NYK-FIL SHIP MANAGEMENT, INC: NAVIGATING

THROUGH COMPETITION WITH INNOVATION AND CREATIVITY

Josephine J. Francisco
President, NYK-FIL Ship Management, Inc., Philippines
jjf@nykfil.com.ph

Abstract

Shipping is essential to the world economy carrying the bulk of international

trade. More than 90% of global trade is carried by sea and it remains as the
common thread joining economic markets of almost all countries around the
globe, thus, it still lingers as the backbone of the worldwide economy. A
Shipowner is the owner of a commercial ship and one who capitalizes on the
profitable freight market resulting to massive expansion of the world trading
fleet. Currently, some of the large fleet foreign owners are Japanese and
Europeans like the Greeks, Norwegians, Danish, Dutch and German. Over the
years, seafaring has already become a lucrative career the reason why more and
more people are choosing this as a profession. In terms of employment, Filipino
seafarers account for about 30% of the entire seafaring population worldwide. It
is because of this that the Philippines has been referred to as the Manning
Capital of the World. The continued employment of the Filipino seafarers,
however, will depend on the continued trust and confidence of Shipowners
worldwide. This trust and confidence can only be achieved through the collected
and complementing efforts of the Philippine government, manning companies
and Filipino seafarers themselves. The Philippine government, through strict
implementation and regulation of the standards for education, training,
examination and assessment of the competence of the Filipino seafarers; the
Manning Companies by ensuring that only qualified crew are sent onboard; and
the Filipino Seafarers, to look at seafaring not just as a means of getting higher
income but more so as a profession and a career, thus, will help spell a good
future for themselves and from the industry.

The years of the Ship Manning industry are always characterized by ever
increasing challenges and as we move closer and closer into the new millennium,
imminent developments in the global, regional and national setting will have a
direct impact on the ship manning industry. Knowing how these developments
will affect the industry will enable the player to single out the most critical area
where focus must be given and identify strategies to address them to ensure the
survival of the industry in the 21st century. Today’s ship manning industry is a
highly competitive field. With the global demand for shipping expected to
increase, ship manning companies worldwide, but especially in the Philippines,
have to contend with intense competition for the declining supply of seafarers.

In the context of a rapidly growing and extremely dynamic ship manning

industry, the Philippines has always found itself challenged. The industry’s
 private sector, on the other hand, has been a significant player in the industry.
Amidst healthy competition, the collective pursuits being demonstrated by the
manning companies and crew training centers are all contributing to a common
cause, that is to maintain the attractiveness of the Filipino seafarer in the
international community.

The continued existence of the Ship Manning industry in the next century is vital
to the country, not only in terms of easing escalation of unemployment but also
for the million of dollars it injects in the economy.

One of the major players in the Philippine Ship Manning Industry is NYK-FIL
Ship Management, Inc. (NYK-FIL). NYK-FIL has always been at the forefront in
continuously establishing the competitiveness of its seafarers. With external
industry factors as well as internal aspects which determine its own strengths and
weaknesses, NYK-FIL continuously realigns its priorities in seeking out a
balanced company performance and enhanced survival in the business.

Faced with this market environment, NYK-FIL Ship Management, Inc. (NYK-
FIL) made a conscious effort to apply creativity and innovation in developing
solutions to the challenges it encounters and to instill these values in its
employees.

‘Finding unique solutions’ defines the company’s planning process. From year
to year, NYK-FIL focuses on ‘what else is possible’ instead of what has been
done before by other manning companies in the Philippines. Thus, in 2005, the
company decided to establish its own maritime school, the NYK-TDG Maritime
Academy. It is the same spirit of innovation which led NYK-FIL to establish in
April 2008 its first satellite office in the province of Iloilo, an area which is home
to majority of the company’s seafarers. NYK-FIL also conducts annually its
Seafarers’ Dialogues and Seafarers’ Dependents’ Assembly in various parts of
the country. Such emphasis on new creative ideas defines many of NYK-FIL’s
initiatives – from crew recruitment to crew management and especially in the
critical area of crew training.

Key Words

NYK Line
NYK-FIL Maritime E-Training, Inc.
NYK-FIL Ship Management, Inc.
NYK-TDG Maritime Academy
Transnational Diversified Group

Introduction
NYK-FIL Ship Management, Inc. (NYK-FIL) is a joint venture manning company of NIPPON
YUSEN KABUSHIKI LINE (NYK Line), the world’s largest and oldest shipping company based in
Japan, and the TRANSNATIONAL DIVERSIFIED GROUP (TDG), one of the fastest growing
business conglomerates in the Philippines with business interests in logistics, shipping, air and travel,
information technology, and investment. NYK-FIL’s mission is to recruit, train, deploy and maintain
world-class seafarers for the vessels of NYK Line, the company’s Principal, and its various
subsidiaries.

NYK-FIL started in 1989 with a manpower complement of 15 personnel, a crew pool of around 357
seafarers and with only eight (8) ships assigned for manning by NYK Line. The company’s
operations have expanded since then, growing at pace with NYK Line’s satisfaction with NYK-FIL’s
performance through the years.

Today, NYK-FIL mans 180 of NYK Line’s vessels – more than 60% of its entire fleet. The types of
vessels on the company’s roster also increased and now include newly-built vessels and ships of
increasing specialization and complexity such as Liquefied Natural Gas (LNG) and Liquefied
Petroleum Gas (LPG) carriers. With a crew pool currently numbering more than 6,000 officers and
ratings, NYK-FIL is now the foremost supplier of crew to NYK Line, deploying more than 70% of
the total number of seafarers its Principal employs worldwide.

Such expansion in business, however, is not necessarily a given. Although NYK Line is a part owner
of NYK-FIL, it is not a captive customer. NYK Line has other suppliers of sea-going manpower in
the Philippines and elsewhere – some of which have been doing business with NYK Line longer than
NYK-FIL – and it may choose these manning companies over NYK-FIL at any time. Thus, NYK-
FIL must continuously satisfy the rigorous requirements of its Principal to provide skilled and
experienced merchant mariners for its expanding fleet.

Navigating a Competitive Market

The challenge to compete successfully with other manning companies gains even more urgency for
NYK-FIL in light of prevailing conditions in the industry. Today’s global ship manning industry is a
highly-competitive field. Although opportunities for new business abound for manning companies,
what with the robust growth in the international shipping sector, this boon is tempered by the
worsening shortage in skilled maritime manpower – especially at the officer level. It is estimated that
the global maritime sector currently suffers from a shortage of about 10,000 marine officers. If left
unaddressed, industry experts predict that even a 1% increase annually in the number of world trading
ships (roughly 41,324 vessels) can have a huge negative impact and will likely result in a shortage of
about 27,000 officers by 2015.

Manning companies worldwide, but especially in the Philippines, keenly feel the pinch of this
shortage. Long regarded as the “manning capital of the world,” Asian and European Shipowners are
now looking to the Philippines for their crewing needs. This sudden increase in the demand for
Filipino officers and crew, unprecedented in the history of the Philippine ship manning industry, has
left manning agencies in the country scrambling for available manpower in the market to meet the
demands of their respective Principals.

To secure their pool of qualified and skilled seafarers, manning agencies in the Philippines have had
to employ more drastic recruitment strategies, in particular the offering of salaries way above industry
standards with the blessings of their Principals. Nowhere is this practice better demonstrated than at
Luneta Park in Manila where a recently-built Seafarers’ Welfare Center now houses more than 30
booths belonging to various manning agencies. Here companies freely display advertisements for
open positions with the corresponding wage scales and seafarers readily approach agency
representatives to submit themselves for initial assessment or to be directly hired. With open
information on salaries, seafarers can easily shop around for the best offer. Manning agencies with
the better compensation package usually get the best crew in the market.
Finding Unique Solutions

Faced with this market environment, NYK-FIL focused instead on ‘what else is possible’ instead of
what has been done before and what is being done now by many other manning companies in the
Philippines. ‘Finding unique solutions’ has always defined NYK-FIL’s planning process from year to
year and it is this spirit of innovation that has steered the company towards strategies that not only
address its immediate concerns but will also continue to reap dividends even in the long run.

The NYK-TDG Maritime Academy. To ensure the long-term sustainability of its crewing source,
NYK-FIL looked beyond simply recruiting from the market and made the bold decision to invest in
maritime education by establishing its own school, the NYK-TDG Maritime Academy (NTMA).
NTMA is located in a sprawling 10-hectare campus about 23 kms south of the capital, Manila.
Considerable resources were allocated to provide more than the minimum required learning facilities
and equipment for the cadets’ laboratory and physical activities at the Academy. NTMA has state-of-
the art simulators and technology that depict actual conditions onboard vessels, including a full bridge
simulator where cadets can simulate navigating various types of vessels under different weather
conditions and an engine workshop that contains an actual replica of the engine of a Pure Car and
Truck Carrier (PCTC).

The school adopts a competency-based curriculum that utilizes the “tell, show, and return
demonstration” approach to teaching to ensure that cadets do not merely acquire the relevant
knowledge but master the required competency. At NTMA, the cadets’ progress is measured from
year to year by their ability to demonstrate competency in skills that are central to maintaining their
competitiveness as seafarers such as in: communication, mathematics, customer service,
environmental protection, safety and security, maintenance, shipboard management, shipping
business, and watchkeeping. At the same time, core values are woven into the design of each module
and reinforced from day to day through the interaction between the cadets, the faculty and the
administrators. As they graduate from the Academy, our cadets should embody the values of:
concern/care, flexibility, global responsiveness, integrity, intensity, innovation, loyalty and
commitment, professionalism, reliability, respect, teamwork, and physical, emotional and mental
well-being.

The Academy’s faculty includes seasoned, competent, and active merchant marine officers who have
in-depth knowledge of the industry and are enthusiastic about teaching, as well as language and
science educators who all graduated with honors and are as equally passionate about molding young
minds.

NTMA formally started operating in School Year (SY) 2007-2008 with its pioneering batch of 120
cadets who are studying to become either marine deck officers under the Academy’s BS Marine
Transportation (BS MT) program or marine engineers through its BS Marine Engineering (BS MarE)
course. It is now on its second year of operations with its second batch of 120 promising young
cadets recruited from various schools in the different regions in the country. By 2011, NTMA will
produce its first crop of BS MT and BS MarE graduates who will be working as officers onboard the
vessels of NYK Line.

The NYK-FIL Satellite Office. On 18 April 2008, NYK-FIL opened the doors to its first satellite
office in the province of Iloilo in the Western Visayas region of the Philippines. This part of the
country is considered the biggest source of Filipino seafarers and is also home to majority of NYK-
FIL’s crew.

The satellite office is strategically situated in a 1,600 sq.m. property at the heart of Iloilo City and was
established to provide faster service to the company’s many seafarers who are residing in the area and
in nearby towns and cities. It also ensures easier access for interested applicants who can now inquire
directly with the local staff for open positions on vessels. The satellite office can also serve as a base
for the various activities of the different chapters/area groups of the Seafarers’ Dependents’ Assembly
in Iloilo.

Especially for NYK-FIL crew, having an NYK-FIL office in close proximity will cut down on their
transportation and board and lodging costs as they no longer need to report to the Head Office in
Manila to process their pre-board requirements. More importantly, this will mean more time spent by
the crew with their families and loved ones.

The office is manned by a Branch Manager, a Fleet Manager, and a Liaison/Documentation Officer.
Aside from processing crew documents, the office can also conduct selected training such as Safety
Management System (SMS) and Pre-Deployment Orientation Seminar (PDOS) as well as carry out
Pre-Employment Medical Examination (PEME), all of which were previously conducted in the
Manila office.

Seafarers’ Dialogues and Seafarers’ Dependents’ Assembly. NYK-FIL also conducts annually its
Seafarers’ Dialogues and Seafarers’ Dependents’ assembly in key cities in the country where many of
the company’s crew reside. These include the cities of Cebu and Iloilo in the Visayas region and
Cagayan de Oro and Davao in the Mindanao region.

This annual gathering of NYK-FIL management, Principal Representatives, vacationing crew and
dependents is aimed at fostering stronger ties with the company’s valued seafarers and their families
and keeping communication lines open. It is another creative strategy employed by NYK-FIL to
ensure loyalty and improve crew retention.

Policy directives of the company, new regulatory requirements, safety and other issues on board are
addressed and discussed thoroughly during the Dialogues which carry a different theme each year. In
2008, the Dialogues were anchored on the theme, “Key Values of an NYK Seafarer: Integrity,
Innovation, and Intensity” in response to the call by NYK Line President Koji Miyahara to
disseminate the NYK Group Values to all members of the NYK family worldwide.

In this year’s Dialogues, NYK-FIL also solicited frank and honest opinions from its crew regarding
critical issues and challenges that affect their work onboard and their relationships with fellow crew
and with the company. This new approach proved to be an invaluable strategy in soliciting crew
feedback and in providing immediate solutions to urgent issues.

The NYK-FIL Maritime E-Training, Inc. Such emphasis on new creative ideas defines many of
NYK-FIL’s initiatives – from crew recruitment to crew management and especially in the area of
crew training. NYK-FIL strictly adheres to a “No Training, No Embarkation” policy to ensure that
every seafarer, whether re-hire or new hire, who is deployed onboard any type of NYK Line vessel
possesses the skills and knowledge vital to successfully completing his shipboard assignment.

To ensure the quality of training, NYK-FIL established its own training arm - the NYK-FIL Maritime
E-Training, Inc. (NETI). NETI began as a small department within NYK-FIL but has since then
grown into a full-fledged company offering both mandatory and in-house training to an ever-
expanding clientele. NETI draws its strength from the expertise of its instructors and assessors, who
are all highly trained and well experienced marine officers and educators, as well as from the quality
of its facilities and equipment. With these assets, NETI ably conducts a range of training programs
geared specifically for competency building, skills development, and for compliance with STCW ’95
certification.

The advent of information technology and the technological innovations in the art and science of
navigation allowed NETI to explore new approaches in the training of our seafarers. NETI is the first
company accredited and recognized by the local Board of Investments for its pioneering efforts in
developing computer-based and inter-active maritime “e-training” thus, effectively assuring that
NYK-FIL seafarers have access to training anytime, anywhere, whether he is onboard or on vacation.
Nurturing the Value of Innovation and Creativity

NYK-FIL’s efforts at nurturing innovation and creativity within the company can best be described in
terms of the NYK Group Values. As part of the NYK Group, NYK-FIL practices the values of
Integrity, Innovation, and Intensity in its daily business activities. By embracing the Group Value of
Integrity, NYK-FIL remains considerate of the changing needs of its seafarers. Integrity guides the
company’s Innovation which is expressed in its continuous effort to think of new processes and
practices to improve company operations. Lastly, the Group Value of Intensity ensures that NYK-FIL
remains committed to its goals.

By capitalizing on the diverse ideas and thinking of its employees, NYK-FIL continually embarks on
projects that promote learning and growth, encourage teamwork and people empowerment, ensure
customer satisfaction and help improve the bottom line.