OSM: Shipping’s new reality demands fresh strategies from owners

Shipmanager OSM believes that the prolonged downturn currently gripping almost all segments of the shipping market has changed the industry for good. Yesterday’s successful business models are no longer enough for the new normal of today, or tomorrow, stresses OSM CEO Geir Sekkesæter.

OSM launched in 1989 and has grown from its roots providing crewing solutions to Norwegian clients to become a significant player across the entire spectrum of shipping segments. Today it provides services to around 500 vessels, with a crew pool of 10,000 seafarers, controlled from 30 worldwide offices.

“You have to go back a long time to find a downturn of this breadth and scale,” comments Sekkesæter. “Every segment is suffering and some of the strongest players of recent years – bulk and offshore in particular – are reeling from the most spectacular change of fortunes. There are fundamental changes underway here, and owners have to react to protect their businesses.”

An obvious example of this, he notes, can be seen in offshore.

“The market has more or less collapsed, expensive assets are distressed and many owners have gone to the wall,” Sekkesæter observes. “Those that think this is temporary and it’ll be ‘business as usual’ once the market picks up are deluding themselves.

“A new breed of owners and investors are stepping in to buy distressed assets at reduced prices. They don’t have the cost bases and traditional working models of established owners, meaning they’ll be able to compete at a completely different level when the market does improve. Owners that don’t react to this – by expanding if they have the liquidity, or at least altering their models to reduce costs and enhance efficiency – will be in for a shock.

“This a time for new strategies, not for sitting out the storm and hoping for the best,” he stresses.

For its part, OSM is adapting its business model to meet the market need, offering new partnerships whereby a comprehensive range of bespoke solutions – ranging from complete ship management and all-inclusive arrangements (including options such as fuel consumption) to individual value-added services, such as crewing, procurement, accounting and insurance – can be tailored to suit client requirements. The firm is also developing all-inclusive solutions that it believes will suit some new owners looking for complete predictability.

“We can see what our customers need and that starts with enhanced efficiency and cost controls,” Sekkesæter states. “We provide that with our size – offering the best economies of scale – our expertise, combining state of the art systems with proven multi-sector experience, and flexibility, thanks to our global network and huge pool of skilled seafarers.

“We aim to offer the market not just the best service in our industry, but also the most cost effective.”

Sekkesæter states that third party ship management through OSM can provide significant savings for shipowners, with some customers saving 20 – 30% on their current costs by utilizing cost effective crewing and procurement solutions. This can provide real competitive advantage for every segment he says, and is potentially a key to survival for the hardest hit sectors, such as offshore:

“We made our name in offshore, but more than two thirds of our business is now with other core segments, such as bulk, tankers, roros and container vessels. We are a fast moving and highly competent asset manager and service provider, and this ensures we can deliver benefits for all our clients, across every sector.”

The OSM boss also notes that the nature of those clients themselves is changing. More and more banks and financial institutions are now seeking out their expertise to run distressed assets that were previously the responsibility of shipping firms.

“The pressure on the market has seen vessels being repossessed and taken on by financial firms that don’t have shipping operations as a core competency – they therefore need external expertise,” Sekkesæter explains. “We can take on that role and help them maximise the returns on assets, offering a complete package that delivers optimal value and operational results for all stakeholders.

“At the end of the day they want the same thing as all good shipowners – cost effective, highly competent and safe operations that help them meet their business goals. That’s what OSM is all about.”

Despite the challenges in the market, OSM says that the business will achieve “significant growth” this year, adding to the fleet of both conventional and offshore vessels in its management portfolio.