International Maritime Services overcame big challenges before achieving profitable growth in a niche market.
The international ship delivery business is one few people would have encountered. And Riga is a city that most people would struggle to find on a map, let alone visit. Yet that market has formed the basis for a highly successful Western Australian business, which has recently opened a branch in Riga, on Latvia’s Baltic coast, to support its growth.
International ship delivery involves relocating vessels such as ferries and tugs across the world under their own power. It’s very much a niche market; there are about 120 deliveries worldwide each year, and traditionally it has been dominated by two European businesses.
O’Connor-based International Maritime Services has not only muscled into that market, it has outperformed its competitors over the past four years, increasing its deliveries to 32 vessels in 2014 and it’s on track to deliver 44 this year.
Company founder Kim Cleggett estimates the IMS’s global market share has increased to 37 percent. Mr Cleggett started the business in 1996 after working for 15 years on prawn trawlers and ferry services. He initially combined ship delivery work with a roster rotation in the offshore oil and gas industry but could see the opportunity to start a dedicated business focused on delivering high-speed aluminum ferries that were produced in large numbers in WA at the time.
The first challenge arose in 2000 when Mr Cleggett’s original business partner passed away and the aluminum boat building industry started to wane. Mr Cleggett moved to diversify the business and invested in the gradual upgrade of its premises and equipment. The diversification included several new services, such as conducting sea trials, and training and supplying crew. It is currently supplying all of those services for the border security vessels that have been built at Austal’s Henderson shipyard.
The business faced further challenges in 2010, when it was down to its last $10,000 and on the brink of closing its doors after being battered by the GFC. Mr Cleggett remained a true believer and decided to pump $100,000 into the business for what he said was “one final hurrah”. Ever since then, IMS has achieved rapid and unbroken growth. The growth has been helped by changes introduced in 2011, after Mr Cleggett hired a consultant to undertake a review of the business.
That led to a strengthening of the company’s management, with the appointment of Brendan Cooley as chief operating officer. “Brendan took on this role with gusto and was instrumental in employing a Lithuanian crew placement agency for all international deliveries, allowing us to compete on an even keel with the European companies,” Mr Cleggett said. Mr Cooley has taken over day-to-day operations and marketing, giving Mr Cleggett more time and capacity to work on the business.
Mr Cleggett believes a significant factor in the growth of IMS has been the development of key customer relationships, which has become one of his major areas of focus. Another step is strengthening the business was gaining triple ISO accreditation, in quality management, safety management and environmental management.
IMS also holds ‘documents of compliance’ with three countries; DOCs are issued to ship owners, managers and operators, but IMS is the first to have them issued under a blanket policy for all deliveries.
In 2014, Mr Cleggett commissioned a continuous improvement program audit to achieve further improvements in the business. This has led to a series of management and training initiatives, and the installation of enabling IT systems in the business to streamline functions such as HR and financial reporting.
IMS gained valuable insights when it conducted a survey of its European clients and prospects in 2014. “There was overwhelming feedback about complications with communications with Australian staff due to time zone differences,” Mr Cleggett said. In response, IMS established a closer partnership with its crew supply agency. This led to the opening this year of a branch in Riga, where the crew supply agency has its training base. IMS also has appointed a Europe general manager to regularly visit regional clients.
Mr Cleggett said he and Mr Cooley continued to develop their own skills, through Curtin University’s growth program, and membership of The Executive Connection. He believes one of the keys to the company’s success has been a willingness to implement the strategic advice they have obtained.
