MARITIME EDUCATION AND TRAINING,

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1 Tackling management issues in shipping: a new series of short course program for the Danish Maritime Cluster MARITIME EDUCATION AND TRAINING, NEWS BY ADMIN ON JANUARY 15, 2013 AT 10:17 AM Irene Rosberg Tackling management issues in shipping: a new series of short course program for the Danish Maritime Cluster* By Irene Rosberg**, Program Director, Executive MBA in Shipping and Logistics (The Blue MBA), Copenhagen Business School Resumé of the article: Short Development Courses Department at Copenhagen Business School (CBS Executive) is preparing to present a series of courses which will be of particular interest to mid-career managers in the maritime, logistics and associated industries, and of course it is important that these should cater carefully to the up-to-date needs of the industry and serve the Danish Maritime Cluster. This article is based on the results of a survey conducted in the Spring/Summer of 2012 in relation to Denmark s Maritime Cluster and specifically pertains to WP5 ii: development of a series of short development courses for professionals and managers working in the Danish maritime sector. New research has found that mid-career managers with responsible positions in shipping and shipping-related companies admit they could do with a brush-up course on different areas which have an impact on their industry. While this main finding of the study, which was carried out for the CBS Executive, was not too surprising, a deeper analysis went on to shine an intriguing light on just what is required by industry potential leaders in this competitive environment. Short courses were seen as the answer, but how much time should be devoted to such a course? What aspects of the swift-moving industry should courses prioritize? And how can attendance at a course be dovetailed into a business year?

2 It is my belief that when you are facing the complexity of the tasks of being a member of a team running a major enterprise, you need to be operating not only across functions, but also up and down the organizational hierarchy; therefore it is important to manage people and processes effectively. Based on analysis of the up-to-date needs of the industry, the Short Development Courses Department at Copenhagen Business School (CBS Executive) is to present a series of courses which will be of particular interest to mid-career managers in the maritime, logistics and associated industries. The success of our Executive MBA in Shipping and Logistics (The Blue MBA) has already demonstrated our ability to enhance high-level education, knowledge-sharing and strategic thinking among younger and midcareer management. We envisage a supplementary offering that would allow those who do not have the opportunity to join our Blue MBA to gain new insights into specific areas, and, together with the CBS Executive, have been gauging the best topics for the courses. The research has been based on 212 questionnaires and 78 interviews, and perhaps one of its most encouraging findings was that companies acknowledged the value of sanctioning their management level staff to step outside their usual environment to learn from and interact with the experts who would deliver courses, and with their peers. Of those surveyed, 75% said that ideally they would be ready to release their staff for a two-day course. In a multiple-choice question, those who favored single-day courses amounted to 45% of the sample, and 15% said they would countenance three-day courses. The appetite for thorough learning experiences was shown by the fact that 20% would be ready to back one-week courses. In any event, according to one interviewee, the duration of the course should be sufficient to give a good feeling of the subject. As to subject matter, the research offered a series of insights into the areas that are calling out for increased knowledge and clearer strategies. Ship finance and risk management are proving to be of most consequence: 75% of those who responded to the survey felt the need for more in-depth attention to this make-or-break challenge to businesses. Indeed company strategy was another compelling field for closer attention to six out of 10 companies that answered questions, closely followed by the ability to anticipate trends in global trade and cope with shipping cycles. Managing risk and its consequences protecting assets, income and liabilities cropped up too as a frequent concern. Half of those questioned were keen to develop more expertise on the legal aspects of ship finance, including contracts. Still on the legal side, considerable interest was shown in tackling maritime law as a whole, maritime liability, and the intricacies of CIF and FOB sales. Many identified the theme of shipping as a business: pricing and costs involved in operating ships and there was much mention of the whole compass of maritime logistics and multimodal transport. Other leading focuses included an eagerness for a more thorough grasp of subjects including piracy and counter-terrorism, casualty handling, regulation governing shipping and logistics, Arctic and ice shipping, green shipping, ship sale and purchase, innovation in shipping, freight markets and derivatives, hull and machinery and liability insurance, and the impact of technological developments on board ship. Specific courses on the tanker, container and dry bulk shipping categories would all appeal, it appeared, and refrigerated shipping, heavy-lift and offshore all drew interest, as did shipbuilding issues. Seeking a closer acquaintance with the realm of protection and indemnity insurance is of interest to many, too. Marketing, port management, ship crewing and

3 labor questions, supply chain management, freight forwarding the demand for understanding of the many facets of the maritime world seems endless. There are calls too for courses which would concentrate on a particular market: China, Africa, US are among the likely territories. Of the ship finance and risk management aspect, companies require their management to obtain sufficient training to appreciate such issues in their practical contexts, to relate different ship finance instruments and practices to the cyclical nature of the shipping industry. The ability to understand financing techniques and their application in real life and to relate to the principal terms used in financing techniques, practices, and security issues stands out as a great advantage. Topics where short courses could help should include the basic principles of good lending, including the importance of proper evaluation of the asset to be financed and the cash-flow to be generated. If anyone doubts this, they should reflect on the many individual finance and asset bubbles that have burst during the past four years. Interviewees volunteered some interesting suggestions for development of short courses. These included bunker developments and their impact on shipping, environmental issues (Sox and Nox emissions), fuel alternatives for the future (especially liquefied natural gas), and in the ship finance area alternative financing such as K/G investor partnerships, pension funds, and capital funds. As to corporate strategies, our research has shown that those in decision making positions in the shipping companies recognize the global nature of shipping industry and thereby the need to develop strategies they can implement to stay competitive. They have to find ways to lead an environment which can create and sustain a more effective and predominantly network-based organization. All realize that companies remain competitive through the use of well-planned strategies. Being a competitor in the corporate world requires constant monitoring of the situation and the events that are taking place around you. To reach company goals, it is therefore necessary for an organization to employ strategic planning. The strategic plan identifies potential problems, creates the framework to help develop a budget and recommends the effective use of company personnel as a road map to achieving corporate goals. A company cannot remain competitive if it does not take the time to analyze the path ahead, and create a plan to avoid the problems and benefit from the opportunities. One of the challenges that companies face, according to our observations, appears to be the lack of clear communication of the strategy of the company to all levels. We know that what the senior management set as the strategy for the company and what the mid-career managers perceived as the strategy are not always the same. As to trends in global trade, and shipping cycles, the characteristics for demand for international transport are two-fold: what the customers want and what the cost of the transport should be. As shipping includes in its field of play many other kinds of businesses and activities which will have impact on supply and demand, it is necessary to take into account the role not only of the shippers, shipowners, brokers and shipbuilders, but also the bankers and regulators who influence the shipping industry. The shipping industry is very diverse and research has shown that each segment will react differently to the fluctuation in the market; however, shipping s main contribution to global trade has been to make sea transport as cheap as possible by taking into account economies of scale and building supersize vessels which have had a major impact on the sea transport unit cost.

4 Different factors such as the price of oil, political situation, and natural disasters, influence the shipping market cycles. These cycles can be long cycles, short cycles, and seasonal cycles where the shipping companies and players in the industry will need to coordinate the supply and demand in the market. Every sector of today s industry is meanwhile heavily regulated. Shipping and commodity businesses in particular are affected by an intricate network of national, regional and international legislation enforced by such devices as port state control and financial and asset freezing orders. Lack of awareness of this network of rules and regulations costs the industry billions of dollars every year. Precise and proper contract drafting, clear and fool-proof compliance procedures and command of the basic legal principles involved often make a big difference at the performance stage or when things go wrong in court. Maritime law is complex and ever evolving. Shipping lawyers are often available in-house, and otherwise from specialist firms; but rapid and critical decisions often have to be made without recourse to lawyers and it is in these cases that a basic legal training kicks in. This has prompted the call for the short courses to provide at least an elementary briefing. Several people interviewed for the short course research were of the opinion that training in the essentials of maritime law should be undertaken as a fundamental procedure, as mistakes in legal matters can cost companies dearly. Neglected at a heavy price over the years, risk management is these days recognized by the wise as a crucial part of any organization s strategic management. Shipping companies should methodically address the risk attaching to their activities and make an effort to reduce the probability of failure in achieving their overall objectives. Management of shipping companies should make the development and implementations of processes that help them face the challenges posed by risk a priority in their strategy. They should make the recognition and management of risk rooted in both external and internal drivers an integral part of their activities and strategy. Above all, these requirements need to be reflected in that key word: leadership. Our research showed that a company s strategy is not always clearly communicated at all levels. We believe that a leadership program which can highlight connecting the overall strategy with everyday work will bring value to the organization and thereby to the industry. A good leadership training which can help translate the company s strategy into effective action should be a solid foundation for success. When working in such an ever-changing industry as shipping, you need to have the appropriate leadership tools which can help you not only to deal with change but also provide the necessary skills to show the direction for the growth of the company and provide the ability to formulate and implement strategy. The short courses may include where relevant visits to sites, including companies, ports, shipyards and vessels, and in some cases interaction with offshore oil and gas industries. Incidentally, a clue about the internal cycles within many companies was given when the question was put: Which months and periods of the year most suit your ability to release executives for such short courses? For some reason, March is the most favored month, but June and February featured strongly too. Few are keen on having courses in December and January perhaps reflecting the intensity of the seasonal Christmas shipping period and the need for many managers to be at the desk to oversee such matters as annual contract and insurance renewals. For further information please contact: Irene Rosberg Program Director, Executive MBA in Shipping and Logistics (The Blue MBA) ir.mbs@cbs.dk

5 **Irene Rosberg is the Director of the Executive MBA in Shipping and Logistics (The Blue MBA) at Copenhagen Business School (CBS), Europe s leading institution of its kind. From the beginning, she has been responsible for the design, development and co-ordination of The Blue MBA. On behalf of CBS, she has a fundamental role in building global relationships and networks within the maritime industry. She also promotes research identifying challenges and future issues for the maritime industry as a whole. She is a member of many international boards and committees. Based on her extensive international network and experience, she has been entrusted with major roles in varied maritime-related activities, and speaks at leading maritime events. * first published in the Mercator Denmark