How Neste is improving vessel performance

Jan 07 2021

Neste Oyj is implementing digital tools to improve the performance of its vessels and its vessel logistics, including chartering, scheduling and monitoring vessels. Shipping performance manager Risto-Juhani Kariranta explained the project.

Neste Corporation, the world's largest producer of renewable diesel and sustainable aviation fuel, is implementing new digital tools to improve the way it manages vessel logistics, including chartering, operations, scheduling and fleet performance.


Shipping performance manager Risto-Juhani Kariranta explained how the project is being managed, speaking at a webinar organised by Tanker Operator’s sister company, Digital Ship, on Sept 3.


Mr Kariranta has been working on ship performance related matters for 10 years, in different roles in different companies.


By “vessel logistics” it means the whole activity of chartering, managing and scheduling vessels to meet its cargo transport requirements. 


Neste has approximately 4,700 employees (Q2/2020). In 2019, 82% of the company’s comparable operating profit came from renewable products. Neste has a global growth strategy for renewables, based on waste and residue as well as other innovative raw materials.


The company operates  a fleet of20 tankers including product and crude oil carriers, and books a significant amount of spot  voyages a year. 


The spot voyages are mainly on voyage charter, where a fixed price is agreed with the owner for the voyage including fuel. In this case, Neste takes an interest in the fuel consumption and emissions but is not directly affected financially if consumption goes up or down. But some vessels are on shorter time charter, where the charterer (Neste) pays for fuel. “We have more control and interest in those,” Mr Kariranta said. 


Neste operates production facilities in Porvoo, near Helsinki, Rotterdam and Singapore. 


It works with an increasing number of terminals around the world, mainly for gathering raw materials for making renewable fuels. This includes used cooking oil, animal fat and residues from vegetable oils. 


Due to the short voyages, the time-chartered vessels spend about 40 per cent of their time in ports for loading or discharging.


Some cargoes need to be heated, because otherwise there might be deterioration in cargo quality, or they are harder to pump out of the vessel. This heating is a significant consumer of fuel. 


The sea area around refineries and terminals in the Baltics can get an ice cover in winter, and this also needs to be planned for, as it affects the vessel logistics. 


Optimising fleet utilisation

The company is keen to optimise everything associated with the shipping activity. 


It wants to get the best “rotation” of vessels, when it has a number of options about which vessel should go where, when and with what speed. 


It aims to find the best choice first by comparing different plausible alternatives, calculating the base cost, weather impact on the costs and speed, risk factors and cost difference of each. Once the calculation engine for this is accurate enough, utilization of high end optimization algorithms will be possible to a larger extent.


It is a complex equation because some cargoes are more sensitive to delays than others and many restrictions and uncertainties exist. 


It is necessary to understand how much time vessels need for each port call, so they can be allocated the right amount of berth time. In the same way the sea voyage duration predictability is being improved. The biggest volatility comes with the possible waiting times for the berth availability and many measures to predict or at least mitigate the possibility of it are under work.


Vessel performance

In terms of improving the performance of individual vessels on longer voyages, weather routing is proving interesting, also taking weather and currents into account. For example, on one voyage the company saved 37.3 tonnes of fuel from weather routing, amounting to $26,000, Mr Kariranta said. On shorter voyages the speed and propulsion power optimization are in focus as there are benefits to be gained on each voyage with systematic speed control and optimization for JIT-arrival


The main KPIs being monitored for validating the performance are vessel waiting time, average speed for the whole fleet and individual vessels, consumption of fuel per nautical mile. 


Digital project management

Neste vessel logistics digitalization leap was initiated in early 2019 to transform the business, the main goals were to reduce manual work, process lead times and costs by changing the way people do their daily operations with the help of digital tools.


In order to transform the business and reach the goals, Neste uses agile methodology for organizing the work and providing the needed capabilities. The work is done incrementally, working with the multiple solutions at the same time and keeping the value delivery in the core. The approach is similar to the “Scaled Agile Framework”.   


The first step was to define the key interactions across the whole organization. A large number of interviews and discussions were conducted to map the processes, understand the biggest challenges and come up with the key capability areas that will be in the focus of the work.


One example of these capability areas is “Fleet performance” that is responsible for managing documents and tasks for voyages, KPI tracking, and safety incident reporting.


The next step was to identify the pain points and understand the dependencies by finding out how information flows between different parts of the organizations. Prioritization was done based on value creation; the work was started from the areas that have the biggest benefit opportunity. 


“We created a rough roadmap of what kind of solutions we want to work on for the following half year,” he said. “We are planning to continue this work for some years. We target in selecting a focus point for each year.”


We need to also think where do we get the resources? Can we do this internally or utilise some partners for the development? Are there  software products already available that we could utilise, off the shelf or with customisation?”


After these steps we define more specifically what we want to achieve in each stage, how the achievement can be assessed, and whether the measurement method is correct.


“We are not developing for the sake of digital transformation. We are developing in order to have a positive effect on our overall performance. 


“It is actually quite laborious work to find the right indicators for measuring the improved performance. You very seldom are completely happy with the matrix,” he said. 


“It is true we can’t change everything overnight,” he said. “Implementing new technological solutions is not only buying a software or new tool, it is always tied to the people and processes of the company.”


“I have been very happy about our agile way of working model, it has been very good and flexible and gives a backbone for the whole development.”


“I think we have succeeded to align it quite nicely. It is not every single project working for different areas [goals].”



“In general we want to do more quick experimenting, try out some concepts improving our performance with least possible effort but a clear way to measure, in order to find out we are doing the right thing. If you find something that is not working, or you need to do more of something else, you simply do it by changing the priorities, you are not tied to any heavy waterfall project plan,” he said.


Often, when you start a project, you have some assumptions about what effect would come from what action, “and it doesn’t work like that, it might have some other effect, our vessel logistics is a complex puzzle and each piece has effect on others” he said. 


The company experimented for example with ways to send an instant request to a vessel to slow down, when the data showed that if it kept the current speed, it would arrive before the jetty was free, and have to wait.


The approach which worked was simply to send an automatically triggered message to the vessels. “It seems to work quite nicely, just tell them, ‘OK at this time your jetty is free,’ and they seem to slow down. We start to implement that for the whole fleet.” 


In one example, a vessel receiving such a message when departing from ARA to Finland, dropped speed by 2 knots compared to what it had originally planned, and saved 30 tonnes of fuel on just one voyage. 


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