A storied franchise transforms itself for a new era.
(Article originally published in July/Aug 2020 edition.)
Frank Coles has a vision. The Wallem Group CEO wants to enhance transparency in the ship management business and change the business model through the power of technology.
"The lack of transparency is about how the business is conducted and how managers are paid,” he explains. “As a consolidator in the old business model, a ship manager was seen as a middle manager of any services provided. This created a lack of transparency in actual costs to operate. Owners should pay a fair rate for value and recognize the expertise provided by ship managers.”
A new model is needed, Coles says: “The relationship between an owner and a manager should move to much more of a consultancy where a fair rate is paid for the expertise and risk that the manager takes on. As we progress towards a technology-based service, where analytics and performance can be more readily monitored, it should be possible to show the value the manager is bringing in decisions, analysis, predictions and overall risk management.”
Having previously run companies like Transas, Inmarsat Maritime and Globe Wireless, Coles certainly knows the technology business. So when Wallem came calling two years ago, he jumped at the opportunity.
“The opportunity to lead a prestigious and diversified company like Wallem was something I could not pass up,” he commented. “With the increased industry focus on efficiency, safety and the environment, providing quality shipping services, crews and technical support is going to be critical. Wallem understands the needs and expectations of owners and clients and is well-placed to be a leader in the future of maritime operations support.”
Wallem, for its part, was looking for a new leader – someone who could guide the more than century-old company in a fast-changing, increasingly technological age. “We are delighted that Frank has agreed to join us,” stated Chairman Nigel Hill. “The shipping world is grappling with a wide range of challenges and opportunities at present. We are confident that we have found the right person to ensure that Wallem stays in the forefront of delivering first-class maritime solutions to its customers, as it has done throughout its long history.”
It was a marriage made in heaven.
In 1903 a Norwegian shipbroker named Haakon Wallem started a shipping company in Shanghai, which he aptly named the Wallem Group. Two years later he bought his first ship, the SS Oscar II, a 4,750-dwt sail-steamer built in 1893. By 1908 the company was managing two sister ships in the coal trade along the Chinese coast, making Wallem – in effect – the first third-party ship manager in the world.
Today, it’s not only the oldest but one of the largest. With roots deep in China and headquarters in Hong Kong, it’s survived the Boxer Rebellion, the collapse of the Qing Dynasty, the Warlord Era, the Japanese War and the Cultural Revolution, all the while expanding its business in Asia and opening new offices throughout the region.
Two years ago, for example, Wallem’s Singapore office celebrated its 60th anniversary. What began as a small office offering ship agency services is now a hub – not only for Wallem but the world – with the Singapore office providing not just ship agency services but also ship management, technical management and commercial services, supported by a global network of 47 offices in 18 countries.
China remains a big market for Wallem. Among other activities, it manages cruise ships, naval vessels, project cargoes, heavy lift and breakbulk projects. In addition, the main Shanghai office has a technical team responsible for oversight of newbuilding projects as well as drydock operations. Wallem is also the only foreign shipping company to operate a Seafarer Manning Operation in China with rights to recruit, train and deploy Chinese mariners worldwide.
All told, the company operates in 18 countries and employs about 7,000 mariners and 1,000 shore-based personnel in 47 offices. Its reach extends well beyond China and Asia, and its portfolio of services has similarly expanded to meet the changing needs of its clients.
In addition to ship agency and ship management, Wallem offers a multitude of related functions such as Asset Management, which includes functions like lifecycle management, shipbroking and recycling along with commercial and technical management and newbuilding oversight. Crewing and Training are two other vital services. Wallem operates eight training centers in China, the Philippines, India and Ukraine that include course accreditation by local authorities and flag states along with a curriculum designed to meet and exceed industry standards.
Safety Management & Assurance, Technology Consultancy and Support Services – like procurement and port operations – are other offerings in an ever-growing list, all part of the company’s goal to be “the leading provider of technology-driven maritime solutions in a customer-centric and transparent manner.”
A New Strategy
Upon assuming the reins in October 2018, Coles wasted no time in outlining his new strategy, having spent the previous six months putting it together. It was based on three fundamentals: supporting quality through safety, transparency through technology and service through support.
Six months later the company updated its corporate identity and branding to mark “a profound shift in its service offering that will harness the latest technology to improve asset management transparency and efficiency in a program intended to transform the relationship between owners and their ships.” The new identity and logo were visible symbols of the company’s ambition to establish a fundamentally new approach to collaborating with vessel owners, enabling them to extract maximum value from their vessels.
It also announced the introduction of BASSnet™ Fleet Management Systems as the backbone for its vision to be the leading provider of technology-driven maritime services. BASSnet™ was a way to standardize ship processes and represented a total solution for maintenance, safety, operational and financial management services on a fleet-wide basis.
In so doing Wallem became the first ship management company to implement a complete suite of integrated software without customization, defying the myth that ship operations were somehow different and required multiple layers of overlapping technology.
“Having run several maritime software companies and considering the complexities of operations, compliance and the regulatory environment,” Coles commented, “I was keen to not reinvent the wheel. We have chosen to install a cloud-based solution without customization. Exactly how digitalization is supposed to be done. Offering transparency, analytics and business intelligence is the way forward for high-performance fleet management, and implementing a complete enterprise solution from BASSnet™ will allow us to integrate the power of big data with our business processes.”
The next move came in July 2019 when the company migrated to the new Agency System, a cloud-based software designed to reduce paperwork and simplify workflows in its ship agency business. Simplifying documentation and actions required in port calls enabled Wallem’s agents to enhance service quality and consistency for customers worldwide. It was an immediate hit.
A month later it deployed SEDNA, a collaborative platform providing team inboxes allowing staff to work together on incoming messages and increase responsiveness to customers. Integrated with the Agency System, it formed a key component of the company’s broader digital transformation aimed at streamlining interactions with customers and improving transparency through the intelligent use of technology.
In the new millennial age of shipping and as a former ship master himself, Coles recognizes that seafarers must undergo continual training to stay abreast of the advances in technology and automation onboard.
"Technology is only half the story,” he says. “For the technology to support and empower it must be used as it was designed, by someone properly trained. So the processes must follow the technology. The user must learn a new process, and the old systems removed. Poorly trained users and new technology on old systems are worse than nothing at all.”
Training must go above and beyond the regulatory mandates, Coles adds. Captains are overburdened with too many responsibilities already. Training other crew members to take on more operational responsibilities will ensure that voyages sail more efficiently and profitably for owners.
The mayhem wrought by the coronavirus has changed the world and the shipping industry forever, but Coles sees it as a possible “Black Swan” moment to change for the better.
He reminds us that while the trend is towards greater automation, these systems must be overseen by highly trained and competent operators. Moreover, the notion that unmanned vessels are just around the corner is more debatable now considering the complexity of new engines, fuels and environmental challenges – particularly in highly concentrated urban regions where shipping thrives.
“Digitalization today is a toxic combination of overhyped capabilities, confused customers and fragmented implementation,” Coles says. “Multiple levels of redundancy for propulsion and safety systems are required before removing any crews can be considered.”
Changing the business model for not just ship management but shipping itself goes beyond leveraging fuel efficiency or smart routing or just-in-time arrivals. It’s about reinventing ships as a green node on an extended value chain.
Coles is quite precise in his thinking as he strives to change attitudes from the top of the industry to the bottom. He reminds us that “Shipping is not special. But if it wants to be, it must let go of the past and reinvent itself.”
Tony Munoz is Publisher and Editor-in-Chief of The Maritime Executive.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.