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If you’re a shipowner, operator or manager, you’re doing business in a fiercely competitive sector. The only way to stay afloat and grow as a player in this environment is to relentlessly drive improvements in all areas of your ship and fleet performance.
How efficient are your vessels and current operations compared to industry and sector averages? Which areas need to be improved and optimised?
In order to measure, control and improve your performance – and also to spot potential problems or opportunities – you need to set key performance indicators (KPIs) within specific areas of your shipping operations.
The objectives of KPIs are to:
Tracking the most critical KPIs allows you to continuously boost performance, reduce costs and maintain compliance, while simultaneously increasing customer satisfaction.
Measuring performance across many shipping metrics requires data analytics.
In your day-to-day shipping operations, a vast amount of data is gathered that can be used to obtain actionable knowledge, insights, and predictions.
By embracing data analytics, you have an unprecedented opportunity to create value and drive optimization and improvement across your fleet, from technical operation and maintenance, energy efficiency (cost and environment), safety performance to commercial operation (as part of the global logistics chain) and automation of ship operations.
In a digitally transformed sector, this will help simplify and accelerate decision making and better prepare you to meet the challenges of tomorrow.
The exponential increase in ship data means you have more options for measuring ship and fleet-wide performance than ever before. You have more data at your disposal, and you have more options for analysing and reporting that data. As a result, there are many new types of indicators for tracking performance in the maritime sector.
These shipping KPIs are increasingly becoming rooted in real time. Instead of measuring past performance (last week, last month or last quarter, for instance), big data enables you to track performance right now, in real-time, or even predict future performance more accurately.
Maersk is one of many shipping companies that have saved millions in costs by measuring the performance of individual vessels.
In an effort to respond to society’s increasing demands and the growing importance of setting KPIs based on big data, the shipping industry has developed an international system for defining, measuring and reporting information on operational performance.
In collaboration with more than 20 shipping-related companies and interest organisations, BIMCO has developed The Shipping KPI System.
The Shipping KPI System offers you as a shipowner, operator or manager the ability to produce a visual representation of how well (or not) one of your ships performs during a specific time period. The system uses a unique standard of 64 different KPIs, such as ship unavailability, drydocking planning performance, failure of critical equipment and systems, ship availability, number of environmental, operational and security deficiencies, and more.
This allows you to compare your company and ship performance against the performance of the industry and sector averages. The data collected is anonymised, so it does not compromise any of your commercially sensitive information.
By benchmarking with other ships in the segments you compete in, the Shipping KPI System enables you to make strategic decisions on how to run your fleet and make the most of your assets and crews. What’s more, it enables you to identify areas where you can make efficiency improvements.
BIMCO’s Shipping KPI System is yet another example of how vital data sharing is for digital culture in shipping, for the benefit of the whole maritime sector.
The data that makes a global shipping KPI system possible comes from its contributing users, i.e. shipowners, operators and managers just like you. The more data shipping companies apply to the system, the higher the overall value is to all users across the industry.
A common KPI system like the one from BIMCO enables you as a shipowner or ship manager to make rational strategic decisions on how to run your fleet, by benchmarking with other ships within the segment you are competing.
However, your strategy should act as a starting point for designing appropriate KPIs. Linking your KPIs to your strategy will instantly sharpen your focus and make the relevant KPIs more obvious. The question you must ask is what performance metrics are right for your business, and then define your data needs to establish what KPIs, metrics or data you need to answer those questions.
After adding data to the system, a KPI system must allow you to identify in which areas any ship is performing well or not. Then it is possible to have decisions and the data behind those decisions made by, for example, the chartering team, the operations team and the technical team. The KPIs can also aid in identifying where efficiency improvements could be made and help communicate your ship operational performance, both internally and externally.
The ultimate goal is to maximise the common objective of the company while rationalising between objectives of the three teams. If a KPI isn't useful in helping you or others in your business make better decisions, which, in turn, will improve your business performance, then it's just noise. You, therefore, need to review the metrics constantly to make sure they are genuinely useful, and you aren't spending hours measuring data simply to tick off boxes.
Appropriately used, KPIs provide a vital tool for improving performance, making better business decisions and gaining a competitive advantage.
Rune Larsen is Service Marketing Manager in Dualog, with responsibilities for user experience design, visual design and marketing of existing and new services. Educated in business strategy and marketing from the Arctic University of Norway, he has more than 25 years of experience from the creative industry, where he worked as a consultant, designer and creative director in various advertising agencies and design studios. He's been orchestrating brand identity projects, design work and brand building campaigns for a wide range of organisations. He brings a passion for great design to the team, never compromising on the importance of the 'experience' part of UX. When not at the office, he enjoys hiking with his wife or is busy being a football coach for his youngest daughter. His fitness regime involves either running or cross-country skiing. Rune is an avid reader of business-related books, and he loves the occasional bottle of Barolo.