9.6.2020 19:39:56 //
Kari Martiala
Timo Porthan

Exceptional circumstances create new operating models

The coronavirus pandemic has caused all kinds of problems for maritime transport. Ships are now learning new ways of working that may also be of benefit after the pandemic. “Considering how we’ve had to operate and create new operating models during these exceptional circumstances, everything has gone astonishingly well,” says Mikki Koskinen, Managing Director of ESL Shipping. 

Demand for cargo transport normally declines during the spring and summer, but this year it is expected to fall more than in former years. Business planning is extremely difficult in these kinds of exceptional circumstances.  

“We’re attempting to forecast the situation based on customer demand, but our customers are also having more difficulty estimating the extent of their business and whether they will have to downsize their operations,” says Mikki Koskinen, Managing Director of ESL Shipping.

ESL’s customers have been continually reducing their raw material stocks, and a shipping company must be able to operate in the just-in-time segment. This kind of transport is important in the metal and forestry industries in particular. 

“Although we don’t operate liner traffic or scheduled services, we make very punctual deliveries of industrial raw materials and products.  Customers can’t and don’t want to keep large warehouses. In order for industrial processes to work, no one wants to risk production being wound down or halted because a shipping company can’t deliver. That’s the main point here,” says Koskinen.

Crew’s wellbeing is important

All of ESL Shipping’s vessels employ mixed manning and, for example, Filipino sailors have had their changeovers postponed and their tours of duty lengthened. 

“Likewise in Manila, we’re waiting for people who would like to come and work for us. Due to the lack of flights and the quarantine regulations at both ends, even personnel are requesting us not to do changeovers. However, things will eventually escalate.The same goes for getting maintenance and a variety of repair crews on board ships. If this goes on for too long, there will be such a backlog of repairs that ships will have to rely on their own expertise.” 

“Luckily, ship personnel are highly competent and this goes for the office staff too. Reboots and other maintenance operations can be done with remote guidance and via video links. We’ve had to learn new ways of working that may also be beneficial after the pandemic. On newer ships, many things are fixed by updating system software, and running something like that remotely can naturally be quite challenging.”  

Biofuels via Loviisa

Energy imports are ESL Shipping’s primary product assortment at the Port of Helsinki. 

“From time to time, we also visit Vuosaari to load pulp using our Swedish subsidiary’s smaller ships. In Loviisa, we largely focus on cereal exports.”

“We hope to ship a lot more through Loviisa in the future. In addition to grain, we’ve also been involved in transporting coal through Loviisa, and biofuels are going to be one of the key cargo flows of the future. And on a fairly regular basis, we also ship timber from Loviisa to places such as France.”

A replacement for coal

While transport volumes for coal were peaking at more than six million tons per annum just after the turn of the millennium, this figure had already fallen to about two million tons by 2018. Imports of coal are continuing this strong downward trend. 

“However, we’ve succeeded in finding something new to transport and generating growth. In the 2018 statistics – when AtoB@C, the Swedish shipping company we’d acquired, was included in the figures for the end of the year – coal accounted for 15 per cent of our business. Now it’s clearly less than ten per cent.” 

“We’re not therefore concerned about the eventual end of coal shipments, but we do hope that Helsinki decision-makers will enable solid biofuels to be transported to power plants by sea, on a direct route through Vuosaari Harbour. Shipping along the most direct route possible would be the most environmentally friendly solution,” says Koskinen. 

New ships with a small carbon footprint

ESL Shipping has been striving for environmental friendliness through continual investments and personnel training.

“We believe that environmental friendliness will be absolutely essential in the future. We already have large and important Nordic customers who see considerable added value in our ability to reduce our carbon footprint.” 

Koskinen says this trend will continue. In addition to environmental friendliness, customers also value the responsible Nordic approach.

We’ve been able to do good things for the environment whilst increasing our company’s expertise.

“It may be difficult to extract extra euros from it, but it can bring us longer and more stable contracts.” 

In his opinion, one of the challenges facing shipping is that ships are very long-term investments and no company can renew them overnight.

“Modernisation requires very long-term efforts, and the shipping company’s owners will have to commit to the investments as well. We also need the kind of customers that see added value in operating in a responsible and environmentally friendly way.” 

ESL’s two newest ships, Viikki and Haaga, attracted plenty of favourable attention in autumn 2018, and not only within shipping circles. 

“We’ve been very satisfied with how these ships have increased interest in our organisation, including as an employer. We’ve been able to do good things for the environment whilst increasing our company’s expertise. We’ve also had to learn new things, and that hasn’t always been easy.” 

Arctic expertise in Canada and Russia 

ESL has been operating in Arctic regions since 2014.

“We’ve been there every year with at least our two largest vessels.  Recently, we’ve mainly been sailing in the Canadian Arctic, but also to some extent in Russia.”

Two of ESL Shipping’s newest ships, Viikki and Haaga, sailed their maiden voyages to the Baltic Sea via the Northeast Passage. 

Viikki ESL Shipping
Picture: ESL Shipping

“It was the shortest and most obvious route home for our new builds’ cargo. We’re very satisfied with our choice of route, which achieved both environmental benefits and savings for our customers.  And we got our new ships home more quickly. It was a very interesting exercise.” 

However, Koskinen says that sailing through the Northeast Passage has a relatively limited financial impact. 

“I find it difficult to imagine any regular traffic, at least not in the near future. Ice conditions in the Northeast Passage are extremely difficult for several months of the year.” 

However, there are still plenty of Russian infrastructure and construction projects along the Northeast Passage.

“Russia needs all kinds of goods, so there will probably be plenty of local shipments and we’d be happy to increase our business there. However, Russia has been rather protectionist with regard to its business there, so it hasn’t been so easy to fly under a Finnish flag.”