Port operators need to start making the most of their existing equipment assets and stop looking to spend their way out of the financial crisis, according to asset management specialist Malcolm Youll.

A new piece of kit – be that a crane, straddle carrier, or port operating system – may promise increased productivity but when the shine wears off, or a change occurs in the business cycle, they could end up being expensive white elephants.

Terminals could make much better use of the equipment they already have, counsels Mr Youll, chief executive of asset management newcomer AssetRight. In his view, increased efficiency is a tried and tested way to overcome a depressed global economy and the pressures of increased competition.

“Awareness of asset management techniques is generally low in terminal businesses; the focus has always been on short-term operational delivery and profitability.

“But today you have to make the most of what you have got. It’s very capital intensive to buy machinery, but often there’s little consideration given to the cost of machinery that’s under-utilised or even redundant.

Efficiency plus

Asset management provides new and optimum solutions to the problem and is not capital intensive. Tens and hundreds of thousands invested can make ten times plus in efficiency gains, just by viewing things differently. For example, not maintaining equipment for the sake of it but because there is a clear, measureable need.

For Mr Youll the key is ‘doing more with less for longer’. “Sweat the assets. You have to make them work, rather than resourcing to peaks and troughs or buying another straddle carrier, gantry crane, or RMG.

Organisations need to look at their equipment utilisation from a different perspective, which is hard to do when you are immersed in the business and faced with immediate operational pressures.”

While acceptance of asset management as a proven science is currently low in the ports and terminals industry Mr Youll says this is changing and the pioneers will be the ones to profit the most.

“Those who embrace it now will see the benefits; those who wait and see or follow will miss the opportunity because this is about long term planning for the future of business. I predict that this will be the next big thing that consultants will be selling to terminal operators.”

Big three

Most businesses have a pool of capital available for reinvestment. Decisions on how to reinvest should be based on three areas; increased capacity, efficiency and reliability and sustaining the asset base.

In some terminals, engineering and maintenance departments have not always had an easy line to management, particularly when it comes to making a case for funding. Sustaining the asset base (or maintenance) is often regarded as an operating expense. This has meant that the employees that could potentially provide information on how a physical asset can be better utilised are not heard.

“Stop looking at the financials in the way you’ve always looked at them. Stop focusing just on the day-to-day operational pressures of the business and start listening to the engineering guy,” says Mr Youll. “He knows what he’s talking about and can save more money than anything else that you could probably do in a board meeting.”

Indeed, Mr Youll claims that just one operational meeting focussed solely on asset management could make a massive difference to a port business. For example, data can now be analysed to give the true expectation of the lifetime of a part in the actual environment it will be working in, allowing failures to be anticipated well before they actually happen.

Some of the technologies involved in physical asset management could also have a positive effect on the equipment users themselves, giving double benefits to port operators. But getting port labour onside needs to be sensitively undertaken.

“The best way to approach this is in terms of education, explaining the value you can add to the business through personal contribution,” says Mr Youll. “The human factor has a massive impact. Conversely, as soon as you lose the people, you’ve lost the game. No change management programme will ever succeed unless you have the people on board.”

Shared knowledge

Transferable knowledge from other transportation organisations could help foster acceptance. “The ports industry is lagging behind some of the other industries. However, if you actually integrate best practise techniques from other industries, like the airline industry, you can apply that to terminals; the assets are different but the way that they behave is the same.”

In that respect, physical asset management is not the dark art that many perceive it to be. “It is so simple,” says Mr Youll, “but no one is bringing the pieces together. The underlying message is start thinking about asset management and what it can do for you. Out of everything I’ve done in the past 20 years, this is what I believe will make a mark on industry.”