Flemming Bo Larsen: Nice – or necessary?
“I was trained for the sea and I had no other idea in mind, but a few years ago I found myself between roles and landed, temporarily, in one of Maersk’s offices – where I had a view over the company’s entire charter fleet,” said Flemming Bo Larsen. “Seeing it, I got annoyed.”
He explained: “Unlike Maersk Line’s own vessels, these weren’t being monitored or having their performance driven in any way.”
“There were, at the time, 350 vessels on charter to Maersk Line, and we were operating them almost totally blind, receiving very little in the way of effective data on efficiency or anything else. It was left entirely as a ‘commercial’ matter.”
So, Larsen stuck around and started working on the issue. However, he hadn’t got very far when the entire industry was hit by dramatic change.
“Before 2008, we were always sailing at full speed, always behind schedule, so we were always pushing fast as we could. Then suddenly, the financial crisis hit, volumes came down sharply and we were facing huge overcapacity.” He adds: “It didn’t help that around the same time, the oil prices started to go up.”
“So, what do you do? Either you continue to operate in the same way as you’d been doing and take out ships by laying them up, or you could do something different, slow everything down and absorb as much of the extra capacity as you could that way.”
“However, our main engine manufacturers, MAN Diesel & Turbo and Wärtsilä, just weren’t prepared for that discussion: the day before we were only talking about speed.”
As might be expected, there were serious concerns about the impact of low engine loads on ships that had been tailored for a very different design point. “Of course the slower flows meant cooler engines and that meant possible deposits and so on, so there were certainly technical issues to overcome,” he said.
“To start with, we got rather different responses,” he said. Initially, Wärtsilä could only see it being viable to drop the engine load to 60%. By contrast, “MAN Diesel & Turbo said with some minor operational adaptations they could see it being possible to go down to 40% of maximum engine load”.
That was taken back to Wärtsilä and following some fairly intense discussions on the technical side, Wärtsilä eventually became convinced that with some further adaptations, their engine loads could be taken down as far as 10%.
“Of course we went back to MAN, saying that their competitor had said 10% was possible, what would they now say?” In the end, the pair “came down a long way” on what they’d consider viable, and Maersk Line initiated slow steaming.
However, the team soon realised that to really work, it also needed buy-in from the supply chain, charter fleet and all. “So, we decided we had to share the technical concept with Maersk’s associates, and start pushing the slow steaming agenda.” But that didn’t mean everyone was ready for it. “I spent that time any place but at home in Copenhagen: I had to go down and convince people, hammer on doors in every shipping office in London, Hamburg, Singapore.” The message? Slow steaming wasn’t just possible, it was plausible.
Initially, the argument was won piece by piece and then suddenly the idea gained critical mass: pressure from the bottom line and the dawning realisation that this was no temporary market glitch swelled the ranks of those using slow steaming to ease overcapacity. So it wasn’t just Maersk’s ships but the global fleet that started to decelerate.
And this took him full circle. “Two or three years later, I came back to where I’d started, to Maersk’s charter fleet and the need to establish operational transparency.” This time it had an extra driver: revenues were down and efficiency was uppermost. “No, they still didn’t want to do it,” he says, “But by now I had gained some credit with them: I’d built up relationships.” And so it was that Maersk Line gained a driver for its charter fleet – and Larsen gained insight into what it takes to drive an industry.
Having recently set up shop on his own, he’s willing to push a few buttons. “Firstly, I am really tired of people talking about digitisation as if it will solve everything. It won’t. Too often, convinced by a good salesman, people will say, ‘we’ll buy in the technology’, but of course, very little happens and after a while, they switch focus.” He adds: “Of course there’s the technical side, but there’s also processes and people. Only by looking at the processes we’re working with and taking ownership of change can it really succeed.”
More, many companies are missing something: “We talk about digitisation, but while technology is wonderful – and believe me, I love it – it has to be to meet demand. Not just because it’s cool. We have to stop allowing ourselves to be drawn in by innovation that’s been developed without strategic necessity.”
He adds, in his view “we need to be more certain about why we do anything, what we want to achieve”. He explains that some of his insight comes from conversations, not with colleagues but with his wife: “I say, I want to buy a new bike, she asks why. I say, to get fit. She says, ‘how will you know when you’ve got there? What will success look like?”
So he concludes, the industry needs more of this approach: to understand where it’s going “and to know what success will look like when it gets there”.
By Stevie Knight
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