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A shipowner’s experiences with PSS12/12-2013

Allan H Rasmussen

TORM’s share price development over the past three years…

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Copyright © 2013 Dagbladet Børsen A/S

“Karo ya Maro”

3Mahatma Gandhi

The restructuring agreement with banks and T/C-in partners concludes TORM’s comprehensive finance solution

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Deferral of debtsExtension of maturities until 31 December 2016

New capitalUSD 100m in working capital over two years

Newbuilding programElimination of newbuilding program completed

Internal cost and cash initiativesImplementation of cost and cash initiatives with a cumulative effect of at least USD100m over three years

Realigning time charter portfolioT/C-rates adjusted to market level or contracts terminated

Compre-hensive finance solution for TORM

One TORM

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When looking at the past year only…

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Copyright © 2013 Dagbladet Børsen A/S

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FBB

VSAT

The VSAT/FBB story – the past

• TORM was first mover on implementing internet on board vessels

• Lack of demand and competition on the market

• Limited technical solutions available (high cost due to low demand)

• Main purpose: Seafarer welfare

• Initiative sponsored by TORM foundation

• Buying and owning the equipment

• No strategy as such was stipulated

• A long term binding contract with customer penalty was entered

• No SLA (Service Level Agreement)8

The VSAT/FBB story – the future

• Lease agreement on all equipment

• VSAT + FBB combo unit

• Monthly service charge/flat fee agreement

• 99,5% guaranteed uptime with penalty clause

• Future proofed solution by hardware upgrades included

• Market price benchmark agreement

• Cost volatility reduced significantly

• Depreciation over three years, if TORM wants to opt out of contract

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Average communication costs for the TORM fleet – actual vs budget

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An exploration of the customer’s perspective of product/service-systems – the case of TORM

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Source: Master Thesis 2013 by Lars B Jørgensen & Christian H P Johannesen

PSS from the customer’s perspective – can TORM use PSS and how?

1. Yes, TORM can use the tools to determine which of the PSS

concepts defined will be the ”best fit” – and use this as reference for

discussions/negotiations with vendors

2. TORM might have some strategic considerations restricting the use of

some PSS concepts

3. TORM is taking a TCO perspective, or even ”total life cycle cost” and

needs to have all deliverables as measureable KPI’s

4. We encourage close partnerships and relations as long as we can

quantify ”added value”

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Learnings being investigated and implemented

• Lubricating oil– Now partnership with only one supplier world wide

• Main engine spare parts– Partnering up with MAN Diesel for genuine parts

• Navigation equipment– Intensive negotiations with various vendors– No world wide vendor covering all equipment

• Safety equipment– World wide agreement on life raft servicing

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Cooperation between TORM and DTU Mechanical Engineering

Until now:

• Professor Tim C. McAloone

• Ph.d. Researcher Jakob Axel Bejbro Andersen

• Two students doing their master project in TORM Technical Division

– Lars Jørgensen & Christian Johannesen

Starting soon:

• 2 x PhD for three years

• Partly founded by the TORM foundation and partly by DTU14

PhD research focus areas

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