6 ways to spend less and add value in 2020
It will be a rare fleet manager or marine superintendent who isn’t looking for ways to make year-on-year cost savings as we edge closer to 2020. The rising cost of compliance – in particular the IMO2020 fuel switch – together with short term trade disruptions and the need for increased investment in monitoring and managing vessel performance will keep margins under pressure.
A lack of insight into where spending is least efficient is often one of the things preventing shipping companies from taking advantage of the cost saving solutions available to them. Often the time required in analysis of ROI of new technology or services can feel like it negates any gains that might be made.
But as the shipping industry moves into an era that swaps long-standing inefficiencies for optimised performance, such insight is becoming essential. In fact it doesn’t always need analysis but rather identifying the areas where value leaks and how to address them.
As an early Christmas present for an industry rather nervously contemplating the new year, we’ve put together half a dozen hacks to save money in 2020 that really don’t need too much number crunching to know they are a good idea.
1. Navigate your chart outlay
First, if your fleet is navigating using ECDIS and ENCs, your vessels are almost certainly buying more ENCs that they ever actually need or use. Our data shows that even the best managed shipping companies overspend on digital navigation, some by quite staggering proportions.
In any given month, vessels buy, but don’t use, as much as 90% of the ENCs they purchase. A real example of this sort of unnecessary expenditure shows us that some $900-worth of the $938 the vessel in question purchased in June 2019 were never actually sailed through before they expired. Obviously we’ve anonymised this example to spare the shipowner’s blushes.
With more accurate purchasing using route-based ordering tools, just in time onboard delivery of ENC permits and ongoing monitoring of ENC purchasing and usage by shore-based management teams, there are significant opportunities for cost savings here.
2. Only buy what you really need
Next, one of the best ways to immediately save money in 2020 is by switching to a cost-price navigation data.
The data collected by GNS since 2015 show endemic levels of overspending, particularly on ENCs, representing many thousands of dollars of untapped savings for the shipping industry each year.
In the digital era, GNS believes there is a new opportunity for greater transparency using software and analytics to purchase more accurately and stamp out overspending as well as an equally big opportunity for cost savings as a result.
Buying navigation supplies at cost price instantly reduces the bill; on a bill of $10,000 per vessel we estimate owners could be instantly saving as much as $3,000 next year.
3. Where’s my stuff?
Many shipping companies pay an annual subscription for vessel tracking in order to display positions of their vessels in the office to provide greater situational awareness and support decision-making.
These days, however, with many maritime suppliers now including vessel tracking as part of their standard package, there’s no need to pay for this service independently of other services.
You’ll need to shop around to make sure that you are replacing like-with-like in terms of polling frequency and other features, but worth it for savings of as much as $500 per vessel per year.
4. Get comms under control
Communications remain the shipowners favourite whipping boy, despite some estimates putting them at around 1% of daily opex. The fact remains that shore to ship calls from office landlines can be expensive.
A VSAT-equipped vessel may well be using VoIP for the majority of calls, but if your ships are in the +/-60% that don’t yet have VSAT and are calling from either your office landline or mobile, you are probably paying call charges ranging from $6 to $11 per minute depending on where you are in the world.
Digital ship calling services enable users to call L-Band terminals for a fixed, flat fee from anywhere in the world. The call quality is exceptional and they are incredibly easy to use; simply go online, create an account, top up your balance and start saving on calls straightaway.
Shipping companies can set up a corporate account and pay monthly, just like your mobile phone bill.
5. Less cash means smaller bills
Next is the question of money itself. While much of the developed world is going cashless and contactless, most shipping companies still keep large amounts of cash on board their ships to pay for incidentals and expenses.
Sending cash to ships and keeping levels topped-up isn’t just risky, it’s expensive. Some ship agents in some countries charge as much as 6% for Cash-to-Master services, not to mention the value lost in exchange rates and other hidden fees.
It often also means that shipping companies have huge amounts of cash sitting in ships’ safes that could be in the bank earning interest. All that cash also makes it difficult to keep track of what is being spent and by whom.
Working with our partner Caxton FX we have shown it’s possible to provide a more cost-effective way to manage ship cash that is also more secure, transparent and easier to manage.
6. Keep in Trim
Christmas is coming and that means some of us will work hard to avoid piling on the pounds. The New Year is the time for resolutions and leaner performance is normally at the top of most people’s lists.
In recent years there’s been lots of talk in the shipping industry about the efficiency gains to be had from trim optimisation. Most options will still require hefty upfront outlay on sensors and other onboard equipment that most shipping companies will find hard to justify in the current economic climate – despite the potential fuel savings they may deliver.
That’s before the in-house process of understanding and interpreting the data that results, at the end of which you may find that data is not yours to share as you wish.
Now, though, there are some much lower cost trim optimisation options out there like Trim Advisor from Dutch start-up, Rensmarine, which uses a software-only model to calculate the optimum trim per voyage.
Fleets can run no-obligation trials of the service to evaluate its effectiveness before they buy. With no financial risk and significant fuel savings to be gained, it feels like another no-brainer for the shipowner’s Christmas stocking.