Stowage As A Profit Centre - Pt 4
Stowage is not a department that can function independently of the rest of a carrier’s processes and departments. It has to work with cargoflow teams, marine and operational teams in order to be successful. That said, it doesn’t matter how many slots a sales team can sell if the company does not have the right people with the skills and abilities to load all the containers onto the vessel.
Using my example bays, if you scale that up to a ship that has 22+ bays, you can easily see how much money can be made or lost. Now scale that up to a service which might have 10 vessels on it and the numbers start to get serious.
If carriers truly want to utilize their very expensive vessels and recoup the operational costs in order to be making a profit then the stowage coordinators need to have the ability to load to 96-97% of the vessel capacity. It’s only in the last few percentage points where the profit is made or lost.
For companies working within alliances and Vessel Sharing Agreements, the stowage team should know the VSA agreements inside out. What is NOT written in the VSA is just as important as what is written in the agreement.
To really exploit the potential of a stowage department it is far better to have Ship Managers rather than Ship Planners. What is the difference? A Ship Manager is responsible for ALL aspects of the vessel operation from capacity management, berth and crane planning, bunkering requests and, of course, stowing the vessel. A Ship Planner merely takes the loadlist they are given and stows it on the ship.
Yes, Ship Managers are more expensive from a headcount point of view but when headcount is put into the context of the operational stowage costs, it is miniscule by comparison. A planner can spend or lose more money in a single port call than their annual salary. Now realise that the top carriers are each sending over 40,000 stowage plans to terminals per year, with just 80 or so people, and you start to see why headcount shouldn’t even be a consideration.
Some carriers are very good at this, some are extremely poor, and you’d likely be very surprised by which carriers are which. Even if the vessel isn’t full in the last port, according to the loadlist, the Ship Manager should be reaching out to find more cargo in the terminal. Anything to get to the 97% and above. Since last port calls are often Hub Ports for the carriers, it is highly unlikely that there isn’t more cargo available, but if no one asks, the vessel won’t break even, let alone be profitable.
It’s also equally important that carriers recognize that finance has as much to do with stowage as the stowage team. If the financial data for every vessel is provided to the stowage team, they can start to look at whether a service is profitable or not. Armed with that information, they are the experts who can identify where improvements can be made, whether a particular type of cargo could be prioritized for a service (for example, more reefer loadings).
Sales teams can start targeting particular types of cargo, cargoflow teams can be steering the right cargo towards the right vessels, ship managers can ensure everything gets loaded.
When decisions are being made about what class of vessel should be deployed on a service, the stowage team are the only ones that can give an accurate assessment of whether the vessel class is suitable and, more importantly, be profitable.
When over-capacity in the market is leaving vessels only loaded up to 60 or 70% full, then it is entirely possible on a service of say, 10 vessels, to completely utilize 9 of those vessels and free one up to either be deployed to another service or just taken out of service for a while.
For some stowage centres, irrelevant KPI’s have become the driving force. Profitability should be the driving force because, in the end, companies don’t stay in business because employees hit their personal KPI’s. They stay in business because they are more profitable than anyone else.