Parts of the shipping industry are coming out of the worldwide economic crisis, that took its due toll on shipping, with the container shipping industry strengthening and earning a profit in 2017, after six straight years of losses. IHS Markit predicts that global container trade will increase 4.9 percent this year and 5.1 percent next year. The cruise industry is also riding a wave of growth: more than 27 million travelers are expected to take a cruise this year, compared to 25.8 million in 2017, according to Cruise Lines International Association.
Cyprus’ geographical location and already substantive shipping industry – along with government policy, including the creation of a Shipping Deputy Ministry to the President this past March – give it the potential to become an international maritime hub in the near future. “I think we will get there,” said Mark O’Neil, President of Columbia Shipmanagement, one of the largest independent ship managers in the world, which was founded and is headquartered in Cyprus. “When looking at the potential of Cyprus, I think Cyprus has everything going for it. I think it has the human capital, it has the companies already here that are growing, it has the political support” he added emphatically. However, O’Neil believes that Cyprus needs to raise its ambitions to truly become a market leader, and not to be just one of the market leaders – something the maritime giant is actively playing its role in achieving.
In fact, Columbia Shipmanagement is celebrating its 40th anniversary this year. In 1978, its founder, Captain Heinrich Schoeller, traveled to Cyprus to establish a robust ship management industry. Upon arrival, he rescued the shipping register from the city of Famagusta, during the Turkish invasion, moving it to Limassol. “He actually drove into Famagusta and brought the register out with him as the invasion took place”, said O’Neil, “So he is one of the founding fathers. His commitment to Cyprus since that date has been unquestionable, and it’s not in anyone’s plans to change our commitment to Cyprus.”
Now, Columbia and Marlow Navigation – which recently merged with Columbia, to create a holding company, Columbia Marlow, which operates Columbia and Marlow Navigation as two independent companies – have 13 management offices, and 35 managing agencies all over the world. The merger is the fourth largest in global ship management over the past three years. But even before the merger, Columbia was a huge international player, representing massive foreign investment in Cyprus.
Whilst the merger of the two shipping giants created waves within the sector – both companies have chosen, for the time being at least – to work entirely independently and separately, whilst remaining under the same roof. When asked why, O’Neil explained that any form of cooperation between the companies needed to be client driven. “Marlow Navigation essentially is a crew manager. Columbia Shipmanagement is a full management company. There are very, very different strategies for each company” he explained, adding that he believes it is completely appropriate for the companies to pursue separate strategies, for the moment, or “until such time as the client or the market dictates otherwise”.
However, the merger responds to a natural trend of consolidation that is being seen across industries, which has been on the rise within the shipping sector over the past two years. The biggest benefit it brings about is “economies of scale,” explained O’Neil. “Whether that’s on a procurement level or whether it’s on an IT level, or an investment level, or service level, economies of scale is a no-brainer.” Consolidation, in effect, can translate into increased efficiency, reduced costs and better and more extensive services rendered to clients.
However, consolidation does come with its risks, and reaping the benefits entails assuring that companies don’t lose focus of their core business, or on that of their clients. “You have to ensure, as a larger company” stressed O’Neil, “that you do deliver a better service, and focus on the small client as well as the big client. Get that right, and consolidation makes sense. No matter how big the companies grows, O’Neil is adamant that that the key to succeeding lies in always retaining the focus on the individual shipowner. However, success is also dependent on having a clear strategy for future growth. Bearing in mind that only 20 per cent of the global shipping market currently relies on third-party managers, and given an increasingly competitive landscape, the future bodes well for the shipmanagement giant.
However, this emphasis on the importance of the individual is something Columbia embodies through and through. The company is committed to an “I Care” philosophy, which focuses on providing the individual employee with holistic care, and cultivating a culture of attention between company employees and for the company. “We invest a lot of time, effort, and money in training; there is no doubt we have some of the leading training institutions around the world,” commented O’Neil, adding, “In fact, our Columbia Marlow training institution in the Philippines is like a university and is state of the art [and] we have similar institutions in the Ukraine and elsewhere.”
The concern over the well-being of employees – in addition to clients – has helped sustain and grow Columbia over the past 40 years. “I gave a bunch of flowers to an employee yesterday who had been here for 35 years. I do this every week,” O’Neil said.
The company’s – and O’Neil’s – innovative thinking on the industry, is another huge aspect of Columbia’s sustained success.
Today, Columbia is leading by example, with a focus on digitalisation, which only really entered the shipping industry last year, but is expected to transform the sector in the coming years, potentially with autonomous vessels within the next decade. Columbia is thinking about digitalisation from the perspective of optimisation – that is; how will digitalisation help serve the core functions of Columbia, including management, technical capabilities, and the crew?
O’Neil believes the answer lies in understanding what the future holds within the context of global markets, which he sums up into one word: verticalisation. “I see much more verticalisation, vertical markets coming in. The Amazons and the AliBabas, and the big logistics companies, owning vertical chains between the seller and the buyer”, explained O’Neil, adding that while he believes these companies have bought, or ultimately will buy their own planes, haulage companies, trains, and shipping companies – that they will not want to manage them. Digitisation therefore provides the golden key for companies like Columbia Shipmanagement to integrate into these markets. “We will be there to manage the vessels” stated O’Neil confidently, “but we have to have platforms that are able to digitally communicate to one another, and slot in seamlessly and offer a service.”
Columbia, for its part, has partnered with Lufthansa Industry Solutions – the first of several partners – to create a digital agenda, and produce software programmes for a whole range of ship-wide applications. “It is a path, not a journey,” commented O’Neil. “There’s never going to be an end because digitalisation involves innovation (…) By the time you’ve digitalised the end product, you’re back to the innovation again. So it’s a continuation, it’s a continual process, it’s a self-improvement process.”
That could be said of all successful companies. And yet, it is this mindset, coupled with a clear focus on their core business, that has allowed Columbia to not only overcome one of the largest shipping crises in history unscathed, but to grow and succeed at the same time.