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❯ INTRODUCTION
❯ SVITZER
❯ SAAM SMIT

Towage: INTRODUCTION

IN OR OUT? It’s a tug of war

There is a pressing need for harbor tugs in Caribbean ports to be sufficiently powerful and well equipped to deal with the ever-larger vessels now plying their trade across the region. But an obvious solution – contracting out – may not be that simple for many island ports. In this multi-page report, Gary Gimson looks at the benefits of outsourcing and also profiles the region’s leading tug builder and designer.

It’s a dilemma that faces many Caribbean port authorities: whether to run their own tug operations or to contract out harbor towage to a specialized provider.

Until now many have opted to keep this service in-house. But does it really make financial sense to do so? Perhaps not, but money is not always the issue. Hiving off a much cherished and locally controlled activity to a foreign company can bring strong opposition from politicians (on both sides of the chamber), from the workforce, from trade unions and from local media. Many port directors could therefore be forgiven for thinking, why stir up an island-wide hornets’ nest just for the sake of a tugboat?

For those port authorities with sufficient funds, another reason for maintaining an in-house operation is the seemingly attractive financing packages – often coming with export credit guarantees and long repayment terms – offered by major tug builders. This provides the port authority with a gleaming new tug, a high-profile ribbon-cutting ceremony and lots of praise from politically appointed board members, who can look with pride at the national flag in the newbuild’s stern.

Once the razzamatazz is gone, however, the tug has to be properly crewed, fueled and well maintained. And during regular maintenance periods the port authority is obliged to charter-in a short-term replacement, often at high cost. Some port authorities struggle to meet these maintenance costs and their tugs may start to present a safety risk as a consequence.

Merits

There is an easy solution, of course, and that is to contract out the harbor towage, either on bareboat or time-charter basis, from one of the two specialized open-market providers: APM-owned Svitzer or the Chilean-Dutch joint venture SAAM SMIT Towage.

For their part, as one would expect, both Svitzer and SAAM SMIT extol the merits of subcontracting, citing greater equipment flexibility, easily managed fixed-length contracts (typically five years) with fixed outgoings, their broad experience in a specialized sector, sharper-priced procurement, enviable safety records and regular maintenance. At the same time, they still offer local crewing supported by top-quality training.

There is a further hybrid-type option whereby the port authority contracts its harbor towage to a wholly owned but independently managed subsidiary, as is the case in Curaçao with KTK Tugs.

By contrast with public sector port authorities, privately held Caribbean oil and container terminals – when they have responsibility for their own towage operations – would rarely consider running their own fleet of tugs and it’s a simple decision to contract out. Perhaps it’s time for port authorities to follow suit.

Concept

And it seems that some mid-sized Caribbean port authorities are already coming around to the concept – most notably the Port of Authority of Jamaica (PAJ), which put its tug and pilot boat operations out to tender in April 2017. At mid December, however, no decision had been taken in regard to the successful bidder and this may, indeed, indicate that outsourcing is not always straightforward for the reasons mentioned earlier.

If the PAJ believes it is making the right choice, others may follow. But whether it will ever make sense for small island port authorities with limited funds and irregular traffic to do likewise is open to question. It would seem that an old tug can sometimes be better than a hornets’ nest.

TOWAGE: SVITZER

Svitzer looks to enhance leading role in Caribbean

There’s no bigger name globally in harbor towage than Svitzer and the company has an equally high profile in and around the Caribbean.

In fact, Svitzer, which operates some 430 vessels worldwide, has an impressive 32 tugs, ranging in bollard pull from 35 to 80 tons, stationed in the Caribbean and is keen to further enhance its current leading market position in the region.

Business development manager Agustin Diaz, a Curaçao native, told Caribbean Maritime: “Svitzer is open to expand in every geographical area of the Caribbean where the port infrastructure is in need of assistance and where improvements are necessary to its maritime standards on safety and efficiency.”

Furthermore, Svitzer believes its expertise and experience can help ports and terminals to increase berth productivity and to help shipowners reduce fuel consumption. This seems to be paying off, with Svitzer adding new Caribbean contracts in 2017 and appearing confident that further agreements are in the pipeline for 2018.

Svitzer is part of the mighty AP Moller-Maersk Group and could be expected to gain some advantage from this situation. But Mr Diaz counters this assertion: “There are no immediate advantages with the exception of the fact that many of our employees have a history in container or port management and so they can provide a good level of know-how when we consider to enter in new harbour towage contracts,” he said.

Flexibility

Svitzer has its regional base in Santo Domingo and there are benefits in the company choosing such a location. Mr Diaz said: “Having a large fleet of Svitzer tugs operational in the Dominican Republic gives Svitzer an advantage in terms of logistical flexibility – to deliver tugs for short, medium and long-term charters throughout the Caribbean at short notice.”

At the same time, Svitzer has a close working relationship in the region with Houston-based Ardent, a separately managed joint venture between Svitzer and Titan Salvage specializing in salvage, wreck removal and offshore decommissioning.

www.svitzer.com

KTK’s open-market strategy pulls in new business

Curaçao’s KTK Tugs is probably unique in the Caribbean – a port authority-owned but independently managed towage company that also operates in the wider open market.

KTK is responsible for all harbor towage, mooring launch and pilot transport operations at Curaçao’s deepwater ports.

Building on its secure home-market base, however, KTK has an open-market operating philosophy that sees the company looking beyond Curaçao for opportunities.

Managing director Surldric Rojer told Caribbean Maritime: “We have four tugs permanently assigned to our home-port operations. The remaining tugs are deployed on the international chartering market – other operators in the Caribbean and South America region with whom we have maintained good collaboration and a long-term working relationship.”

KTK currently owns eight tugs, ranging in bollard pull from 10 to 70 tons, but Mr Rojer says the company is keen to increase its fleet size: “We are looking forward to adding more units to the current fleet as we are making firm steps to grow in the region,” he said. “We see the whole Caribbean area, including the Dutch-speaking islands, as an interesting market to achieve our vision.”

In Curaçao, KTK is more than just a basic harbor-based operation; it has a deepsea capability and offers a range of other services:

• Regular barge transportation
• Assistance for vessels lightering offshore
• Emergency response (in November, for example, KTK assisted a vessel drifting with mechanical problems north of Aruba)
• Coastal towage (regular tug/barge service between Curaçao and Bonaire)
• Crane barge assistance to ensure position-keeping as well as anchor handling during wreck removal and harbor civil works.

KTK is a good example of how a port’s harbor towage services can be used commercially. It could be the template for other companies in the Caribbean with entrepreneurial flare and a sufficient base business.

ABOUT THE COMPANY

KTK Tugs was set up in 1985 and is a wholly owned subsidiary of Curaçao Ports Authority. The company employs 140 maritime professional and office staff.

www.ktktugs.com

TOWAGE: SAAM SMIT

SAAM SMIT eyes Caribbean harbor towage market

Panama-headquartered SAAM SMIT Towage has gone from strength to strength. A joint venture between Chile’s SAAM and the Boskalis Group of the Netherlands, it operates a fleet of over 100 tugs of up to 80 tons bollard pull.

SAAM SMIT Towage already has operations in four locations – Panama, Mexico, Brazil and the Canadian west coast in British Columbia – and now the company is pushing hard to win a share of the Caribbean’s harbor towage market. It is out to show Caribbean island port authorities how they can move away from their in-house towage operations and seriously consider contracting out services.

Chief commercial officer Robert Bosman outlined the current situation and explained why things might have to change: “Most smaller islands in the Caribbean have their own in-house tug operations as a legacy from the past. The requirements for tugs for shipping and cruise lines have changed significantly in the past decade. While many port authorities are still operating with older tug equipment, safety and operating costs become an issue. That is the moment when outsourcing to a specialized tug operator should be considered as an efficient and effective solution. I always say buying a tug is simple, but what happens after that? Operating and maintaining a tug through its lifetime while keeping it in class and with a well-trained crew is not that simple and can be very expensive. In my opinion, operating tug services does not belong to the core business of a port authority.

Technology

Mr Bosman went on: “We see that tug requirements are getting higher as ships get bigger, while at the same time the tugs operated in several [Caribbean] locations lack power and have technology that does not comply with the requirements of today and tomorrow. At the same time, these older tugs [involve] significant operating costs for the port authorities involved due to lack of economies of scale.”

SAAM SMIT Towage believes it has the regional and worldwide presence and the range of modern equipment to offer tailor-made tug solutions to port authorities to solve this fast-approaching dilemma while the port authority still stays in control. Mr Bosman said: “We operate under our umbrella of related group companies and we operate as one company in terms of transferability of equipment. This gives us a tremendous flexibility with our global group of companies."

The company is optimistic about its ability to offer tug solutions in the region. “We are in contact with port authorities to review their needs and to find the right equipment for their ports,” confirmed Mr Bosman. “Moreover, we participate in tenders in the region. And with Panama as our regional hub, we see more customers finding their way to SAAM SMIT Towage.”

www.saamsmit.com