Strategic Asset Manager

Thought Experiment: Think of a brand or company whose business model you find compelling. What makes them so special? Did they transform an entire industry? Affect social norms? Create an economic moat for themselves in a fierce competitive environment?

Technology in particular is allowing forward thinkers to transform traditional business models, capture rapid market share, and delight customers in previously unimagined ways. Uber is a great example. On the surface, they simply introduced an app to the taxi business, making it easier for us all to book the rides we need. But we know the transformation was more significant. By rethinking who the driver was, they were able to give passengers better prices and faster service, while helping a whole new audience maximize the lifecycle value of their automobile. Business model innovation isn't confined to the use of tech, and is all about reimagining how the greatest value can be delivered to the greatest number.

Let's reimagine the shipmanagement business for a moment. What if, in order to escape commoditization, shipmanagers repositioned themselves as strategic asset management partners? By leveraging their deep knowledge of fleets, vessel lifecycles, and operational patterns, ship managers can transform from a reactive service provider to a proactive, value-adding strategic partner for shipowners. Here’s how such a transformation could unfold:

1. Shift from ‘Shipmanager’ to ‘Strategic Asset Manager’

Ship managers can elevate their role by framing themselves as strategic asset managers rather than traditional service providers. The idea is to position themselves as long-term partners who don’t just handle daily vessel operations but also help shipowners optimize their entire asset portfolio over the vessels’ entire lifecycle. By offering lifecycle management, they can advise owners on purchasing decisions, asset allocation, and value maximization strategies.

Key Benefits of the Shift:

• Long-Term Engagement: Unlike commoditized services, a strategic partnership would ensure that ship managers are involved in the decision-making processes from vessel design and procurement through to disposal.
• Asset Optimization: Instead of managing ships as isolated entities, they would treat the fleet as an integrated asset pool, enhancing efficiency and reducing costs over time through optimized maintenance schedules, upgrades, and disposal strategies.
• Revenue from Expertise: Ship managers can monetize their expertise by advising on asset management policies, fleet investment decisions, and even the design of vessels that align with market needs.

2. Introducing a New Product Offering

Ship managers could rebrand themselves as consultants and asset managers, offering a suite of services beyond day-to-day vessel operation. This could include:

• Fleet Performance Optimization: Using data analytics to monitor and optimize performance across the fleet. By utilizing real-time data (e.g., fuel consumption, engine performance), they can identify cost-saving measures and recommend upgrades or replacements when necessary.
• Lifecycle Management Consulting: Providing services like forecasting future maintenance needs, advising on regulatory compliance, and developing asset depreciation strategies. They could help owners assess their fleet’s future resale value or how best to extend the useful life of aging vessels.
• New-Build Consulting: Partnering with shipowners at the procurement stage to help define vessel specifications, advising on the most cost-effective design, and ensuring that the new vessel will meet operational and financial goals throughout its lifecycle.

3. Value-Based Pricing vs. Transactional Pricing

Rebranding could also include a shift away from traditional fee-based pricing (i.e., fixed management fees) toward a value-based model. For example, ship managers could charge based on:

• Performance-Linked Fees: Tying part of the compensation to the performance improvements they achieve for the owner, such as reductions in operating costs, increased uptime, or higher resale values.
• Asset Value-Linked Pricing: Instead of charging for day-to-day operations, ship managers could be paid a percentage of the value they generate over the vessel’s lifetime, giving them a direct stake in the success of the asset they manage.

4. Building Trust and Control

The idea of managing the entire lifecycle cost of the vessel means that ship managers will have the authority to make decisions without always seeking approval from the owner for each expenditure. This would require ship managers to:

• Demonstrate Proven Expertise: Establishing credibility by showing the ability to optimize fleet management, reduce lifecycle costs, and extend the useful life of vessels.
• Establish Data-Driven Decision-Making: Using real-time monitoring and analytics to continuously optimize vessel performance and justify decisions with solid data. This would enhance transparency and build trust with owners who may be wary of giving up control over decision-making.

5. Tangible Benefits and Competitive Positioning

The tangible benefits that ship managers would offer under this model could include:

• Cost Savings: Through proactive asset management, owners can expect lower operating costs, fewer unexpected repairs, and more efficient use of resources.
• Long-Term Asset Value Maximization: Ships would be managed with the aim of maximizing their resale or scrapping value, providing owners with more accurate long-term financial forecasting.
• Stronger Customer Relationships: By focusing on providing ongoing value through lifecycle management, ship managers could build deeper, longer-lasting relationships with owners.

In terms of competitive positioning, ship managers who adopt this model could distance themselves from price-driven competition. By becoming asset management experts, they can establish themselves as indispensable partners to shipowners looking for long-term, strategic value rather than transactional service providers.

6. How to Advocate for This Shift

• Case Studies and Success Stories: Ship managers should look for success stories from industries that have already embraced lifecycle management principles, such as railroads or airlines, and showcase how this approach has worked.
• Proof of Concept: Offering trial periods or pilot programs where owners can experience the benefits of asset management before committing fully would help mitigate resistance and build trust.
• Collaborative Selling: Ship managers should take a consultative approach, engaging owners in discussions about long-term strategic goals and how asset management could align with those goals.

By reimagining themselves as partners in asset value optimization rather than just operational managers, ship management companies can position themselves as strategic partners, elevating their value proposition far above the commodity-driven competition in the marketplace.

Thought Experiment: How would that future look, sound, feel? How would your business be impacted?

If you're ready to fly, let's talk about it together.