Sustainability is paramount in all aspects of purchasing and supply chain management, says Kailash Sabnani, Head of Procurement and IT at Laurel Ship Management. He talks to Felicity Landon about the challenges for the shipping industry, and how procurement professionals can make a difference
Laurel Ship Management, an ISO-certified company based in Singapore, is a relatively young company; operational since 2006, it has 22 ships under management, a mix of group-owned and third-party vessels in the bulk carrier and PCTC (car carrier) segment. The fleet is expected to grow steadily over the next couple of years, as there are a couple of new building projects in the pipeline, with vessels due to enter service later this year as well as
in 2024 and 2025.
Laurel is committed to decarbonisation, digitalisation and an overall ESG approach, says Kailash Sabnani. The company ensures that it works with pre-approved vendors and service providers to minimise any risks in terms of quality or accuracy of supply. A significant part of the approval and review process is dependent on feedback from the crew and the procurement team. As part of its ISO45001 strategy, Laurel expects high health and safety standards. “In addition to the typical criteria on cost and performance, we evaluate our vendors on their ability to promote health awareness, improve the safety standards of the people working for them and promote environmentally friendly products,” he says. “We maintain a proactive and comprehensive approach with the help of assessment tools, performance metrics and certification/accreditation standards.”
Laurel is committed to decarbonisation, digitalisation
and an overall ESG approach. Laurel ensures that it works with pre-approved vendors and service providers to minimise any risks
in terms of quality or accuracy of supply. A significant part of the approval and review process is dependent on feedback from the crew and the procurement team
As environmental concerns become increasingly important, the firm prioritises sustainable procurement practices. Sabnani cites logistics consolidation for ship spares and stores as an example of a sustainable procurement practice. “Consolidation helps to reduce cost by optimising the supply chain process and contributes towards decarbonisation efforts. This is quite a masked area – a lot of companies may adopt such methods but predominantly for cost savings. We look at it as an opportunity to decarbonise.”
He explains: “By eliminating unnecessary resources to collect and deliver the supplies, consolidation can help to optimise the supply chain, reducing the total distance travelled of transported goods and the number of vessels/vehicles needed to deliver goods, leading to lower fuel consumption and reduced emissions. It promotes reduction of packaging waste, as suppliers can use more efficient packaging for larger shipments. Furthermore, by reducing the frequency of deliveries, we reduce the amount of time crew spends tallying items received, so they can focus more on cargo operations when at port.”
Sabnani acknowledges that it can be easier for smaller companies to scrutinise supply chains at this level of detail but insists: “More companies should consider implementing this strategy as part of their broader sustainability initiatives. Logistics consolidation is effective for reducing costs and environmental impact.”
One of the significant challenges that purchasers face is vetting suppliers, especially in an industry where vessels are tramping globally, notes Sabnani. “Currently, there is a lack of visibility into the sustainability and ESG practices of suppliers. This can make it very difficult to ensure that we are working with suppliers that meet our sustainability and ethical standards. Suppliers may not be very forthcoming with information about their sustainability practices or may not have a robust system in place for measuring and reporting on ESG, making it challenging to measure.
Currently, I find that there is a lack of visibility into the sustainability and ESG practices of suppliers. This can make it very difficult to ensure that we are working with suppliers that meet our sustainability and ethical standards. Suppliers may not be very forthcoming with information about their sustainability practices or may not have a robust system in place for measuring and reporting on ESG, making it challenging to measure
“The supply chain for ship management is complex, with multiple tiers of suppliers involved. For example, if we procure from a trading house or ship chandler, these companies may source from 10 other suppliers. This complexity can make it challenging to track and monitor efficiency all the way to the source. Different regions may have different standards for environmental performance, which makes it difficult for suppliers to meet standards across all jurisdictions when trading worldwide.
“To address these issues, we implement robust procurement management practices, conduct due diligence on suppliers through regular interactions,
and work with partners that share similar commitments.”
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