Innovating a way out of the Pandemic

The Isle of Man has to focus on niche areas of the maritime industry and on knowledge and technology, because the reality is companies are able to operate from anywhere in the world on digital platforms. But what will underpin this, from the industry’s perspective, is being able to innovate new ways of using that digitalisation, otherwise the lower cost centres will predominate.

This comment by David Furnival, Executive Chairman of Bernhard Schulte Shipmanagement and a prominent member of the Isle of Man maritime cluster, puts into context the opportunities that clusters face against the backdrop of the pandemic.

“Certainly, from the profitability perspective of ship management, margins are getting thinner and thinner all the time and we are transferring more services to lower expense regions such as Mumbai for example where the operating costs of an office are significantly lower than Singapore or the Isle of Man. But we still have a lot of knowledge and experience available to us here on the Isle of Man and other higher cost centres which we have to maximise,” he said.

Luke Tippett, Managing Director of Döhle (IOM) Group of Companies, agreed that there are opportunities for industry to tap into all corners of the map and use the resources the industry has at its disposal to overcome some of the issues and tackle the problems it faces.

“I’m not sure how it is for the rest of you, but for me it doesn’t seem like 12 months ago that we were all sat on this debate and I think some of the topics that we’re addressing now are still at the forefront of our  schedules. The general issue we had was getting crew on and off vessels, and this was a huge, huge struggle, but it remains a huge struggle and I think we’ve just been very fortunate because it’s taken a pandemic to enable us to realise what tools we have around us, how we can work together with our partners and also in some ways with our competitors, in order to work towards a common goal that we’ve had in order to keep the industry moving.

“We’ve seen crew desperate to get off vessels to get home to their families and we’ve had the exact opposite of crew desperate to get back on board vessels to earn money to support their families,” he added.

“From a Döhle perspective, we’ve been involved with some charter flights for example from the Philippines to Europe, things that we wouldn’t perhaps have been involved with in the past but doing such projects with partners, with competitors in order to reach a common goal, to keep everything moving I think has been absolutely invaluable.

“And as an Isle of Man cluster, we’re all doing a sterling job to ensure that in each of our areas we continue to succeed as much as possible, to grow each of our businesses. Nothing beats the whole interaction of somebody going onboard a vessel or somebody going to a networking event, but we’ve certainly shown in the last 12 months and I think this will be a trend that we see into 2021 and the future, that it can be done
with great success.”

According to Cameron Mitchell, Director of the Isle of Man Registry, one of the biggest takeaways of the past year has been the realisation that everything we took for granted, to be able to travel, to be able to survey ships, all of those things that we just expected to continue, haven’t happened.

“So, for me, it’s the networks that we’ve managed to build on and formulate over the last 12 months which will ultimately enrich our business. It will provide us with that network of business development managers or surveyors at key locations throughout the world to actually expand our business. When we come out the other side, we’ll be stronger for it, we’ll have a bigger presence, probably globally I think through those networks. We have expanded into China now which has been big for us,” he said.

Russ Kent, Managing Director of Manx Ocean Crewing and Chair of Isle of Man Maritime, a not-for-profit company which has been established to promote, develop and support the strategic development of the Isle of Man’s growing maritime cluster, is realistic about the impact that COVID has had over the past year.

“Let’s not beat around the bush here, it’s been an exceptionally difficult year for the cluster because we’re primarily an events driven organisation and that’s the way we try and get our message out. When you’re trying to be competitive against other clusters, you have to go out there and try and sell ourselves and in this environment it’s very difficult to do that digitally; it needs to be face-to-face, person-to-person and that’s
how you engage and make contacts.

“As a cluster we’ve had to focus internally and we’re looking at how we raise awareness to students on the Isle of Man about the possibilities that exist in the maritime world. The current perception on the Island circles around the Steam Packet. However, I’ve not been to sea and a number of people in the organisation haven’t been to sea, but we’ve still forged successful careers in the maritime industry,” he said.

According to Mr Kent, it is about raising that awareness that a career in the maritime industry doesn’t necessarily have to be about going to sea. There are the opportunities for this on the Island, he claimed,

“we have seen a massive upturn in the amount and the volume of work that the pandemic has created so that in turn is creating opportunities within the industry.”

Isle of Man Maritime also used the social media platforms to heighten awareness about the plight of the seafarer during the pandemic and, in so doing, raise some funds for seafarers’ welfare charity. In conjunction with this, the Ship Registry has released a welfare app available to all flags.

“We’ve tried to focus also on our Women in Maritime Initiative, and a number of women are involved in senior positions on the island within the maritime organisation so that’s a very positive story to try and sell. But overall, it’s been a very tough year and how we get back to competitiveness I think we can only start to really properly address that once we reach some form of new normality,” he added.

Kuba Szymanski, Secretary-General of InterManager, also based on the island, said he would love to see the Isle of Man back to where it was in 2000-2006, “being a centre of shipping excellence where we were able to deliver every aspect of the shipping business.

“I would like to see a deep analysis of what went wrong and why we are not the biggest LNG operator that we used to be; we are not one of the most sought after boutique crew management centres we used to be and why is technical management not provided from our excellent island anymore?

“Without this root cause analysis we will be acting like a child in the fog, try to move in each and every direction. Proof is in the pudding and currently our Manx Shipping pudding is rather bitter, Bibby’s has gone as has Shell and Maersk. BSM, Dohle and VShips are all working with reduced staff – it is only the ship registry is really making us internationally proud.

“We have a very catchy motto on the island ‘Freedom to Flourish’, however, I question this ability to practice freedom. The recent lack of appreciation by the government of our own seafarers ended up with a COVID blunder. We could have been an international leader on crew vaccination and we did the opposite. Now we could be showing the world what happens if a nation chooses not to vaccinate seafarers, so
others can learn lessons from this, but again we seem to prefer to keep quiet about it,” he said.

Cameron Mitchell, Director of the Isle of Man Registry, added to the debate:

“We’ve taken a huge interest in the welfare of seafarers as Russ has pointed out. I think we were one of the first flags in the world to develop our own seafarer welfare app for seafarers on Isle of Man ships. I think, globally, we have to start thinking more about our seafarers and the continuation of the supply chain and I think we’re still in a bit of a mess there.

“We need to start putting our energy into the green agenda and as a ship registry, we’ve been working hard on that over the last 12 months. We have various companies testing bio fuel and we have the first design equivalents for older VLGCs to be able to operate with LPG as a fuel. One of the big things that the Island could do more proactively is trying to attract those green tech companies; I think that’s probably a big thing for the future, everywhere, I suspect.

“From a marketing perspective, we’ve pushed ourselves ahead quite rapidly this year. We currently have representation in Singapore, Japan, China and Greece – we’re expanding in the Middle East, in Dubai and we’re currently looking at Germany, the USA and Hong Kong.”

Russ Kent again:

“From our crew management perspective what the crisis has really brought out is the value of long-term relationships within the industry. We have a vessel on charter around South Africa and she’s been there for a number of years and of course during the crisis South Africa closed its ports so, it was impossible to repatriate the crew. It was only with the cooperation of the charterers who diverted the vessel up
to Tanzania and the collaboration of the owners in terms of off-hire that we were able to change the crew. It was about having such good long-term relationships in place both with our owners and the charterers.

“In terms of managing the crisis for the crew, it has been operationally difficult to get crew on and off the ships. There has been a massive strain on our crewing operatives because of the additional work involved with COVID testing and the requirements for a PCR test within 72 hours of travelling and then the reduction in airline schedules and cancellations. We don’t have to pretend here, it’s been a massively challenging year for our crew operations but thanks to the long-term relationships we have with our travel agents and crewing agencies, we have managed to ride it through.

Cathy Lane, Director of European Operations at MHG Insurance said:

“Again, just to back up what everybody else has said, relationships and existing pathways sort of really come to the fore.

“One thing I have noticed about the industry is that it is very close-knit, everybody knows everybody or if you don’t, you know somebody who does. People are more than likely to help each other, whether you’re from a competing company or not, if you need something you can pretty much ask anyone and they’re pretty good at helping you out or pointing you in the right direction; relationships are incredibly important.

“The pandemic has kind of made everyone realise that you can’t take things for granted. We all tend to have a certain way of doing things and you kind of stick to that; occasionally you’ll have somebody come up with a brilliant idea and think oh that’s quite innovative we’ll do that. But I think something like this pandemic has made everyone think that way all of a sudden. So there have been quite a lot of innovative developments I would say in the use of technology, which is quite encouraging to see; more than anything it’s that you can’t take anything for granted and you have to be quite nimble in your response to things as and when they occur.

“Certainly, on the insurance side I would say it’s made people more aware of what cover they didn’t have. So, in that respect it’s been an incredibly busy time for us, surprisingly and not just on claims. We’ve seen an awful lot of people moving away from those insurers who panicked as soon as the pandemic was declared and put a Covid exclusion on their policies. A lot of people have come to us because we have incredibly good relationships with our underwriters and we have managed to convince them that the overall claims experience purely for COVID is actually quite small compared to what we would normally see on the claims activity.
This is because ships are self-contained entities; the industry has been exceptionally good at keeping infection off their vessels,” she stressed.

Bruce McGregor, Director at PDMS, an IT software and solutions company, said COVID has forced many companies to increase their focus on further Digital Transformation and bring certain skills to the fore to enable their organisations to work in ways that were only lightly used previously before.

“We’re using great technology now and I think we all know that had this pandemic happened 10 years ago, without this technology the world would be a very different place. A lot of focus is really coming back to that innovation a business’ digital and transformation piece and we’re fortunate to be in that space where that’s where we operate anyway. So, we’ve seen organisations come to us that were going to do things previously in a certain timeframe and now these have been compressed. Part of the challenge will be to innovate in the right ways to ensure digital tools are both in place and remain to support the new activities that organisations now need to do as a matter of course.”

As he stressed, many are focusing on those parts of their businesses that need to transform when it comes to digitalisation so they can provide many of their services truly online, rather than partly online.

“I’m not saying face to-face activities won’t come back, because it will, but a lot of these efficiency gains that IT and software solutions allow us to create and innovate will continue to be pushed to the fore. For the Isle of Man as a cluster, using the now more familiar digital technologies we could push out wider and further perhaps more quickly or in a more accepted way than we might have been able to if this hadn’t been the case,” he said.

Craig Richards, Director of Maritime, Oil and Gas Consultancy Services, added:

“We’ve seen a huge uptake in terms of people asking us to look at how they can digitalise and use technology for some of their core processes, and I think these strategies have been on CFOs and CHROs’ desks for the last 5-10 years, but they’ve just maybe been shuffled to the side. But, all of a sudden, with the reactions to COVID, we’ve seen these come to the fore.

“Now on the negative side, lots of people want to talk about digitalisation but there’s also a fear of people actually making the changes until the know there’s some security back in the world. And I sense a lot of businesses are still on hold. They are still operationally having to make sure it works so people are wanting to change but they don’t have the resource to actually implement those changes until normality returns. It’s almost double-edged in that digitalisation is at the front but we’re not quite ready to do it yet because operationally we don’t have the staff to do it.”

Dan Jespersen, Managing Director of 7C Shipping, said:

“From a positive perspective, companies can be run “pretty much anywhere you are, you don’t need to sit in an office. We’ve had discussions with various parties on the island about strengthening the whole ownership representation and the substance required to do so doesn’t need to be as great as it used to be in the past. Not because the rules have changed but simply because the decision-making power can sit on the island while the rest of the organisation can be spread out around the world and we are competent working at that.

“The pandemic really highlighted the gaps in delivery; the world changes slightly and suddenly we need to better at seeing solutions. And to be fair we hear about all the positive stories but every time there is an issue it’s been dealt with and so forth, and we all pat each other on the back and say, “We did this great.” And I turn around and say, “Yeah, it’s great we solved it, but it still cost me in dollars.”

“And so I think and this is the gap. From a ship manager’s perspective, it’s a challenge, it’s difficult but it’s a question of the speed and the flexibility in order to be able to change and solve the issue which in the end is going to determine your ability to give a service.

“So, coming back to your question, I think the island definitely has a lot that strengthens or can benefit from this from the whole digitalisation of it, but as well, and thereby being able to strengthen these sides where you have the true, as I say, substance on the island, without having to relocate the whole company, all the services to the island,” he said.

Special thanks to Elaborate Communications for their continued support.
Published by Ship Management International: March/April 2021.