on hand.

“We have ended up in weakened position where financing of shipping is made harder by regulators with no understanding of the industry. Can the industry have a greater say next time you are earning all that money,” he asked.

Philippe Louis-Dreyfus, himself a former banker before joining the family firm, called this “a good and a fundamental question”. He noted that in his time as chair of national and international ship owner associations, he urged members to spend as much money as possible to improve shipping’s image and let the public know how much good was being done.

“To be frank I wasn’t followed. No one wanted to spend money,” he said. “It should have been the main topic and now we pay every day for our bad image. We have created these problems when we should have been dealing with them as a priority. Most industry bodies have not proactive enough on environmental issues. We have lost time and politicians are making decisions for us.”

It’s a pretty damning assessment, but there was another to come from Scorpio’s Robert Bugbee and it underscores what I have tended to believe will always undermine the attempt at a group hug. If shipping is a zero sum game, why should its constituency play nicely?

“We strongly support crew safety and environmental protection and that starts with design of ships and working with our people. But I think we are destined to repeat our errors because it’s just not a team sport. We are all very motivated to make money when things are good and scramble to get out when they are bad.”

Quoting his wife’s description of shipping as “boys playing with their toys” he said it was precisely that exciting, volatile nature that would attract the mavericks, movers and shakers that make shipping what it is.

“Frankly I’m really all for more regulations and barriers to entry and I’m all for cycles because that’s where the opportunity is and where the fun is. It would be really boring if we created a ‘proper’ industry where everything was nice and rational. I would be out in two seconds.”

I don’t think Bugbee was being purposely cynical, just reflecting what he, his management, board, shareholders and staff are in it for. Doyen of the ship lenders and former INTERTANKO head Dagfinn Lunde of DVB Bank proffered a terrible statistic.

“Some 86% of the money in shipping is private and with a few notable exceptions, there is no will to put any of it into working on the image of shipping or education. The will is not there and the money is not there. Even between industry organisations, the will is sometimes not there,” he said.

Giorgi agreed that there was too much fragmentation and too little alignment between shipping organisations but there were possibilities. The book which gave its name to the conference session – Dynasties of the Sea – could be a useful tool to educate people who had no idea that most of what they consume comes by sea.

For Giorgi, the rot went deeper. A lack of common purpose meant shipping – and shipmanagers in particular – found themselves dictated to on ship and equipment design, making training and the retention of quality crew harder and harder.

It was refreshing to hear a panel not preaching to the converted but to an audience that has probably not heard these issues aired so frequently. As Rajaish Bajpaee pointed out, shipping has spent too long looking inward while not reaching the man on the street.

“Ask a taxi driver in Hong Kong where the gas for his cab comes from and he won’t know. Ask him the gold price or the stock exchange or which horse just won at Happy Valley and he knows. Shipping lacks that identity and we need to reach out to non-shipping community and make them understand how shipping touches their everyday life.”

More threats (and opportunities) for the VSAT vendors

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A final dispatch from the recent GVF seminar in London, not because it didn’t bear reporting sooner, more that it might serve as a springboard going forward.

Amid optimistic forecasts of a doubling of maritime satellite communications terminals over the next decade and the rush towards High Throughput Satellite offerings by Inmarsat, Intelsat, O3B and others, it always pays to listen the person who has run the numbers on the demand side.

Roger Adamson whose company Stark Moore McMillan, has been running a rule over the maritime market for a couple of years with help from iDirect, used his speaking slot to point out that a ‘re-acquaintance’ with the maritime market would always be an illuminating process.

Adamson’s most salient point was to remind the vendors that shipping is still a highly fragmented market – with some 9,000 owners out there, 4,000 of which own but a single ship.

The cruise sector, VSAT’s traditional arena of operation, is far more consolidated with some 300 vessels, 175 of which are controlled by three players. Similarly the offshore support vessel segment is spoken of as a VSAT hunting ground. But as Adamson pointed out, even though the OSV sector has close to 10,000 ships, at least half are idle or laid up and 30% are 25 years or older.

The even more interesting news for those selling fat pipe solutions is that vendors of VSAT and L-band alike – are selling into a market that is at a high level at least, far from sophisticated.

SMM’s survey found that 48% of owners are still using the obsolete Inmarsat-B, 75% of them for primary voice communications. As Adamson pointed out, “we are dealing with a market that is still at 9.6kbps data.”

Spending on L-band is stable at around $1,000 per vessel per month, whether on B, Fleet or FleetBroadband. In 2010 VSAT customers were spending $3,500 per month on average. By this year that had fallen to $2,600 reflecting price pressure and increased competition.

Despite the increased incentives, Adamson said, the realities of today’s market would constrain a wholesale move towards VSAT on grounds of price.

“The slower growth in VSAT market is partly due to market conditions. The niche is becoming well penetrated, but it is also down to VSAT industry not communicating ROI properly. Sales have to be on quantifiable benefits not on functionality,” he said.

“The shipping industry is in survival mode in most sectors and it is not focussed on IT and comms, unless you can provide them with clear ROI benefits as to why they should be moving to VSAT and spending 2.5 times more than they are currently spending,” he went on.

Trouble is, Adamson thinks VSAT vendors are not communicating the benefits effectively enough. Not only is there a reluctance to invest in technology, there is a genuine aversion to the kind of long fixed-term contracts that characterise VSAT. He noted the newest kid on the block O3B was offering “fixed terms of 5-10 years and to be honest that’s not where the market is. They may take a few off the top, but it’s unlikely to find much sympathy in the broader commercial market”.

In bulk, tankers and containers, owners are likely to be laying up tonnage, so there is little appetite to pay for airtime when the ship is idle. Even when they are sailing – often below operating costs – the benefits are hard to quantify.

“When iDirect asked customers whether fitting VSAT had generated cost savings, 60% said no, 20% said yes and 20% said not sure,” he continued. “I’m convinced that that VSAT can deliver savings but nobody has as yet started to look closely at the process.”

The difference is that where Inmarsat was an easy sell to IT managers and superintendents, the cost and complexity of VSAT needs to be sold at board level, where a story that frames the potential efficiency gains across whole business can gain wider approval.

The next uncomfortable fact is that the majority of tier two owners – regional or coastal players – are unlikely go to VSAT while GSM coverage in coastal waters continues to improve.

“My take on where VSAT is going is beyond offshore and cruise and into the tanker sector. There is a huge charterer requirement for data coming off the vessel and this could be the next big market for VSAT providers. There are 15,000 ships in the clean and products trades and they are starting to become receptive to the VSAT business case.”

But there was a twist in the tail – or perhaps just another contradiction in this most fickle of markets. The SMM survey found a big increase in data usage, but the majority of the new traffic on L-Band and VSAT is for crew welfare rather than for shipmanagement applications.

“The effect is even becoming pronounced for VSAT users,” Adamson noted. “Where business efficiency was the killer app in 2010, the importance of crew welfare had increased by 2012, with VSAT a driver to increased retention for crews wanting to use instant messaging and other social media applications.”

It’s not (just) about the money

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So what did we learn from the first day of the GVF conference in London? Enough for plenty of future blog posts – but the over-riding takeaway from Wednesday was that satcom vendors need to understand more about shipping.

And on the flip side, shipowners and managers need to understand more about satcoms.

This double negative effect – whereby the vendor has little idea about what the owner really needs and prefers to seal a deal at any price, while the buyer is more likely a superintendent than an IT specialist – is creating problems once the kit is delivered and onboard.

Several times yesterday, the sheer number of satellite acronyms and numbers per second demonstrated what makes satcoms people tick. They are geeks. That’s not meant as an insult – they just have more in common with The Big Bang Theory than they do with, say, The Six Million Dollar Man.

Buyers, it seems are equally in the dark about what they need to do the job and how reliable and effective it is going to be once they are on the ocean. At times nervous of what their ignorance might reveal – also price driven and advised seemingly by what they read in the maritime press as much as by their own research – they sometimes make bad decisions.

It’s not all bad. Demetris Makaritis of Navigator Gas said his company was pleased to get a fixed monthly price for a mini-VSAT installation but observed wryly that the service was good ‘when it worked’. He also said the coverage was not what he had been led to believe, in part because he had fitted an antenna smaller than the recommended size.

Perhaps, a few of us pondered, that was an oversight, perhaps a cost saving, perhaps an absent-minded error. But it left him, not exactly back where he started, but longing for better system uptime and reliability.

Navigator’s LPG ships are pretty hi-tech and having done his own cost analysis, he was pleased with the 30% reduction in comms bills he achieved. But he admitted he would ‘happily pay more for bandwidth’ if the service was more reliable.

Finding out that India to Singapore was pretty much missing from the coverage, along with parts of the Mediterranean is not a nice feeling to have, one which left him to advise, ‘if you don’t can’t guarantee the coverage, don’t put it in your marketing’.

In an aside that certainly made him the most popular man in the lunch break, he said these doubts meant that he was far from certain which solution to go for on six LPG newbuildings.

How Makaritis and perhaps many another owner and manager found themselves with a system that wasn’t all it promised, was illustrated by Kaushik Roy of MOL LNG.

MOL is, like Navigator, a quality operator that invests in operation efficiency and crew welfare alike, but Roy was frank enough to say that owners would sometimes end up specifying systems because they lacked the knowledge to challenge what they were being sold.

There was not enough benchmarking or gap analysis and expectations on either side were often not known or understood clearly. Equally, he said the satcom sales person often had little or no technical knowledge about shipping or shipmanagement they ‘just wanted the contract’.

Again the issue is not entirely about money. Roy said MOL LNG’s move to VSAT had seen its comms costs rise modestly, but this was a price it was willing to pay for the value that the fatter pipe brought the company.

As conference co-chair Kuba Szymanski of Intermanager pointed out, it was something of a tragedy that more Radio Officers, which were ‘retired’ as computers replaced wireless onboard ship did not find employment with satcom companies.

If they had, both sides might be talking the same language.