In many ways, Kristian Mørch's career as head of the old Norwegian chemical tanker carrier Odfjell began when he raised his hand.
He had actually been serving on the board of the company for about 18 months, when it was suggested during a meeting in the spring of 2015 that a new CEO be found. At that time, Kristian Mørch was one half of the Clipper executive duo, which also counted Gary Vogel, who is now CEO of dry bulk carrier Eagle Bulk. But while the cleanup of Clipper's many business segments started to fall into place during 2015, not least with the sale of the multipurpose division to Thorco, Mørch thought that it was time to move on.
About 500 days have passed since he first walked into the iconic Bergen headquarters which hangs off the mountain side like the hull of a ship. Since then, he has worked extensively on one main task: Getting the company's finances back in order.
In other words: Significantly cutting costs. Exactly USD 100 million in the first round, which proved to be a doable task, as the savings in the Felix project came to USD 109 million.
Too much fat
"It was only possible because USD 109 million were being overspent. There was too much fat in the organization," says Mørch briefly, when ShippingWatch meets him at a café in Copenhagen.
"We simply couldn't make long-term strategies until the efficiency process was settled. The headline for 2015 and 2016 has been: 'Put the house in order'," he adds.
The financial figures do not disagree with Mørch. 2014 showed a deficit of USD 75 million, just slightly better than the deficit of USD 108 million in the previous year, which was basically the same as the red numbers in 2012.
The owners, not least important the Odfjell family, own slightly less than half of the shares and had a desire to make the more than 100-year-old carrier more efficient. But it took a new face, recruited externally, from a different country and a different segment in shipping. The carrier and the family are institutions in the city of Bergen as well as a vital part of the city's history, where generations have worked on the fleet or at headquarters. So the decision to trim down the carrier was painful for some.
Everyone knew things were bad
"But everyone knew things were bad and that something had to be done, and although most people in town know someone who works here, it was also a relief to complete the process. Maybe it took someone like me who is not from Bergen and has no relation to the family, to see it from the outside, in a different, perhaps clearer, way. However, this all took place with help from Laurence (Chairman, Laurence Odfjell, -ed.)," says Mørch, elaborating:
"Fundamentally, it has been about changing a culture where you hold on to good things and get rid of the bad. It's not that Odfjell sank or the core business was broken. But the carrier, like many others, had adopted a "wait-and-see" culture", and it's simply not an option for us to sit and hope for the best."
The culture, also the negative part, was in many ways created by years of success transporting some of the most dangerous chemicals on earth, and the pride of being part of a historic carrier. The danger is that good experiences can become the crutch that you start to lean on, that ultimately suffocates good initiatives and the need to think anew. And this is where Kristian Mørch came in.
Can look ahead again
The efficiency project Felix has reduced costs in roughly three equal parts:
- Administrative costs
- Staff, maintenance, insurance
- Actual efficiency measures
Late 2016 is the first time, according to Mørch, where it is really possible to start looking forward again. The first piece of tangible evidence was the order a few months ago for four of the largest chemical tankers ever seen. And soon there will be more announcements from the carrier about growth and expansion.
The work to streamline and make the carrier more efficient is not over, however, and will probably never really end. The next round of efficiency measures has begun, under the name "Money Ball", from the movie starring Brad Pitt, which insists that decisions must be based on data.
Maybe Kristian Mørch will end up feeling native to Bergen. After commuting between Bergen and Copenhagen for months, he is now having a house built on a piece of land where his wife, daughter, and son will live. The job at Odfjell is almost perfect for Mørch, who is trained from the listed, communicative Maersk Group, and also has experience from privately owned Clipper, which does not publish financial reports.
"Turning a company like Odfjell around actually takes between five and ten years. But the carrier has most things: The history, it's listed, it has an organization ready for transition, and it's one of two market leaders in its field," he says.
In the past quarter, Q3 2016, Odfjell booked an operating result of USD 60 million, and a net profit of USD 16 million, which the CEO describes as satisfactory.
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