InterManager’s Shipping KPI Project Poised For Breakthrough

With research completed, the next step is to mobilise industry support for establishing a performance information database in the shipping industry
Last month’s launch of the next phase of InterManager’s Shipping Key Performance Indicator Project, following completion of its research phase, opens it up to the wider industry after more than five years of development.
The project represents a major advance in measuring performance, with potentially wide-ranging applications going well beyond owners and managers benchmarking their vessels’ performance against the industry average.
In particular, it could have major commercial implications, giving charterers, for example, the ability to check the performance of vessels they are considering using for their cargoes.
Although it is being led by InterManager, the project involves an array of industry interests that see its potential benefits.
Alastair Evitt, InterManager president, said: “This project is for the benefit of the industry as a whole, not solely to benefit those in shipping, but also everyone who relies on shipping.”
Svein Sørlie, group senior vice-president at Norwegian owner Wilhelmsen, and one of the project leaders, said the progress made means the Shipping KPI “is now a very robust document” and meets the project’s original objective as an ‘international standard to measure company and vessel operational performance’.
Mr Sørlie said in its new phase, the project aims to mobilise industry support for establishing a performance information database in the shipping industry, including benchmarking.
“It meets the requirement for the next step forward, which is performance management as a tool to advance safety and efficiency in shipping,” he said.
The database is now open for shipping companies to input their own data, which will form the basis of creating benchmarks under a variety of headings.
However, Mr Sørlie said shipping is playing catch-up in developing such performance standards. “Other industries are way ahead of shipping in this.”
He added another important aspect of this initiative is that for shipping, “it is unusual that it is a voluntary industry standard and not a response to a regulatory requirement”.
Mr Sørlie said the project’s key benefit is that it is fully transparent, so it is clear what is being compared. “At present, owners can give figures, but there are no standard definitions, so it is not clear if comparisons are like for like. But KPIs provide standard definitions to enable accurate comparisons.”
He cited the example of lost time injuries. Currently when owners give figures, it is not clear what qualifies as an injury or how lost time is measured. But under the KPI project, these definitions are standard, so comparisons are meaningful.
George Hoyt, chairman of InterManager’s Shipping KPI Project steering committee, said the next steps will involve further development of the software and the various KPIs, promoting wider industry awareness and in particular data input.
“We will try to ease the process of enrolment of new companies. We need a critical mass of several thousand ships in the database to provide a reasonable benchmark. A clear advantage is that it can be used by owners with small fleets who would not have the resources to do key performance indicators themselves,” Mr Hoyt said.
Harald Sleire, research manager at Marintek, KPI project manager, outlined some of the obvious applications of the KPI data, such as benchmarking.
“They can be used internally by shipping companies to review their own performance and compare with industry averages. They can also be used externally for objective performance information and documenting performance gains,” Mr Sleire said.
Shipping KPIs have other external benefits, such as image building, aiding recruitment and demonstrating shipping’s attractiveness as a transport provider.
Specifically, KPIs can be used as a basis for performance-based contracts such as shipmanagement contracts, using a management fee as a variable with the incentive for the owner of lower costs. Contracts could include, for example, a bonus or penalty for performance under selected KPIs.
Apart from owners and managers, other stakeholders with an interest in the information include investors, insurers, class and academic researchers.
A further potential application is that charterers could start to require owners to show how their performance measures against the industry on the particular KPIs that are important to them. In that way, it could become an important vetting tool.
Mr Sørlie said: “Its application could be extended to charterers to measure vessel performance before selecting a vessel.”
Some leading charterers such as oil majors and some major dry bulk commodity traders operate their own ship vetting schemes, but the KPI project has the potential for a far more universal system of measuring vessel performance. It would therefore be in owners’ interests to participate.
Mr Hoyt said: “It will be fully transparent, for example, for charterers to compare vessel performance and for owners to demonstrate their performance claims.
“Also it would allow owners to demonstrate to port state control that their performance is good compared to the industry average. So it is potentially a useful tool for charterers and PSC authorities.”
Kuba Szymanski, InterManager secretary-general, confirmed InterManager is underwriting the new phase of the project through to April 1, 2014. Day-to-day operation will be carried on by Shipping KPI Ltd, while a Shipping KPI Trust is being created to seek new stakeholder participation.
Markus Schulz, at project software developer SOFTimpact, Cyprus, said the main outstanding challenges are to improve usability and maintain privacy of the data. Further development will include automating data consistency checks, extending KPI descriptions, enhancing user support, developing advanced statistics and related analysis and enabling access to benchmarking results.
Detailed information about the Shipping KPI Performance Hierarchy is contained in the KPI depositary. This includes descriptions of all performance indicators, key performance indicators and shipping performance indicators, including specifications for capturing data and the respective calculation formulae.
Responsibility for the KPI Depository is switching from the project steering committee to InterManager, which will take over the maintenance of the standard, though the actual work and hosting of the depositary may be contracted out.
Now the project is being opened up to the wider industry, Capt Szymanski expects a rapid expansion. “We expect to have 2,000 vessels in the system within two years and 5,000 in three years.”
The ultimate aim is to have about half the total global fleet — about 30,000 vessels — included in the project within about 10 years.
He emphasised the project is non-profit making and participation is entirely voluntary, “but I believe KPIs will become a standard measurement for comparison”.
He added: “I am confident this KPI will quickly become a standard tool for comparing and improving ship operation performance across the industry.”
The Shipping KPI Project was always going to be long-term. InterManager is clear the time taken on detailed work to create a firm platform was justified and the continued progress is proof of that.
The real test is still to come, and that is the extent of wider industry acceptance, participation and application of the Shipping KPI standard, finally bringing shipping into line with many other industries.
It could also provide the means by which shipping can demonstrate what it has long claimed but never before been able to prove: that overall, it is an efficient and high-performance industry.

1 Comment
  1. Aart BROEK 12 years ago

    Dear sirs

    We would appreciate to receive a copy of the Shipping KPI’s.
    We have tried (in vain)

    Thanks & kind regards,
    Aart BROEK
    Owners Representative

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