Ship Management : Tuesday 3rd October

16.00 - 17.30 Karl Jeffrey - Compuship

Portals: which one?

Karl Jeffery, editor, Digital Ship

www.thedigitalship.com

I did an interview a week ago with a company from Silicon Valley in California, which has a system on the web for managing empty box containers. They told me that in Silicon Valley, nobody dares even mention the word "auction" any more; even the word "dot com" is frowned upon.

The implications of this are rather enormous. Silicon Valley is beginning to see sense. And it seems like the maritime portal industry is already taking these ideas onboard.

The business world is realising that people don’t want to conduct their day to day business on blind auctions, which demands that they bid against other companies without even knowing who they are talking to. They want e-commerce companies to help them do business the way they are used to doing business

And more to the point, people don’t want to work with the so-called "dot com" companies, bringing to mind bloated internet companies, overfunded by venture capitalists in the hope of turning dollars into billions of dollars and expecting the maritime industry to provide them.

So we define the expectations of a modern maritime portal. It is supposed to help us conduct business, to make it easier for us to conduct business, and not create problems. It is there to serve us, not take our money. We don’t want to have to learn a whole new slew of negotiation skills, or become experts in information technology, we want to carry on doing what we do best, which is running our busineses.

The maritime portal creates an environment which we can use to go shopping in. And since business shopping is not something we do for our own enjoyment, we want to get it over as quickly and as easily as possible so we can go home to our families.

Business to business purchasing on the web, people are saying, is the opposite to business to consumer purchasing. With business to consumer, you want to hold the customer on your site as long as you possibly can. With business to business, you want to keep the customer on your site for the shortest possible time, making it as easy as possible for them to transact business.

Against this backdrop, lets take a look at some of the main players in maritime portals for purchasing.

Setfair

Setfair, based in London, was set up by Inmarsat, the satellite communications company we all know so well and all shipping companies depend on. We also all know that Inmarsat knows how to run maritime technology companies which need to be extremely reliable; we know Inmarsat knows about telecommunications; we know Inmarsat can operate a service 24 hours a day.

This brand recognition gives Setfair quite an enormous head start. It is also helped by the fact that Inmarsat has committed up to $70m to the project.

Setfair is taking a very much business-consultancy approach to its marketing, sending business advisors to suppliers and purchasers to analyse how much the service can help the business. It is putting emphasis on using the Inmarsat communications link to help seafarers put their purchase orders together from onboard vessels.

OneSea

OneSea, also based in London, was set up by Arvid Bergvall and Henrik Platou, both from Norwegian shipping families. Whilst other web companies want to have as little investment from shipping companies as possible to preserve their independence, OneSea’s strategy is to have investment and alliance with as many different shipping companies and suppliers as possible, to make the spread as broad as possible and preserve its independence.

OneSea has a 25 per cent in the Marine Contracting Association (MARCAS), a purchasing club formed by shipping companies Teekay, World-Wide and Acomarit (which are also all investors in OneSea). It has a 50 per cent shareholding in SeaLogistics, a shipbroking portal based in Houston.

A P Moller, owners of container shipping giant Maersk, has an undisclosed stake in OneSea. The company has an "association" with the International Ship Supplier’s Association (ISSA), defying claims from critics that OneSea is just a buyer’s club which serves the interests of purchasers at the expense of suppliers. V.Ships, the world’s largest ship management company, has an involvement in OneSea’s cruise ship procurement venture, OneSeaCruise.

Altogether, OneSea has signed up eight of the top 30 shipowners in the world, including World-wide, V.Ships, Bergesen, TeeKay, RS Platou, Jebsen and Leif Hoegh.

ShipServ

ShipServ is probably the most remarkable of the maritime portals, in that it has captured a great deal of interest from a starting point of nothing. The CEO, Paul Ostergaard, has a shipping background, but comes from what he calls "the working class of shipping;" he did not have any family connections to draw on at the start.

After his MBA, Paul worked himself up to being head of business development with Oracle’s website, probably one of the largest business to business sites in the world. Once he hit on his plan to develop a maritime portal, he decided not to woo investment from shipping companies, but to go the hard way and go for conventional venture capital.

So he won investment from the Singapore government, along with private investors and executives from Oracle, Amazon.com, Excite, and a number of well-known Silicon Valley venture capitalists.

Paul had the discipline not to tell any journalists what he was doing while he was building up the company, I finally found out about it when I met his business development manager at midnight in a bar in Posidonia, completely by chance.

The site opened for business July 24, gaining a headstart on all of the other companies which are still in the pilot phase.

ShipServ has distinguished itself by its commitment to develop a standard for purchasing systems to talk to each other, called MTML. Setfair and OneSea have already committed to using it.

MaritimeDirect

MaritimeDirect is something of a mystery to most observers. It is obviously extremely well financed, although the identity of the investors is a tightly held secret. The business plan is to create a great deal of free information, capture the audience and then sell things to them, an untried strategy in the internet world.

The energy of the people who work for MaritimeDirect never ceases to amaze me whenever I meet them. Apparently it is standard for its people to work 14 hour days in its office in Madison Avenue, New York.

A recent coup was the company’s appointment of Martin Taylor to set up its office in Hong Kong. Martin Taylor previously led Arena, one of the first maritime e-business portals. Arena was widely tipped to be a leader in this field, mainly because it had been conducting business since April 1999, with all the purchasing for Wallem Shipmanagement going through the system. We’re still waiting to hear word about what Arena is doing in maritime e-commerce now Martin Taylor has left.

The site is founded by Connor O'Brien and Bill Livanos. Mr O'Brien previously founded Stanton Capital and has experience with a number of early stage internet investments. Mr Livanos was previously founder and CEO of Millennium Seacarriers. Philip Rogers, director of news and content, was previously managing director of Simpson Spence and Young Consultancy and Research Ltd. Staff have also been recruited from ARCO, IBM, J P Morgan and McGraw-Hill.

E4marine

E4marine ought to be cleaning up this business. It is a joint venture between SpecTec, without doubt the world’s leading maritime software company (itself recently purchased by Station 12, one of the world’s largest ship to shore communications companies) and Unitor, the world’s leading maritime supplier.

Cynics pass off E4marine as simply an extranet for Unitor, ie a system for Unitor to talk to its customers through. It is possible that the Unitor link could discourage other suppliers from using the system. But even if this happens, the site should still be in a leading position if all of Unitor’s business is put through it.

The SpecTec and Station 12 link is very important. SpecTec is the leading company for supplying software systems onboard vessels which they use to manage their maintenance and purchasing. This software can easily be integrated into Unitor’s terrestrial purchasing network over the Station 12 satellite link.

Unitor has the benefits of a supply network already in place; indeed customers already in place; and depots in place all around the world. However it is certainly not doing so much in the way of marketing and getting its message across as the other companies. But maybe it doesn’t need to.

The bunker suppliers: OceanConnect and Bunkerworld

OceanConnect is a portal for buying and selling bunker fuels. Partners and equity holders include BP Marine, Fuel and Marine Marketing (a joint venture between Texaco and Chevron), Shell Marine Products, Nippon Mitsubishi Oil Corp, Eletson Corporation, Keystone Shipping, Clarksons and Marubeni International Petroleum. So this includes some of the world’s largest bunker suppliers, as well as shipping companies and brokers.

The main sales mechanism is an auction, where buyers or sellers make bids for each other’s business. For example you could have all of the bunker sellers in Rotterdam bidding against each other to supply fuel to a ship. The company has been rolling out the system in ports, initially looking at Rotterdam, Singapore and Gothenburg.

Such serious backing makes OceanConnect widely expected to succeed. Indeed Setfair told me that it was not looking at bunker broking, specifically because it thought OceanConnect would clean up this market.

Bunkerworld is another bunker procurement portal. There are two sections. Bunkerworld.com is a content site, providing information about bunker procurement. Bunkerstem is the trading arm, where the trades are actually made.

Currently, Bunkerworld.com is reporting a million hits a month, with 7,500 web pages on the site. Bunkerstem can manage bunker supply to 460 ports around the world, with 529 eTrading accounts and about $50m in enquiries per month.