We need to move the ship management business from a low-cost model to one that delivers real value: Kristensen, Group CEO, Synergy Marine

by P Manoj 

Don’t destroy India’s competitive edge as a key supplier of qualified staff whether land or sea to the global shipping industry and make sure that we all can keep on finding India the right place to be in for a major part of our operations, the Group CEO at the world’s No 2 ship manager said in an interview to ET Infra during a visit to Mumbai. Excerpts from the interview:

The global shipping industry is facing multiple pain points with geopolitical tensions, decarbonisation goals etc. How are you, as a ship manager, dealing with these pressure points?

Chaos is not a bad thing for our industry. We are in the outsourcing area of shipping. We basically try to convince shipowners not to take care of their own ships by themselves. They invest, let’s say $100 million into a new ship and the day you get it delivered, you take your baby and give it to a caretaker saying ‘please take care of my $100 million baby’ which is a pretty steep decision to take. But that is the industry we are in. We are trying to convince people who can do it themselves not to do it on their own.

So far, the way I understand ship management, it has been very much a cost driven kind of proposition. And I do think that the more complicated the work gets and complications come from legislation, decarbonisation, geopolitical, the overall requirements of society, the more you get on that which we can all be kind of upset about on a day-to-day basis, it also makes our life everyday more complicated, but it isn’t. It makes our life less complicated through scale and focus than if you are a ship owner.

If you are a shipowner, let’s say you own 40-50 ships, this huge avalanche of challenges coming against you may be easier and better handled by somebody like us through scale, expertise and focus than if you are a shipowner.

I think, without wanting chaos for anybody, it is not a bad thing in terms of driving more outsourcing and at the end of the day that’s what we want. That’s what our business thrives on.

Whether the wind comes from this side or that side, yes, it’s our responsibility. You lift the burden of somebody’s shoulder and say, ‘listen don’t you worry, I’ll take care of it, that’s what outsourcing is all about’.

What is the biggest challenge a ship manager is confronting these days?

There are two. One sitting here in our crewing office in Mumbai, I think crewing and making sure that we have the right crew with the right numbers with the right background and with the right education to keep on feeding the food chain, so to speak, I think that’s a super challenge. It’s a ship management challenge. So, the hunt for talent and hunt for talent pipeline and all of that, that’s the main challenge.

The second thing is how do we take up more business and move it from being the race to the bottom on cost – the cheaper the better – into being something where we are valued, prized and we are being chosen for the real value that we deliver, not only the low cost that we deliver, also the low cost but at the same time what do we do about efficiency, how do we help a ship owner from becoming compliant, how do we raise safety standards, how do we make sure that the crew is the best we can get so that the total cost of operations over time is the most efficient.

The major challenge is about turning the whole business into focussing on something more than the lowest possible price.

Where does India stand in the crew supply map?

On board, we have close to 8,000 Indians but the total roster would be closer to 28,000 globally and Indians would be 70 per cent of that. But the challenge is, what the government is pushing for, if you see the MIV 2030, they are building a very strong pipeline, trying to channelise the youth and they are bringing in a lot of order into how we get into the pie and the issue of cost versus efficiency. I think that’s going to be the key in deciding where India would position. Because, as of now, Indians are getting expensive compared to Myanmar, Indonesia and even Philippine.

But, if we can deliver, we can give a reason for the costs versus better quality argument. Indians have to step up to deliver to those standards. I think, we are on course, the number of schemes that the DG Shipping is putting out, a lot of seriousness about quality is coming from India’s maritime administration.Recently, the D G Shipping barred seafarers holding certificates issued by certain overseas jurisdictions….

I am not saying it is good that Honduras and Belize were banned suddenly. We could have found a method to the madness but look at the far term goal – better quality of seafarers – because if an incident happens, the first thing is it was Philippines on board, Indians on board; that’s the first thing that gets flashed. Any collision that happens, there are so many Indians on board, so we’re trying to safeguard ourselves from that aspect.

We are trying to see how we can have bridging courses, or how we can address those skill gaps that the Indians need. The supply is looking good. But, in terms of shortfall, it’s just getting wider and wider, the demand is going to rise with new ships coming, dual fuel vessels and stuff like that. The training and infrastructure are not keeping pace with the ships that are hitting the seas.

How are you encouraging more people to take to the seafaring profession?

Slowly, the landscape in India has changed. Seafarers, particularly officers, are coming more and more from Tier 2 and 3 cities than what it was many years ago. Tier 2 and 3 cities have abundance of talent as well as supply.

What we are planning now is some sort of a campaign like ‘proud to be a mariner’ which we would like to run through various cities, small villages so that people are made aware and they start to realise its employment potential.

Our main thrust in coming years will be taking it to the Tier 2 and 3 cities where there is abundance of talent and people require jobs. The traditional jobs in India which used to be government services, public sector now are seeing lower head count due to modernisation. Where do we generate jobs? Transportation through sea is going to remain and they are becoming more sophisticated. We have opportunities and this gives you exposure and money. The only thing is how we are showcasing our profession.

The shift in sourcing seafarers from Tier 1 cities to Tier 2 and 3 cities is because the shore salaries have kind of come up, it maybe not in tandem with the ship salaries but what people are sure going to realise is that every cadet will become a master but not every guy who starts as an executive will become the Managing Director.

It can be tough on us in the maritime sector to go to Tier 2 or 3 cities but for society, it’s a good thing.

Where do you stand on diversity of crew?

The numbers are good mostly at the junior ranks. At the cadet level, we have close to 140 girls.

How is technology shaking up the ship management industry?

It’s one of the big things. If we need to move this industry from the basic, low-cost kind of model into being a model that can deliver real value then we need to think about what value for our customers is going forward. Quite possible, it’s most probably something to do with efficiency. Because, if you want to be a competitive ship owner you need to be looking at efficiencies. It might be that you have a cheap ship or a cheap crew or whatever but if your efficiency sucks, then you have a problem that you will not be the chosen ship owner. Where does that efficiency come from? It comes from the people that you have on board, the people you have on shore, but also the technology that you give them, to make available to them to make sure that they can create efficiencies.

It means a lot and if you want that efficiencies to happen, apart from the crew, the ability to take technology, the AI and all of these things and make it useful to achieve efficiencies.

My colleagues complain that we are not a ship manager anymore; we are a tech company. I refuse that argument, but it’s a big thing what we do. We have some 150 people based in Chennai and Kochi developing technology just for our own purposes.

Many industry specific companies are now morphing into technology companies….

Because we have this enormous amount of data, the 730 ships that we manage give us an enormous amount of data and the cleverer you get with what you can use that data for, the more you want to use it.

Synergy Marine Group is the No. 2 ship manager globally. What’s the next goal?

Scale means a lot in this industry. Whether we grow to 900 or 1,100 ships, it’s much more important to us that we keep on growing and scale up but in the right way, the right type of ships, the right type of owners, geographies that gives us a broad base, a resilient company, a resilient kind of attitude to what we do. That’s more important than some crazy numbers. But it is important to have scale, that goes without saying. We are in a scalable industry. We call it healthy growth.

What’s the next growth plan you have for Synergy?

I am driven by a certain amount of geography, so we need to have a company that is as strong and sustainable as possible irrespective of where the wind comes from. We need to be broad based. It is also important to us that we get to be a balanced company from a geography point of view, in terms of business point of view and also in the services not only in ship management so that we make the totality of what we do as strong as possible.

That also goes to making sure that what we say to our customers is actually what we deliver to them, because otherwise we lose trust, and we are less solid. That’s our strong, first priority.

Second priority is we need to be at the forefront of moving this business from just focussing on cost to focussing on something else. I don’t think any of us dream that a customer will wake up one fine morning suddenly and say I don’t want the cost any more, now I want services. Therefore, we need to be out there arguing our case, ‘look dear Mr Shipowner we can do it like this, that meets our job, or you could potentially consider doing it like this, which gives these results’. So, from a transactional relationship, we are looking at a value-based relationship. As one of the world’s leading ship managers, we need to be at the forefront of that.

Crewing and training are the hygienic factors that we need to secure because all the other stuff are just illusions if we don’t get those things in place.

What’s the current trend in the ship management business?

Everybody is speaking of decarbonisation, greening the footprint, how to comply and make sure we get the staff and the cadets, it’s a big thing not just in ship management but in the maritime businesses across. In the shipping business, the closer you get to Europe and the more you are based in Europe, this is something that can be a make or break for your business. Ship management is part of the overall maritime ecosystem.

The Modi government is undertaking a lot of reforms in the maritime sector. What should India do to be known as a strong maritime nation?

Being a key supplier of qualified staff whether land or sea, remains super important. I don’t think there is anybody in shipping today that does not recognise the role of India there. That’s not a bad place. That’s strong, there’s something to it. There’s a competitive edge if you manage to get to that position. Don’t destroy that but make sure that we all can keep on finding India the right place to be in for a major part of our operations.

Look at Synergy, we are 2,500 people ashore, the vast majority are from India. We have 28,000 seafarers globally, the vast majority from India. That’s pretty good, don’t destroy that.

Don’t make things more complicated than they need to be. Sometimes we should let competition and let the best man win. You have a huge coastline, there is a lot of maritime related business, make sure that it gets acceptable, fair practices to work out of and it will find its way and it’s an interesting market because of the vast coastline and the 1.4 billion people. Don’t try to micro manage down into the last point.