Navigating difficult waters

It comes as no surprise that shipping has been at the epicentre of the pandemic, and coming out of a difficult time has required more than business as usual. We sat down with IMPA ACT members Anel Medina and Henning Andersen, Purchase Manager and Head of Purchase respectively at J. Lauritzen A/S, to discuss how they have been navigating the challenges brought about by COVID-19 and how a mature and deeply-embedded sustainability programme helped them avoid survivalist decision-making to the detriment of their purpose, people, planet and profit.

How has J. Lauritzen fared during this time?

At Lauritzen Kosan, we are committed to work with the UN Global Compact and the UN Guiding Principles on Business and Human Rights in addition to applying the Maritime Labour Convention 2006 when assessing impacts related to crews onboard our vessels. We stayed updated as early as February with the latest advice from government and the World Health Organization, and we were advised not to travel to China, Hong Kong and South Korea because of the risk of contracting the virus. Additionally, no business visits were allowed to the offices of J. Lauritzen from anybody traveling from China without the express approval of the local head of each office.

What have been and are the challenges within your company, but also the key takeaways from this unprecedented crisis?

We began to see that most of the regions in which Lauritzen Kosan is active were already or on the brink of being affected by COVID-19, so we were quick to integrate new procedures and routines for our colleagues onboard to prevent severe consequences; these measures included lowering the risk by reducing exposure and ensuring that our operations were as safe as possible. We also started sharing information with our seafarers on changes and precautions every week. A Procurement Contingency Plan was put together to identify the various risk elements and to ensure procedures that limit the impact of a major closedown.

One of the biggest challenges was to get a hold of surgical masks and sanitising alcohol, as stocks were very low at the beginning and the majority were being sold to hospitals. Later on, with the lockdown in many countries primarily affecting our crew members, those onboard were unable to disembark and we could no longer send new crew members onboard.

Shipments with spares to our vessels were economically affected due to limited and cancelled flights resulting in tight capacity and very high prices on those available.

Fortunately, at the beginning of the pandemic, we asked the vessels to look ahead and order spare parts for planned maintenance jobs for the forthcoming period. By doing this, we managed to supply the vessels with a large number of spares before supply became too complicated. We have not experienced so far any huge problems regarding the limitation of supplies, and this is certainly an area that would have caused problems.

Will you be doing anything different or look at things through a different lens going forward?

Yes, definitely. Active communication and more intensive exchange of information have been key criteria to succeed for us. We had daily meetings to share the experiences and news from our suppliers, agents, terminal restrictions, logistics, etc., monitoring the availability of spares from major suppliers along with critical spares, medicines, etc. We also had a period where all employees were working remotely, and the above was a key point to success and the online meetings showed that remote work could be done successfully. Going forward, we can only encourage suppliers to continue meeting their customers online; this will reduce travelling and save the environment.

Is IMPA ACT helping by making sure that your supply chain is more resilient?

Some suppliers took management decisions to reduce the number of staff, while others sent their employees to work from home, in accordance to their commitment to protect their employees and business, and in coordination with the authorities.

While those decisions were positive in many ways, they also gave us a few administrative challenges when suppliers’ management designated new contact people to look after our business due to reduced staff. Complications included invoices missing information, emails being sent to the wrong people, longer response time, longer lead time for delivering, wrong items being delivered onboard and extra charges on the different measures on the chain. However, this has also been an experience that we will learn from and improve in the future.

IMPA ACT has indirectly played a role in navigating these challenges because we have a very good level of communication with the suppliers with whom we have been in contact regarding the IMPA ACT programme, and the better communication and relationship you have with suppliers, the better your possibility to address issues and have them quickly solved.

About J. Lauritzen A/S

Established in 1884, Danish shipowner J. Lauritzen is an international shipping company that operates more than 150 vessels and has a base of over 350 suppliers. The company has been dedicated to implementing a responsible procurement programme that focuses on aligning expectations, cooperating and engaging in dialogue with suppliers to ensure decent social and environmental conditions.