Crewconnect whitepaper2018 by Videotel

The Future of Crewing – Shipping’s Challenges and Opportunities AN INDUSTRY REVIEW PAPER

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ABOUT CREWCONNECT GLOBAL Over the past eighteen years, CrewConnect Global has become the world’s largest and most influential event for the crewing industry. The event brings together the pioneers and leaders of the marine HR community in search for solutions for recruitment, training, connectivity and welfare for seafarers in the digital age.

TABLE OF CONTENTS p3: Connectivity: A Reason for Seafarers to Disconnect? p4: Digitalisation and The Role of the Seafarers p5: Experiencing the Change in Maritime Training p6: Retention and Progression

“ It’s networking, it’s friendly, it’s interactive and informative - it’s all in one! The event of the year, no doubt.” - Director, Netvision

“ It’s a great forum to meet people, whether it’s suppliers, partners, customers... Everybody’s here.” - Director, Globecomm

p8: Taking Crew Costs Out of the Picture p9: Crew Claims Prevention, According to the Experts p10: Leadership and the Challenges in the Industry p11: Looking ahead to 2018

Connectivity: A Reason for Seafarers to Disconnect? Professor Helen Sampson, Director of Seafarers International Research Centre

Seafarers’ access to connectivity is often associated with high costs, seen as a culprit to cyber-attacks, and regarded as a distraction from work and on-board social life. However, is connectivity truly a distraction? A study by Sampson et al. (2017) tells a different story.

Not all that many, only just over one in ten, go to their cabin to use the internet, but at the same time, very few engage in social activities with colleagues. This is largely because companies have banned many social events and activities such as basketball, barbecues, and alcohol consumption, which discourages some forms of socialisation.

HOW SEAFARERS SPEND THEIR SPARE TIME

Many facilities that were once provided on ships such as swimming pools, squash courts, purpose-built gyms for collective sports are no longer found on board. Nowadays, the gym is often a spare cabin with one or two pieces of equipment in it. Furthermore, communal lounge areas have decreased in size and there are no social spaces which are big enough to accommodate the whole crew. So we can see that it is correct that the social life on board is not what it once was, but this is the case for ships with and without internet access and it is due to the changes in ship design and the squeeze on accommodation areas, as well as changes in company rules to do with alcohol and specific social and sports activities. The main difference between ships with internet and ships without is that seafarers on ships with internet access can draw on regular social support from their friends and families. This makes them better able to integrate once they return home and helps them maintain stronger social bonds. All of these things contribute to a reduction of stress and isolation and I am in no doubt that they preserve mental wellbeing. This is particularly true of younger generations of seafarers who unlike a small number of their (much) older predecessors do not go to sea because they struggle with social integration and are ‘loners’. The vast majority of seafarers want connectivity and feel supported by it. The answer to social isolation on board is not to remove or restrict connectivity but to improve social spaces and facilities and to re-think some of the rules that have been introduced on board with regard to health and safety. A better social life on board would give seafarers something interesting to talk with their family and friends about. It would complement, rather than compete, with connectivity.

Go to cabin and sleep-rest 41.60% Go to cabin and watch DVDs-TV 20.90% Go to cabin and use the internet-Wi-Fi 13.20% Go to cabin and listen to music 9.10% Go to a communal-shared space and watch DVDs 5.40% Go to a communal-shared space and chat to colleagues 2.80% Sing karaoke with others 1.70% Group sports 1.50% Gym alone 1.20% Gym with others 1.10% Use the ship’s internet room 0.50% Total (with ‘other’ not shown here) 100.00%

Digitalisation and The Role of the Seafarers Jason Barreto, OSM Maritime Group

As connectivity enhances every day shipping operations, it is clear that the industry’s digital transformation is well under way. Innovation and technology have a profound effect on businesses and organisations, but what about the seafarers?

Digitalisation is going to change the way the maritime industry operates and that will include the role of seafarers. We are already seeing increasing levels of automation on board ships so the type of work we expect seafarers to undertake is starting to change now, and that’s why we at OSM think it’s so important to be leading the digital conversation. There will be both threats and opportunities in the digital future so we need to be thinking differently about how we approach everything from recruitment to welfare and well-being. According to the results of the most recent Futurenautics’ Crew Connectivity Survey, which were previewed at CrewConnect Global in Manila, seafarers themselves overwhelmingly view new technologies as an opportunity for them in the future and it’s our job to work with them to realise the potential benefits.

“ The days when the ship and its crew was completely self-contained and remote from the rest of the organisation are disappearing.”

Seafarers’ health is a good example of where digitalisation could offer enormous potential. The growing availability of connectivity to vessels opens innovative ways to monitor and support seafarer’s health from telemedicine to real-time data and from wearables to remote diagnostics. Already, there are maritime charities which are using connectivity to offer counselling for seafarers at sea. But aside from the medical support, simply by allowing seafarers to be connected enables them to access things they were unable to before, whether that’s training and development or just remaining in close contact with friends and family. The latter point is vitally important for the mental wellbeing of seafarers, particularly with the growing demands of a life at sea and the pressures that come with the territory. There is a lot of debate about how the role of seafarers is going to change in the future and no one can be sure exactly how roles, functions and responsibilities will develop. What seems clear is that increased automation will demand different skill sets at sea, but digitalisation will also require new thinking ashore. The days when the ship and its crew was completely self-contained and remote from the rest of the organisation are disappearing. One of the major challenges the industry faces will be in enabling seafarers, shore-staff, charterers, regulators, etc. to work together seamlessly to deliver safety, efficiency and reliability. At OSM we’re focused not just on how the way we work at sea will change but how all of us in the industry can work differently to enable and support digital change and opportunity. Are you ready to embrace digitalisation and transform your business?

Experiencing the Change in Maritime Training KVH Videotel

With the seafarers’ roles and responsibilities adapting to increasing demand, the industry must also transform its practices to be able to deliver quality service and great efficiency. This transformation starts with maritime training.

Shipping is rapidly changing, and this is perhaps the most exciting time the industry has seen in generations but, just as it was in 1973 when KVH Videotel was founded, the need for training to evolve, improve, and embrace technology remains, as does the need to ensure we deliver on the requirements of seafarers, companies and legislation. As we all transition from traditional ways of working to the new digital ship, we need to cover the shipping needs of today, as well as anticipate future changes to the industry. As shipping becomes more technical, the demands for highly skilled and specialised crew will intensify; more and more learning will need to be done on the job and all of us will have to be prepared to develop new skills outside our comfort zone. We can take comfort that there is an evolving generation of seafarers that are ready for this challenge. These digital natives consume their information in a totally different way to their forebears and we need to be ready if we are going to get the best out of them.

game, highlight the changing way forward; placing seafarers in realistic scenarios and testing them under similar pressures that they would find onboard ship bring us closer to experiential learning.

“ Innovative training pieces, such as our virtual reality experiences and Enclosed Spaces training game, highlight the changing way forward.”

The goals of safe, secure and efficient shipping on clean oceans can only be delivered by skilled, informed people that know what they are doing. We need to monitor and measure the performance of our crew so that we can keep track of their strengths and weaknesses, ensure compliance and look for development opportunities which ultimately enable us to optimise the efficiency of the fleet. We are investing in technology that not only provides a fast, secure and reliable experience but that also makes it visually compelling and intuitive to use.

This generation expects things to look good and work well, and they lose interest in things that don’t make the grade. We are working to ensure all seafarers receive a more interactive learning experience that works beautifully across a variety of desktop and mobile devices. Innovative training pieces, such as our virtual reality experiences and Enclosed Spaces training

Retention and Progression CrewConnect Global

When asked how the maritime industry could attract millennials and generation Z, experts have identified a wide scope of factors that need improvement.

The younger generation is looking for equality, innovation, and first and foremost a purpose. But for the maritime industry to even be considered as a viable option for this generation, the experts at CrewConnect Global recommend improvements from the way the sector communicates to its operational processes. However, attracting is not enough, especially when many who enter the industry leave after a few years at sea, thus the industry loses valuable trained manpower. Speaking at our first CruiseConnect Summit, Magali Bertolucci, Director of Crew Development and Strategy at MSC Cruises, shared a unique method that allows MSC Cruises to leverage their human resources well: engagement. An employee’s engagement with the business refers to his or her commitment and loyalty to the organisation. High engagement levels, however, not only affect retention, but it also has a positive influence on profit, productivity and personnel cost. With higher employee engagement levels, studies reported: • 10-15% profit growth (MIT’s Sloan Review), • 21% higher profitability (Gallup 2016), • 19% increase in operating income (Towers Perrin), • 27% higher productivity in blue-collar employees, and • 16% increase was seen in white-collar employees (McKinsey),

Prabhat Jha, Managing Director of MSC Ship Management, is one of the few, who can boast about a 98% retention rate. “At MSC we believe it’s essential to take care of our seafarers in order to run a successful, sustainable business. MSC is a family company and our founder Captain Gianluigi Aponte has always placed employees at the heart of his development strategy. We offer our crew a world of opportunities, through our training and professional development programs. Whether a crew member aspires to become a Master, or to join other ex-seafarers in a commercial role in our headquarters in Geneva, we try to help them to realise their ambitions. We listen carefully to our crew, through regular feedback interviews at the end of every voyage and through our biannual crew engagement survey, which recently highlighted the following 5 key points as crucial to our 98 percent crew retention rate: • Training and professional development courses for all seafarers; leadership development, team building and cultural training for senior crew • Good onboard working conditions, from health and safety to Internet access • Clear information and communication from employer/ management to crew and regular opportunities for feedback

• 20% higher productivity overall (Gallup 2016),

• An opportunity for stable, long-term employment from a company with a strong reputation in the market

• 41% lower absenteeism rates (Gallup 2016), & employees were

• Salary paid on time”

• 87% less likely to leave the organisation than disengaged employees.

Still, not all seafarers realise the multitude of potential career paths ahead of them, according to the Faststream Group’s research Perception vs. Reality. The survey found that seafarers often underestimate their level of employability for on shore positions. 92% of shoreside office workers think it is “quite important” to have former seafarers in the office, while 35% of them think it is “vital”. At the same time, seafarers on board ships find that those on shore who have not spent time on a ship do not understand the difficulties of the work they do, which is why an experienced seafarer could be a great asset to an on-shore staff. Yet, over half of the seafarers think it is difficult to get a job on shore, especially deck officers, because they do not know where a career in maritime could lead to.

...are all potential career paths for seafarers. To root out the misconceptions, Karen Waltham, Managing Director of HR Consulting, calls for sea and shore HR communities to work together to educate and enable the seafarer’s ship-to-shore transition. This transition, however, needs careful consideration. On top of having the wrong perceptions about on-shore employability and payment, the Merchant Navy Training Board’s Project Ulysses found that seafarers had unrealistic assumptions of what life is like on shore, and therefore had trouble adjusting to their new roles. To correct these misconceptions, the experts at CrewConnect Global agree that better education is the key to show what seafarers’ lives can be after their time at sea. Education can give them a goal to aspire to and in return, their aspirations will have an impact on what skills they want to nurture to be ready for the future. Mentoring, training courses, and work placements are all opportunities where seafarers can have a taste of a potential career in maritime. This way, not only does the industry retain valuable manpower, but it can also contribute to businesses’ sustainability.

Taking Crew Costs Out of the Picture CrewConnect Global

Although the amount of pay does not have a significant effect on motivation, it is certainly a factor in the attraction and retention of future seafarers.

This year, at CrewConnect Global, research from several parties revealed that pay is not a motivator. Still, its importance should not be underestimated. Phil Parry, Chairman and Co-Founder of Spinnaker Global, said: “Salaries don’t motivate, but if you pay your staff unfairly, they can be incredibly demotivating”. A Harvard Business Review analysis of 92 studies on the subject found a weak, less than 2%, correlation between pay and job satisfaction. What this essentially means is that pay is not something that can help your organisation to increase productivity, but when payment is lower than a regional benchmark or unfair, the strategies to retain your seafarers are unlikely to succeed. Furthermore, a study carried out by the US Federal Reserve found that even bonuses are not good motivators, other than in the case of simple mechanical tasks. If the job requires cognitive function – thinking, reasoning, judgment – bonuses don’t work. However, bonuses make great rewards, but it is highly unlikely that the prospect of a bonus will change or produce the behaviours you want. The new Seafarer Employers Association analyses seafarer pay and enables employers to benchmark the cost of filling berths with seafarers of particular nationalities at particular ranks on board specific vessel types. “We take the lowest and highest base salaries for each job title on different vessels, and report ranges,” Parry says. “We look at a seafarer’s daily wage cost and leave rotations, ensuring that differences caused by salaried or unsalaried arrangements are

“ In today’s rapidly changing market, the race to attract the best seafarers out there has already begun.” accounted for. This way, a company can truly compare how much it costs to crew a particular vessel type per day, month, quarter or year, regardless of employment relationship.” “It’s about taking pay out of the equation,” Parry says. “Seafarers may look at two identical jobs at two different companies – one paying more, one paying less – and take the lower paying job. Seafarers know their own ‘nationality-market’ well and they know which companies have good and bad reputations for how they treat their seafarers.” “Tweaking pay a little higher doesn’t fool them. Seafarers generally tell us that as long as pay is within a reasonable or fair band, other factors take precedence. The Seafarer Employers Association was set up to enable employers who are members to understand whether or not they are indeed paying fairly in comparison with the competition.” With the financial aspect of crewing out of the picture, there is room to grow other aspects of your organisation that can ensure you attract, retain, and develop your seafarers. In today’s rapidly changing market, the race to attract the best seafarers out there has already begun. As KD Adamson said, “the winners will be the ones with the best people”, so in the time of seafarer shortage, nurturing your crew has never been so significant in the progression of your business.

Crew Claims Prevention, According to the Experts CrewConnect Global

Crew claims are widely recognised as one of the biggest challenges for the crewing sector because of its effect on vessel costs and the business’ and seafarer’s reputation.

At CrewConnect Global, Iris Baguilat, President of Döhle Seafront Crewing, named crew claims, especially invalid ones, as the main reason why shipowners turned away from the Philippines as a labour source. Rajesh Nanda, General Manager & Head of Insurance Department at Synergy Marine Group, said in an interview with KNect365: “All potential claims need to be treated on the basis that they are genuine”. However, when looking at how many crew claims one processes, reducing the number of invalid claims not only spares precious resources, but it could also save damage to the reputation of a company. “Training plays an important role in preventing as well as controlling the losses in a claim by imparting greater awareness as well as safety consciousness that is critical in avoiding incidents involving injury”, Nanda said. Baguilat urged shipowners to raise awareness about the consequences crew claims might cause for the involved parties’ reputation and financial losses, while Robert Fay, Senior Vice President of Maritime Operations at International Registries, stressed the importance of enforcing compliance to safety procedures. “Proper preparation prevents poor performance”, Fay said at CrewConnect Global. Prevention is also what Vivek Menon’s, Interim Head of Department of Occupational Health and Safety at Seahealth, approach is towards crew claims, focusing on health, safety, and well-being.

BY THE NUMBERS BASED ON RAJESH NANDA’S EXPERIENCE AND FEEDBACK FROM VARIOUS SOURCES: • About US$ 30,000 are involved in an illness claim • About US$ 60,000 are involved in an injury related claim xcluding time & efforts of various people involved as well E as the difficulties or hardships encountered by the crew member who has suffered the illness or injury “We support, we raise awareness, we create value, and we educate”, Menon said. But to be able to truly prevent, Nanda identified another step which is essential. “A key aspect is proper and in-depth analysis of incidents following which the information or findings are circulated back within the system for awareness. In addition to internal circulars, we regularly transmit various loss prevention material, engage frequent campaigns, etc. for addressing specific aspects. Identification of gaps in competence or safety awareness and imparting customized training in accordance with the same is also a critical factor.”

Leadership and the Challenges in the Industry CrewConnect Global

Bringing together the four corners of the maritime industry, the experts debated what it means to be a leader and evaluated the biggest challenges in the industry at CrewConnect Global.

Prabhat Jha, Managing Director of MSC Ship Management, noted that up until recently, leadership was not a quality that was taught at any level in the maritime industry. Consequently, leadership styles were often characterised by reactions to what is happening in the industry instead of activities to anticipate the changes.

this as a failure of communication between the various parts of the industry.

“The people’s competency is not growing as fast as the technology is evolving and that creates a big gap”, Jha said.

Yuzuru Goto, Managing Director of K Line LNG Shipping, goes even further and suggests that due to strong regulatory and policing processes, currently, the industry is part of a cover-up culture that can stifle necessary conversations within shipping’s supply chain.

Indeed, Gerardo Borromeo, Vice President of the Philippines Shipowners’ Association, also reported a similar issue in competency and training. Borromeo asked: “We could build a ship in a year, but how fast is it taking us to build a captain and a chief engineer?” The answer is 10 years, and with technology changing the industry quicker than ever expected, it can be natural to assume that the solution to close the gap in competence also lies in technology. However, the implementation of technology is a challenge in itself, as Artur Pankowski, Associate Vice President and General Manager at Royal Caribbean Cruises, noted. Still, Pankowski reminds us that in our personal lives, “we don’t need wizards between technology and ourselves”, because there is a way to deliver technology that can be used intuitively and creatively. Although there is an assumption that older generations are unwilling to learn to use new technologies, Borromeo views

“I think the challenges go back to the fact that a dialogue is not taking place between those who come up with solutions and the users of the solutions”, Borromeo said.

“What we think needs to happen is for the industry to create an open culture which goes back to embracing failures and allowing people to be open about their mistakes. A culture where people can feel vulnerable and feel okay to admit their mistakes”, Goto elaborated. Jha warned that “we are moving to a world that is absolutely transparent”, which technologies such as blockchain can enable. This involves transparency about mistakes and lack of competences, which Goto believes will allow the industry to learn. But transparency can also open an honest dialogue about how to change shipping for the better, using innovative tools like interactive learning, gamification, 3D simulation and virtual reality, thereby speeding up the training process and close the gap between the industry’s commercial demand and manpower shortage. 10

Looking ahead to 2018 CrewConnect Global

Leading the sessions at CrewConnect Global, John Adams, Managing Director of Teekay Shipping and Chairman of the Bahamas Shipowners’ Association, looks at the industry’s future, and talks about the upcoming challenges and opportunities that 2018 will bring.

WHAT DO YOU THINK THE INDUSTRY SHOULD STRIVE FOR IN 2018? “As a highly regulated industry, shipping has many demands placed upon it, which it must plan to implement as priorities. Therefore, an important part of answering this question requires us to be aware of upcoming legislations like the Global Sulphur Cap (2020), the EU’s CO2 MRV Guidelines and IMO’s Data Collection scheme, IMO’s Ballast Water Convention and USCG requirements, Biofouling, Cyber Risk Management, and the list goes on. In 2018, the industry needs to strive to address a number of topical issues and challenges – some of which arise from these upcoming legislations. The slew of new environmental regulations is important to all of us. We need to proactively be part of the dialogue on greenhouse gas emissions and CO2 reduction in the industry, and drive the development of the IMO roadmap and strategy. Ballast water management and biofouling are serious issues, and the USCG have stated they will view any infraction as seriously as a pollution! Although autonomous shipping was once regarded as fanciful science fiction, it is now being considered feasible in certain operations, requiring a more serious and realistic review from the industry. Following the Maersk and Clarkson hacks, the industry needs to step up its efforts, especially when there are reports of vessels being hacked, resulting in the loss of navigational controls every 10 hours! 11

Furthermore, the industry needs to address the elements that negatively impact not only our reputation, but our people, too! Security, abandonment, harassment, bullying, welfare and wellbeing initiatives, stress and related conditions, pay and work conditions, work-life balance, shore leaves etc. all need to be addressed.”

WHAT ARE THE CHALLENGES AND OPPORTUNITIES YOU THINK WILL CHANGE THE GAME IN THE NEAR-TERM? “The game changers will be the strategies built to respond to the above mentioned topical issues. From the business and crewing perspective, authentic leadership and management will be key in inspiring, providing focus, and setting directions to communicate effectively, motivate well, and build trust within the company. The industry needs more senior leaders empowering others and

line managers who support and help employees. Integrity, therefore, is essential. Stand for what you believe in and do the right thing! There needs to be a focus on safety and make it the no. 1 priority. The industry needs to understand the human interface with operations and the human element in incidents. The development of safety culture and behaviours means getting our people home safely. Another game-changer is the new EU General Data Protection Regulation (GDPR) coming into force May 2018. It is the biggest shake-up of data protection law in nearly 25 years, which could potentially become a global standard, as it deals with issues like transparency, consent, accountability, administration and data subject rights. There are also extremely punitive fines and penalties in case of a breach. It will require extensive staff training and awareness both ashore and at sea.”

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