Strategic planning and budgeting of RORO services, car carriers and PCTCs. Norwegian Maritime Solutions. John Colletts alle 117, N-0870 Oslo, Norway.

Transcription

1 RORO Including new module Blue Ocean Strategy Strategic planning and budgeting of RORO services, car carriers and PCTCs Norwegian Maritime Solutions John Colletts alle 117, N-0870 Oslo, Norway. Tel: + 47 / Fax: + 47 / erikst@online.no 1

2 Practical tools for strategic planning and budgeting RORO4004 Is a powerful strategic planning tool for major shipping companies that need to analyze alternative scenarios in a vibrant world economy with swiftly changing factors that influence the bottom line results. Blue Ocean Strategy Is a new module within Route99 that is specifically aiming at assisting the CFO in his challenges of taking information from the commercial/chartering side and converting info into useful economical budgets that allow effective risk and cash management This module allows for implementing a Beyond budgeting philosophy using dynamic or 12 months rolling budgets: 2013 Norwegian Maritime Solutions Slide 2

3 Spend time on strategic planning (without falling asleep) No countries are protected from the financial crisis and thus companies have to prepare for a possible downturn Companies must spend time on strategic planning and possibly move back into core activity what is distinctive about your business? tactic we don't' know what is happening FORECASTING DOES NOT WORK THE WORLD IS GOING TO BE DIFFERENT FIVE YEARS FROM NOW 1. RISK IDENTIFICATION 2. RISK ASSESMENT 3.RISK MANAGEMENT 4.RISK SHARING/RISK STRUCTURING 2013 Norwegian Maritime Solutions Slide 3

4 Challenges that Route99 can be used to shed light on There is opportunity in change Many rapid changes taking place in the global market. The dynamic economies of China, India and Russia are not only creating increased demand for cars, but will also be new manufacturing centers. While the US, Europe and Middle East markets may remain strong, there are many promising markets developing in China and India China???? Where will Russia be? New manufacturing facilities in East Europe To what extent can trade management be de-centralized? cargo mix, which is tilted heavily toward the new car side, Reviewing existing contracts. How to find the right tonnage size and capacity, market coverage and flexibility to meet the shifting requirements of both established customers and new emerging markets 2013 Norwegian Maritime Solutions Slide 4

5 Market Analysis Network Basis for capturing and understanding key short- and long-term developments in existing and potential markets What will be the net effect of stretching vessels US outbound trades what is the effect of wekaing or strengthening currency? exports. What will be the impact of changes in the export to West Africa? Used light vehicles and High/Heavy cargo?? list. The present operators, including Höegh Autoliners, have struggled What is the impact of volumes across the Atlantic to the Middle East and to Europe dropping 20 % Trade volumes out of Europe gain 5 % 2013 Norwegian Maritime Solutions Slide 5

6 Blue Ocean Strategy Communicating info from commercial/chartering to the CFO office Commercial and Chartering Departments Cargo volumes - Cars - H&H - NCC Freight rates Bunker prices Speed/consumption Service frequencies Drydocking Layup alternatives RORO4004 Blue Ocean Strategy Data and info is continually changing and updated: Route99 will interpret and convert info to economical budgets CFO office Results for the entire fleet: -- Automatically generated Voyage calculations for the entire fleet -- TCE -- Periodic results -- Monthly cash flow projections -- Risk management reports - - Sensitivity -- Currency exposure -- Hedging optimization 2013 Norwegian Maritime Solutions Slide 6

7 The four levels of residual uncertainty Level 4 True uncertainty Level 3 Not evena range of possible future outcomes Level 2 A B Range of futures Range of possible future outcomes Level 1 C Alternative futures Lmited set of possible future outcomes, one of which will occur Clear enough future Single view of the future Source: McKinsey& Co, Hugh Courtney 2013 Norwegian Maritime Solutions Slide 7

8 RORO4004: Tool to calculate the economics of alternative strategic plans on how to service the car industry RORO Norwegian Maritime Solutions Slide 8

9 A strategic plan is based on the assumptions about cargoes to be shipped and fleet available Fleet Year: 2014 Schedule Cargo Economics 2013 Norwegian Maritime Solutions Slide 9

10 Fleet Typical vessel data Vessel Built Car cap High car cap (> 2 m) Ramp (mt) Eufonia ,060 1, Fanta ,115 2, Festa ,115 2, Høegh Trapper ,640?? Høegh Masan ,000?? Norwegian Maritime Solutions Slide 10

11 Cargo Cargoes and services: Typical trade routes to be included in cargo base: Frequency and volumes Europe / Middle East 2 slgs/month Europe / Far East 2 slgs/month Europe /W/S Africa Far east 2 slgs/month US / Med Mid East 2-3 slgs/month Transatlantic shuttle 3 slgs/month US / Dom Africa 2 slgs/month Far East / Europe 40,000 50,000 cars pr month Far East / WC South America 1-2 slgs/month Far east / North America 2 slgs /month Carribs Short Sea 2 slgs/month Med shuttle service 2 slgs/month.. Source: Norwegian Maritime Solutions Slide 11

12 Route99 : Calculating the fleet tc results and other key parameters 2014 Fleet Fleet Voy 1 Voy 2 Voy Voy 10 Cargo Ship A Asia to Europe EUR to Oceania Asia to Europe Europe to USEC via SA Ship B EUR to USEC USEC to Far East Asia to Med Med to West Africa Ship C Asia to USWC Asia to USWC Asia to USWC USEC to AG FLEET TC RESULT: 525 mill USD 50 vesels 30,000 USD/day 17,500 ship days 2013 Norwegian Maritime Solutions Slide 12

13 Route99: Typical data input VESSELS NAME DWT SPEED/CONSUMPTION CAR CAP/HIGH & HEAVY ETC OPEN IN PORT DATE OPEN ETC. TC Ships VESSELS TO BE FIXED SHORT OR LONG TERM EXISTING CONTRACTS PORTS and PORT ROTATION DESCRIPTION OF CARS/CARGORATE(S) LAYDAYS NR OF SAILINGS FREQUENCY ECONOMICAL BUDGET CONTRACTS TO BE EVALUATED NR OF LIFTINGS RATES TERMS LAYDAYS ETC. MARKET OPPORTUNITIES E.G. GERMANY/TURKEY FINLAND/FRANCE NET PROFIT 2013 Norwegian Maritime Solutions Slide 13

14 RORO4004: Provide economics for alternative scenarios Scenario Cargo and fleet Fleet TC TC pr day Fleet size Ship days 2010 result (Mill USD) Average for fleet (# of ships) required PLAN A Basic budget , ,500 assumptions PLAN B Crisis , ,500 assumptions PLAN C 30 % reduction in , ,000 Jap volumes + no West Africa service Illustrative: Results from Route99 analysis 2013 Norwegian Maritime Solutions Slide 14

15 Plan A : Route99 to quickly provide sub scenarios and sensitivity Route99 will provide a tool that quickly can calculate the consequences of adjustments in the basic assumptions This will enable an effective 12 months rolling budget with monthly cash flow projects for effective cash management What is the consequence of a speed reduction of 20 % What is the consequence of fuel prices going back up to 600 USD/mt Will I increase the efficiency of my fleet by laying up 5 vessels second half of 2014? 2013 Norwegian Maritime Solutions Slide 15

16 Route99: Illustrative comparing scenarios 2013 Norwegian Maritime Solutions Slide 16

17 Market Analysis Network: Blue Ocean Strategy will capture and analyze signals MAN: Important basis for capturing and understanding key short- and longterm developments in existing and potential markets. US outbound trades what is the effect of weakening or strengthening currency? Exports? What will be the impact of changes in the export to West Africa? Used light vehicles and High/Heavy cargo? What is the impact of volumes across the Atlantic to the Middle East and to Europe dropping 20 % Trade volumes out of Europe gain 5 % 2013 Norwegian Maritime Solutions Slide 17

18 Challenges and changes that RORO4000 can be used to shed light on There is opportunity in change How to take advantage of the many rapid changes taking place in the global market. The dynamic economies of China, India and Russia are creating increased demand for cars, China???? Impact of new manufacturing centers in East Europe. To what extent can trade management be de-centralized? What is the optimal mix of Brand new cars/high and heavy/second hand cars (70/20/10?) 2013 Norwegian Maritime Solutions Slide 18

19 More strategic issues Reviewing existing contracts. Where do we make money?. Impact of new contract USA/Mexico to Europe How to find the right tonnage size and capacity, market coverage and flexibility to meet the shifting requirements of both established customers and new emerging markets What will be the net effect of stretching vessels Tonnage sourcing vessels to be fixed on tc short term/long term Impact of further consolidation adding fleets (Kiwi/Maersk etc) 2013 Norwegian Maritime Solutions Slide 19

20 Important issues in strategic planning Keep a balanced level of accuracy Scenarios enable the strategist to steer a course between the false certainty of a single forecast and the confused paralysis that often strike in troubled times Realize the uncertainty of data base Don t go overboard in details as this will blurr the total picture Future planning is all about uncertainty 2013 Norwegian Maritime Solutions Slide 20

21 What is the need in the chartering organization? Improvement in management focus Forcing chartering info to be digitized will lead to better internal communications in management and enable a more creative discussion about strategic options for the company 2013 Norwegian Maritime Solutions Slide 21

22 RORO4004: Visual presentation of a scenario 2013 Norwegian Maritime Solutions Slide 22

23 Cash flow budgets integrated in the planning model 2013 Norwegian Maritime Solutions Slide 23

24 Route99: Sample report for results by ship and voyage 2013 Norwegian Maritime Solutions Slide 24

25 ROR4004: Illustrative bottom line figures for a scenario 2013 Norwegian Maritime Solutions Slide 25

26 Wha can Norwegian Maritime Solutions offer? Route99 can be installed within minutes on a laptop or server Only requirement is Microsoft office package Data are kept on Microsoft access data base Reports are written i Crystal Report and can easily be updated or changed by the user (Program is written in Visual Basic 6) NMS offers to start modeling the data into Route99 which means that a user can get started almost immediately and without any interference from IT department nor any need for training personnel By intensive work, we estimate max 10 days to gather data and getting the first results Typical cost: E.g. 3 months trial period with intensive consulting support to gather data and present results: EUR 40,000 Annual license costs: 50,000 80,000 EUR depending on modules and type of support/maintenance 2013 Norwegian Maritime Solutions Slide 26

27 RORO4004: Maybe the solution to get crisp analysis of strategic options RORO Norwegian Maritime Solutions Slide 27