Scope#35 | Sailing across the boundless ocean
Following the naming ritual, a sponsor, who is the “cord cutter” of this ceremony, throws down a silver axe made especially for the occasion. The next moment, a bottle suspended from the cut cord hits the portside of the vessel, breaking into pieces. Champagne spurts out. Within a fraction of a second, a Kusudama ball opens, letting out ribbons of many different colors. This is the scene from the naming ceremony where all the stakeholders are there to celebrate the birth of a vessel.
With such magnificent blessings, the Federal Illinois, a “newborn” vessel, slowly sails out from a shipyard in Marugame, Kagawa, to the boundless ocean, heading out to Vancouver - her very first destination. Among the people who are there to congratulate her debut is Mr. Shigeki Nakagawa, the president of Fednav Asia Ltd.
“What I like the most about the maritime business is that it stirs your sense of adventure,” Mr. Nakagawa says with a gentle smile. “The vessel symbolizes the fruit of our efforts. Those vessels that are crafted by dedicated people definitely perform well.” Mr. Nakagawa adds, “Whenever I come see off such a vessel setting sail for the very first time, I cannot help getting emotional. I feel as though all the efforts that we made as we tackled many challenges together have finally paid off.”
The Federal Illinois is chartered on a time-charter party, which is signed between MMSL Pte. Ltd., a Marubeni Group company based in Singapore, and Fednav, a shipping company. During the charter period agreed by the two companies, Fednav, the charterer under this contract, can set the shipping schedule and routes as well as decide the contents of the cargo, at its own discretion. MMSL, on the other hand, is responsible for ensuring the safety of operations, the work of which includes managing the vessel and assigning crew members.
The Marubeni Group owns 50 ocean-going vessels, most of which are bulk carriers. These vessels are chartered out to shipping companies all over the world that use them to transport a variety of commodities, such as grains and iron ore. This enterprise - owning, chartering, and managing vessels - is part of Marubeni’s diverse business portfolio.
“Just like any other business, we, as an integrated trading and investment business conglomerate, cannot do this shipping business alone. If it were not for collaboration among the stakeholders, each of whom has a different role to play, a different commitment to make - shipyard, foreman, consigner, owner, charterer, financer - nothing gets done or even started,” says Hiroyuki Iizumi, general manager who leads the Planning & Coordination Section at Marubeni’s Ship Project Development Department. “But of course, it is quite natural that various gaps exist between the stakeholders. In order to get the project done, we must bridge these gaps, and we do this as we seek the solution that is most effective and convincing,” Iizumi says. “I believe that this is the very mission that we must adhere to, as a trading company.”
Connecting to the World Through Vessels
The Federal Illinois, a bulk carrier of 63,000 DWT (deadweight tonnage), was built by the Imabari Shipbuilding Co. Ltd. Its model, “NEW I-STAR,” is the company’s best-selling series, which is highly acclaimed and named “one of the best” by Mr. Nakagawa of Fednav, an expert in the maritime business who has 34 years of experience. Including the former model, “I-STAR,” more than 200 vessels of this series have been delivered to date. Compared to its predecessor, the NEW I-STAR has a larger capacity, which has been increased by more than 2,000 deadweight tons, while it consumes less fuel, cut by about 10 percent as a result of employing new energy-saving technologies.
Imabari Shipbuilding started its business in 1901 and has continued to be Japan’s top shipbuilder ever since 2003 in terms of the number of vessels delivered. The company has 10 shipyards along the Seto Inland Sea and makes more than 90 vessels every year. Because of its moderate weather throughout the year as well as its jagged coastline with deep waters and mild waves, this region is suitable for building large vessels. For their commitment to protecting an industry that is deeply rooted in the region, Imabari Shipbuilding has continued to expand itself by merging and acquiring local shipyards along the coast, which were struggling to survive by themselves. In an effort to move forward to the coming age, the group has continued to make strategic investments in new facilities and new technologies, such as autonomous vessels.
Ship-trading is another business that Marubeni does. What the company does in this enterprise is, identify the specific needs of each entity, such as shipyards, owners as well as charterers, propose the best matchup that can fulfill their needs, and then provide intermediary services between the parties engaged in such deals. Since their relationship began in the 1970’s, Imabari Shipbuilding and Marubeni have collaborated on numerous projects, in which together they receive orders to build new vessels. A recent example is the delivery of various types of containerships - both large and small - to Evergreen Marine Corporation, Taiwan’s leading logistics company. Among them is a vessel with a capacity of 20,000 TEU (twenty-foot equivalent unit), one of the world’s largest containerships.
“Those deals were made possible by the long-lasting commitment and persistent efforts that Marubeni has made in Taiwan,” says Mr. Kiyoshi Higaki, senior managing director of Imabari Shipbuilding. “They have continued to assign their own people to their Taipei office. They have penetrated into the Taiwanese market by building relationships with Taiwanese companies.” He adds, “Japanese trading companies never fail to have their ear to the ground to stay abreast of emerging trends and the needs of the market. They boast a vast pool of information because they have their own people working in every corner of the world.” Mr. Higaki says, “For these reasons, trading companies are our indispensable partners in doing business with our international customers.” And he continues, “To Marubeni Group, we have delivered a wide range of bulk carriers from 38,000 DWT to 84,000 DWT. They are a very important business partner of our group.”
Building Trustworthy Relationships: Key to Safe Operations
“A ship in port is safe, but that is not what ships are built for,” Grace Hopper, United States Navy rear admiral and a computer scientist, who was considered the mother of programming languages, often said. Her message - an analogy between a man setting out on a new endeavor and a vessel setting sail on a voyage - was intended to inspire people, but the same holds true for the operation of ocean-going vessels. As soon as discharging is completed, the vessel must leave for the next port. New cargo must be loaded without delay. It goes without saying that it all starts from the premise that the vessel is maintained properly so that she can safely stay at sea.
The Marubeni Group’s next mission after their vessel is being delivered is, fulfill its obligation to keep it seaworthy (meaning that a vessel is fit to travel safely at sea and can resist potential hazards that she may experience during the course of the journey), and this work belongs to MMSL’s ship-management team. Singapore is an ideal place for Marubeni to have its base for the management of the vessels that the group owns and manages. Being a global hub for the maritime business, Singapore attracts highly talented professionals.
“On vessels, there are a lot of things that we have to do to ensure that things happen correctly,” says Madhu Shet, technical director of GM Ship Management at MMSL. “The first thing is that a vessel has to go to a port, where she can safely load and discharge cargo. So, going to a port is also a big challenge for us, because we have to ensure that we have enough data when approaching the port,” Shet says, adding, “It’s not like land where we have a clear way to go.”
While there are international conventions and regulations for safe operations, each country or state has its own local procedures and regulations for vessels entering or leaving its port. In order to strictly abide by these rules, MMSL monitors every single move of their vessels that are travelling around the globe.
Shet emphasizes how important it is to build mutual trust with the crew so that the captains immediately report to MMSL whenever an incident occurs, regardless of however small it is. Building such strong relationships will ultimately ensure the safety of the crew. “The key is to ensure that we are giving assurance to them, we are there to support them,” Shet says.
Many industries are experiencing labor shortages, and the maritime industry is in the same boat. Assigning the same crew to the same vessel for a longer period would help enhance the safety and efficiency of operations, however, this isn’t an easy thing to do. Crews are hired on a contract basis; if they find the job at MMSL unsatisfying, they will leave for other jobs on the vessels of other companies. “Each and every one of them is different. To get the work from these people is very, very challenging because everybody’s competence level is totally different,” Shet says. While the recruitment of crew is entrusted to a third-party company, MMSL frequently provides their crew members with training sessions intended to help them correctly understand the rigorous safety standards that MMSL has in place. These sessions also create opportunities for people at MMSL to interact directly with the crew. Those efforts have borne fruit; MMSL maintains a consistent crew composition for their vessels.
In terms of tonnage, nearly 100 percent of goods and commodities that Japan trades with other countries are transported by sea since the nation lacks natural resources and relies heavily on imports. There will always be market demands, but the maritime industry is greatly affected by changes in market conditions, so that people in this business inevitably face many ups and downs. “I always ask myself, ‘Is this really going to help our customers in the long run? Will we be able to benefit from this as well?’ These questions are my guiding principle,” Iizumi says.
The ability to maintain the equilibrium between the two enterprises - one has to do with owning, chartering, and managing vessels, another is shipbroking - is not only a testament to Marubeni’s strength, but also a testament to the values that the trading company has to offer, Iizumi explains. Knowledge and insights gained through their experiences of owning and operating vessels will be beneficial to their shipbroking business. At the end of the day, they can make a greater impact on their customers’ businesses as well.
The very first vessel that he saw off during his rookie years is still vivid in his memories, Iizumi says. “The work that I was involved in belonged to a miniscule part of the project, but the fact that I became part of the team to deal with such a large vessel made me very happy,” he recalls. “Every time I see off a vessel sailing out of a shipyard, it conjures up the same feeling, which gives me the energy to keep going.”
All information contained in this article is based on interviews conducted in October to December 2019.
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