Making performance measurable

A shipping industry initiative aims to increase transparency by developing benchmarking for shipmanagers and operators

Quantifying the performance of shipmanagement companies is a complex, and sometimes a baffling procedure. But in a climate where corporate social responsibility is increasingly important – to say nothing of credit-worthiness and business credibility, proving the capabilities of the firm is vital for both shipmanagers and their clients.

The KPI scheme evaluates performance in all areas

Towards transparency

Against this background, ship management association Intermanager has been working to develop an international standard and tools for making performance measurable. The results of the first stage of this scheme, a multi-level system of performance measurement in shipping, were introduced at Intermanager’s general meeting in Singapore at the end of last year. This will eventually feed into a shipping report card, which will give an at-a-glance view of a company’s performance, whilst allowing users to drill down into detailed information about performance in any area of operations. The report card provides a powerful analytical tool for clients and management alike. According to Intermanager, the scheme is designed to:

• Boost performance improvements internally;
• Provide an efficient means of communicating shipmanagement performance, both for the management on board and ashore.

This should avoid each company spending resources on developing the same measurement criteria and tools, while ensuring the industry focuses on the most efficient performance indicators. It will also avoid the need for tailor-made reporting to all the different stakeholders both on board and on shore.

In addition to Intermanager, the project is backed by the Norwegian government through Marintek (the Norwegian Marine Technology Research Institute) and the Research Council of Norway. More than 20 companies have been involved in the consultation phase of the scheme.

Developing an index

Training and navigation are KPI s

The first stage of the scheme, designing and evaluating the indicators, is the result of three years of consulting with major shipmanagement companies and shipoperators around the world. The result is an evaluation scheme that covers seven shipping performance indexes (SPIs) in key areas. Each shipping performance index is scored out of 100, with 100 being an ideal target that may not actually be achievable. The scores are calculated from the results of a number of key performance indicators, which are themselves based on a set of performance indicators. Some KPIs may feed into more than one shipping performance index – for example, crew management, which measures the shipmanagement organisation’s ability to acquire and maintain the required competence/crew for their operations, feeds in to all seven SPIs, while NOx emissions feeds into only three: technical, operational and environmental performance.

The SPIs cover:

• Environmental Performance. This is a measure of emissions, spills and other forms of pollution that impact the environment, caused by the vessel operations. This includes MARPOL violations and SOx, NOx and CO2 emissions, as well as spills and other deficiencies.
• The Safety Performance Index is a measure of accidents/incidents resulting in injuries or death. This index does not cover environmental damage and safety of assets and cargo. The SPI does not at present cover near misses, although this may change if a suitable method of reporting and ranking them can be found.
• Security Performance is measured by compliance with the ISPS code.
• Human Resources Performance is a measure of the company’s ability to employ, retain and develop personnel with the required competences in order to ensure safe and efficient operations of the vessels. It includes monitoring training and recruitment practices, as well as crew management and behaviour.
• Technical Performance is a measure of the technical incidents for each vessel, including technical breakdown and technical underperformances.
• Navigational Performance is a measure of the navigational incidents recorded for each vessel. Navigational Incident is related to safe navigation.
• Operational Performance is a measure of the operational efficiency of the vessel, including all cargo transport related operations (safe and efficient cargo handling, transport timeliness, reliability and cost efficiency).

A full explanation of the KPIs and the methods of calculating performance can be found online at www.shipping-kpi.com

Industry approval

A full day meeting of principal stakeholders was held at the Baltic Exchange in June. Representatives from a wide range of organisations and associations within the shipping industry, including BIMCO, Intertanko, Intercargo, ICS/ISF, OCIMF, the International Maritime Organization and the European Commission and various industry interest groups, debated the project aims. The response was universal approval.

Roberto Giorgi, president of Intermanager, said: “What was important about the meeting was the unequivocal support the KPI project received from the shipping industry at large. It is now up to the stakeholders to finalise the project whereby the 35 chosen KPIs will be available to owners and managers to ensure they manage and operate their ships to the highest standards.”

At the same meeting, Intermanager announced the signing of an agreement which will see intellectual ownership of the KPI project move from Wilh. Wilhelmsen to Intermanager.

Phase two – validation

After completion of the initial phase of the project, defining and establishing the KPIs, the organisation has now moved on to the second phase, which is expected to last for a further two years. This phase involves developing a benchmark for the industry, and is jointly funded by Intermanager and the Norwegian Research Council. Members of Intermanager have committed some 1,100 hours of their staff time to input data for comparison and benchmarking.

The next stage is to test the scheme in operation

This phase of the project aims to develop and facilitate the process for external stakeholders to adopt the principles of the Shipping Performance Indexes. A major part of the process will be using data captured from major shipping companies taking part in the study to validate the KPI model and its sensitivity and ability to express performance. The end result will be a prototype process and tool that will give valuable contributions to increased transparency in shipmanagement and operations, enabling identification of low performing vessels and companies, permitting benchmarking between similar vessels and fleets, and by setting of minimum operational performance requirements.

The focus on Shipping Indexes for external communication will contribute to improved environmental, safety and efficiency performance; in other words improve the competitiveness of the shipping companies.

It is hoped that this phase of the project will appeal to participants across the shipping industry as a whole, not just the members of Intermanager. Giorgi says: “We would now like to submit the proposed system to the expert judgement of the various stakeholders of the industry. If deemed acceptable by all stakeholders, the proposed KPIs could form the basis for a common language in the area of shipping performance measurement.”

Welcoming further feedback, Guy Morel, Intermanager general secretary, said: “We are working towards a pan industry agreement that will enable these KPIs to be adopted as standards for the whole of shipping. We would be pleased to talk to all the people involved in shipping that would like to contribute to the effort.”

By providing increased transparency in shipping operations, the project will also prove useful to third parties, such as governments and legislative bodies, who are not necessarily directly involved in shipping, but need insight into it. For example, Dimitrios Theologitis, head of unit for Maritime Transport & Ports Policy, Maritime Security, at the European Commission’s DGTREN, said that the project “goes straight down the path we have been thinking”.

He added: “In January we brought out our maritime strategy for the next 10 years, so we have regulated a lot and created one of the best regulatory environments in the world in terms of safety and environment. It is now the time to capitalise and look forward. This is why we want to ensure there are actions such as the KPI programme, which go beyond the regulations.”

Intermanager sets up criminalisation think-tank

Criminalisation is one worry too many

Another major campaign underway at Intermanager has underlined the groups commitment to rid the industry of crew criminalisation by creating an industry-wide think tank it hopes will translate its findings into international law.

It has created a new Criminalisation Workshop that will bring together experts from all areas of the shipping industry – managers, P&I Clubs, shipowners, maritime unions and regulators – to seek ways to protect the world’s seafarers.

Headed up by Brian Martis, director of Monaco-based manager V.Ships, the workshop will develop proposals, to be presented to the International Maritime Organization, that can then be integrated into future maritime legislation to protect the well being of the world’s seafarers.

Intermanager has been scathing in its criticism of the unfair criminalisation of today’s seafarers, especially in the aftermath of the Hebei Spirit case. Hebei Spirit Master Jasprit Chawla and Chief Officer Syam Chetan were cleared of blame in April by the South Korean Supreme Court, for the country’s worst ever oil spill last December. However, they remain unable to the leave the country pending a lower court decision.

This latest move underlines Intermanager’s pledge to defend seafarers’ rights wherever they are in the world and from whatever nationality.

Guy Morel said: “We are very concerned because we need to protect our crew. They are ‘our people’ – our colleagues and also our responsibility. We also want to ensure that new regulations will demonstrate to potential seafarers and youngsters that they can consider this industry for a career without fear of unfair imprisonment.”

Intermanager, whose members represent a worldwide fleet of some 3,000 vessels and more than 125,000 crew, believes the plight of the Hebei Spirit pair has already had a detrimental effect on recruitment at a time when seafarers are in short supply. “How can we encourage young people to take up a career in shipping when they see experienced and innocent crew criminalised in this way,” said Morel.