Shipowners and operators are under pressure to validate their suppliers’ performance and can lower costs and save time in the process, writes Paul Stanley, CEO, Achilles.
Vessel owners and operators in the EU were some of the first to come under pressure from clients and investors to comply with ethical sourcing programmes and to report on labour practices and human rights in their supply chain. This was driven in no small part by national and regional regulation which aimed to codify best practice into law.
Even with lawmakers apparently ready to slowdown timelines for EU directives, interest is growing here and across the Middle East and Asia – regions which are not subject to direct regulation – to adopt an approach that prioritises transparency.
Pressure for Disclosure
Despite some residual cynicism around the topic of ESG in the shipping industry, vessel operators are beginning to address it with greater seriousness. However there is a need for these often internal dialogues to evolve from an arm’s length view to recognition of the near term risks.
Even where national legislation doesn’t demand detailed reporting, there is a growing desire to align with the prevailing trend. This increased awareness reflects the emergence of the issue as a reputational risk, particularly thanks to investigations by the media, NGOs and IGOs.
Other countries with whom the EU is a major trading partner are developing similar requirements and aligning them with the directives. Nations including Canada, Australia and Singapore have either enacted or are considering regulations, while others have developed voluntary guidance on due diligence from a human rights perspective.
Grasping The Reality
For some actors in the industry, the desire to look closely at their supply chain is tempered by the understandable concern about what they may find.
Audits conducted by Achilles have uncovered troubling conditions at construction and repair facilities in the Middle East and Asia. Facilities in these regions commonly employ migrant labour recruited through agencies and abuses have included debt bondage, passport retention and even forced labour.
In some cases, companies are paying lip service to the issues. Many have a modern slavery statement on their website and they probably believe this indicates they are taking the issue seriously.
The truth, as anyone familiar with the shipping industry knows, is that standards vary widely, whether by flag state, vessel operator, port or inland carrier. Some sectors, including fishing fleets have become regular targets for activists concerned about the treatment of workers based on historic issues of abuse.
At the same time, access to a wider supplier network can help reduce potential disruption at a time of growing uncertainty created by protectionism and changing tariffs. Achilles’ global network enables procurement teams to find pre-qualified suppliers in alternative markets, where appropriate.
Making Compliance Easy
It can be easy to underestimate the due diligence required for ESG and supply chain reporting and across a large fleet.
What appears a simple process can quickly become unwieldy. Internal and external audits are a continuous source of pressure and stress both for suppliers and buyers – in part because there are no agreed standards.
The vast majority of companies employ a manual onboarding process using spreadsheets, since legacy purchasing systems do not support the full breadth and width of the data sets required, including sanction checks.
Even some of the largest companies are not doing as well as they might. But by sharing data with a neutral third party there is an opportunity to improve reporting for buyers and suppliers alike. By recognising the scale of the challenge, this can be done in a collaborative way that generates a wider industry benefit.
The Achilles Maritime Network provides a platform for shipowners and managers to collaborate, reduce risks, and enhance supply chain visibility while lowering costs and administrative burdens. Suppliers and contractors benefit from standardised processes and pre-qualification, fostering stronger relationships and business growth. The network supports transparency, sustainability, and responsible business practices in the maritime industry.
Greek Owners Get Onboard
Underlining the importance of transparency in the supply chain, Achilles recently struck a long term partnership agreement with Procureship, the world’s leading e-procurement platform to enhance the ESG capabilities of the shipping industry’s procurement processes.
The agreement will bring efficiencies to the supply chain assessment and purchasing process for Procureship members. Procureship provides streamlined purchasing for more than 100 fleet owners and operators, including BW LNG, Angelicoussis Group, Oldendorff Carriers, Starbulk Group, TB Marine and Technomar. By leveraging advanced analytics, machine learning tools, and a unique supplier recommendation engine, Procureship simplifies the procurement process between buyers and suppliers.
The reasons why owners such as these continue to engage with transparency initiatives like Achilles are more than a prosaic desire to look good, though investors are increasingly interested in interrogating underlying business practices.
For shipowners, understanding and engaging with their supplier community is simply good business; supply chain disruptions translate into substantial costs and using the Achilles platform to track supplier performance provides measurable time and efficiency savings.
The views presented are only those of the authors and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.
