Safe and efficient port operations the world over
Operating 440 vessels across 120 ports in 34 countries throughout all seven continents, Svitzer and its 4,000 employees are an integral part of the global towage industry.
Inside Marine’s Daniel Barnes spoke to Kasper Friis Nilaus, Managing Director of Svitzer Europe, about the challenges and developments associated with running a business that sees Svitzer tow a ship somewhere around the world every three minutes.
Considering the history of Svitzer dates back almost 190 years, what would you consider to be the key milestones in the company’s more recent past that have helped shape the company?
Becoming part of the Maersk family in 1979 was a big milestone in our recent history. The ownership allowed Svitzer to accelerate its growth growing through acquisitions from a Danish company to a truly global organisation. The last big acquisition was the acquisition of Adsteam in 2007.
In the last 10 years we have primarily grown organically with our customers, both within harbour and terminal towage. Additionally, we have worked hard on harvesting our global ownership advantage by raising safety standards and streamlining global processes as well increasingly focusing on innovation.
Svitzer recently announced it is trialling new line handling technology that can be controlled remotely. What can you tell us about the testing so far and the impact you envisage this particular technology will have on future towing vessels?
We see innovation as an opportunity for increasing safety, creating real business advantage and to differentiate our services. The remotely controlled line handling system is a great example of how we innovate to take out risk in our operation.
The innovation, if proven successful, will take crews out of harm’s way when connecting the tug to the principal vessel, which is one the most dangerous elements of any towage operation. The seaborne trials have only commenced recently, and they are still at a very early stage. We aim to refine the technology based on the learning gained from the test. It looks very promising so far.
How long will it be, in your opinion, until remote controlled and/or autonomous tugs are being operated in ports across the globe? What are the key issues that still to need to be overcome before we reach this vision?
That’s a very good question! It is still early days when it comes to maturing both the technology and the legislation that is necessary to make autonomy work. In my opinion, it will take quite a few years before remotely controlled tugs will become the industry norm.
Instead we will see slices of the technology that supports autonomous towage slowly changing the standards in the industry. More or less the same way we have grown accustomed to back sensors and cameras on family cars and technology that assists the driver in avoiding collisions. Cameras, sensors and partly automated processes have already begun to make their way into our industry.
The biggest challenges with these advancements are founded in the legislation and maturing the technology so it may accommodate the many types of conditions our operations face. Short to medium term, I think we will see tugs controlled remotely when vessels need to mobilise over greater distances. If someone ashore drives the tug, the crew can arrive rested and ready to work at the designated port.
In May 2019, Svitzer confirmed its decision to divest its marine operations in Portugal in line with the organisation’s “wider corporate growth strategy”. Please could you elaborate on the key points of the company’s corporate growth strategy.
Svitzer is and has always been looking for growth opportunities. It’s an underlying part of the way we do business and integrated in our commercial strategy. While I cannot reveal details of our growth strategy, we are looking both at organic growth within our core business as well as acquisitions if the right companies can be acquired at the right price.
How has the role of Svitzer – or the towage sector in general – changed over the years?
Over the past five to 10 years, we have seen a notable movement in the market. Our customers are increasingly focussing on efficiencies and costs and expect that towage operators can constantly optimise what they do to provide ever lower prices.
In general, all towage providers have experienced how towage has become increasingly commoditised. We have noted how the purchasing of towage has changed from being a service our customers’ operations teams would be tasked to buy to now being handled by procurement specialists. This development makes it very difficult to differentiate – sometimes price is unfortunately the only differentiator.
In towage, we handle large and valuable assets, and every day our skilled crews take calculated risks, so it would make sense if safety was put back on the top of the agenda.
How do you see this role changing (if at all?) in the years ahead?
It is very difficult to break the trend. The trend feeds into the challenges that especially container lines have faced to arrive at satisfactory financial results. So essentially, we feel the pain when our customers are suffering.
What are currently Svitzer’s busiest areas of activity? Which segments of your market do you think will grow the most in the coming years?
It is still the major European ports that are the busiest for us. Bremerhaven and London are examples of busy ports where we need to constantly change and optimise our operations to service our customers and stay competitive.
Generally, there is no growth in the European towage market. You may have one port growing, but it is then at the expense of other ports. The overall number of tug jobs are declining year-on-year, which makes the quest for efficiencies a do or die issue.
Outside Europe we are growing in Brazil and Argentina and recently we have won long term contracts with customers in North Africa.
Reflecting on the challenges of the industry, in February, Leendert Muller, chairman of the European Tugowners Association (ETA) said: “Many of us have been forced to drop their tariffs in order to remain active. As an industry we have to look internally to ensure we provide valuable services for a price that is competitive, but also warrants a healthy return on investment.” Do you agree with these sentiments, and what has Svitzer done to address such financial challenges?
It is not a secret that especially the European towage market has experienced a high pressure on prices in the recent years.
It has been tough, but we have succeeded in putting our global ownership advantage into play in Europe. One of the key elements has been a highly flexible fleet that moves according with the work and an outstanding workforce that has worked with us on improving flexibility and the way we work together.
Smart administration and utilisation of people and assets is the key to being successful in towage. We have managed to increase the number of jobs per tug significantly which is why we are hard to compete with.
What are the other challenges currently facing Svitzer and the industry?
Safety remains top of our agenda. We simply cannot accept people getting hurt while working in the towage industry. We need to keep improving systems, processes and the way we work together to ensure we constantly increase the safety standards in the industry.
In Europe specifically, the price pressure is another major challenge for the industry. Many towage companies are struggling with their financials and we have seen a number of consolidation moves over the last couple of years.
Are there any recent additions to the fleet that particularly highlight the strengths and quality of Svitzer’s towage services?
We have recently added the Svitzer Meridian in London. She was selected and built to accommodate the challenges and variety in the port of London. Among others, the Meridian serves our LNG customers where her capabilities are a great asset to the customer and us.
Svitzer prides itself on its safety record. How have safety regulations within the industry improved in recent times? How does Svitzer ensure it remains an exemplar of safety across the globe?
In Svitzer, we have a harmonised marine safety system that is used on every vessel in every port across our operations. This common and united approach to safety enables us to deliver a consistent and safe service no matter which port we are required to operate in. Furthermore, it’s a great foundation to pass on best practices and other learnings from one port to other, or from one part of the world to the next.
However, the key factor in safety is our people. We need to constantly challenge ourselves to come up with better and safer solutions in what we do by listening to and working with our crew and shore staff in our operations.
In March, Svitzer published pictures of the company’s first all-female crew, operating in the Dominican Republic. With the International Transport Worker's Federation estimating that only 2% of the maritime workforce is made up of women, what is Svitzer doing to encourage more women into careers in this male-dominated environment?
We are very proud of our all-female crew in the Dominican Republic! We believe in equal opportunity for all and as such we welcome all types of employees. The requirements are often driven by the local culture, so different initiatives are required in different parts of the world.
Please tell us about Svitzer’s key plans and objectives for the future. Are you optimistic about the outlook for your markets and the global towage industry?
To stay competitive, we need to constantly optimise what we do through increased efficiencies and/or innovation.
We believe we have a strong foundation in Svitzer which in combination with our global ownership advantage makes us optimistic about the future. Svitzer’s turnover in 2018 was $692 million – a figure that has increased during the last few year and we expect continued growth in the future. But we know we have a lot of hard work in front of us.