22 Jun 2017
Peter Rowand
Marketing and Business Development

Brainstorming Ideas

Last month the members of the European Tugowners Association (ETA) gathered for their annual meeting in Edinburgh, Scotland. The group enjoyed a surprisingly sunny week in the land of whisky, golf, and curling.

While the group, representing the large majority of tugboat owners and operators in Europe, was enjoying the fantastic sights of Scotland outside, they had some serious business to tend to in their industry inside. They’re currently facing another era in their industry with the advent of the mega-ships and mega-alliances. Olaf Merk, from the International Transport Forum, spoke about the mega-ship era and the effects on the towage industry. The obvious impact is the requirements for towage companies to provide stronger harbor tugs to handle the bigger ships. He also mentioned that fleet under-utilization is a problem because of less port calls and mega-alliances.

These impacts have created a more competitive environment especially in ports where there are competing towage operators. Pressure on tariffs and service levels are going to continue to challenge operators to find ways to be more competitive. Merk mentioned four ways for companies to adapt their operations in the mega-ship era:

  1. Ensure your towage tariffs are more size-dependent.
  2. Give discounts to customers for unpopular berth windows, and ensure you’re capturing charges for late notice and/or changes.
  3. Look to build longer term contracts with carriers and shipping alliances.
  4. Integrate vertically with carriers, and provide a more complete solution through consolidation.


We are already seeing #4 in action with many joint ventures taking place, most recently the one between Smit and Kotug in northern Europe. But these don’t happen overnight and they require large amounts of data to ensure the changes are going to be beneficial to both parties. When undergoing changes to tariffs and contracts, towage operators must be armed with information that will allow them to analyze the potential effects of the changes (good and bad). Operators must cut costs just like their shipping partners are doing, but they also must look to optimize their rate structure to ensure they can remain profitable. What-if scenarios like “what if I gave a discount for this time period?” or “what if I changed the tonnage range for this rate?” are not easy to answer without data. And to make an important decision like that without supporting data is just gambling with your profit margin.

Deniz True, Chief Operations Officer of SVITZER Europe, also spoke at the ETA event and coined a term called “Small Tug Big Data”. She was referring to a number to technological and digital advancements affecting towage, one being the power of data in providing commercial intelligence. Competition is going to come from different angles in the future and towage operators must be better equipped with data to power their business decisions. Customers are also asking for it so it’s a great opportunity for towage providers to become more integrated into their shipping company partners. True went on to say, “Towage holds a critical role in the shipping supply chain and can be a change leader to drive port-wide efficiencies… We can look at big data trends from a commercial angle and from an operational angle.”