Finnpilot vuosiraportti 2020

Pilotage is a vital part of the chain of logistics required for Finland’s international trade and security of supply. Pilotage ensures navigational safety and efficiency within Finland’s rocky fairways. In Finland, pilotage activities are the responsibility of the entirely state-owned special assignment company Finnpilot Pilotage Ltd, which has the exclusive statutory right to carry out pilotage activities within Finland’s coastal waters and the Saimaa region. The costs accrued by the organisation of pilotage activities and maintenance of the national service network are covered by charged pilotage fees. The provision of pilotage activities in the Saimaa region is governed by Finnpilot’s obligation to provide financially unprofitable services. 

Finnpilot’s reporting for 2020 includes a review of the operational activities in 2020, the description of corporate governance, the corporate responsibility report, the financial statements and the annual review of the Board of Directors (only in Finnish).

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Review of the CEO
DEFENSIVE SUCCESS WITHIN A YEAR OF UNCERTAINTY

The past year cannot be discussed in any field without mentioning and referring to the coronavirus. This is the case for pilotage as well. Now, as I am writing this review at the end of January, it has been more than one year since we issued the first COVID-19 guidelines to our personnel.

That was the start of a long road that has involved instructions, working groups, equipment procurements, reports and decisions. Now, when the year is behind us, we can state that we managed excellently in this battle that we wage every day and every hour on the international front. According to my information, not a single Finnpilot employee contracted the coronavirus during their work tasks.

Succeeding in avoiding the virus has been critical in terms of providing our services. Even one single infected individual is enough to put all the personnel at a pilot station at risk of exposure. If this occurred, we would only have the personnel taking their week off to utilise for all the pilotage jobs needed for that particular port or area. For this reason, advance information about possible identified coronavirus cases on ships are of primary importance. When we get the information in advance, we can take the proper precautions already before the pilotage begins and to carry out the pilotage assignment safely. This enables us to do our part to make sure that the wheels of society keep turning.

Operating during the pandemic has been a significant operational issue for us, but also, to a great extent, a financial issue as well. In practice, the coronavirus eliminated all Helsinki cruise visits and, as Finland’s import industry suffered, there was a consistent decrease in the need for pilotage within all our pilotage areas. Savings were implemented, holiday pay was changed into time off, investments were postponed and the owner had to accept more moderate dividends, even though the previous year of 2019 had been a profitable one. Despite all this, our result ended up being unprofitable at approximately EUR -450,000. Turning our result to be profitable would have required such measures that we felt would endanger our ability to provide the necessary services within the existing exceptional situation. Our number one priority is the prompt provision of our services to facilitate the uninterrupted flow of Finland’s foreign trade.

In retrospect, I can confidently claim that we completely succeeded in safeguarding our services. Our customers did not experience any more delays as a result of our activities than in earlier years when we were not burdened by pandemic. This, while a global pandemic was taking over, was an especially significant achievement when one considers the international nature of our field. The maintenance of the service level was secured through a major amount of collaboration and dialogue with authorities, our customers and our personnel. Under these exceptional conditions, guidance, equipment procurement, isolation, decentralisation of personnel, testing, training, communications and management require an unbelievable amount of flexibility and resilience from our organisation. I am extremely proud of our efforts. We have to continue to find resilience within ourselves, since it seems that we are only halfway there. Knowing that the goal is within sight, thanks to vaccinations, goes far to help us cope.

The year 2020 can also be viewed as successful because, despite the corona situation, we were able to advance our strategic projects as planned. Of these, the key project is the research project exploring remote pilotage, Sea for Value. The first year of the project is now behind us, and we are satisfied with its progress. In addition to Sea for Value, we realised numerous smaller advances and adopted new software. The year also showed us that our administration is capable of achieving its targets even while working remotely, as we have been since March 2020.

I sincerely hope that it’s possible for us to return to our normal routines by the end of 2021 and to meet our customers, stakeholders and personnel as we are accustomed. Until then, however, we all need to continue to obediently comply with the corona instructions. I wish you continued strength and energy to deal with the challenges of 2021.

Kari Kosonen
CEO
Finnpilot Pilotage Ltd

Up until 30 September 2020, Finnpilot’s operational activities were divided into six pilotage areas. Following reorganisation, starting on 1 October 2020, the pilotage areas were merged to form four instead of the previous six.

You can read more about our organisational change and new area division under Highlights from 2020.

The reporting for 2020 still reflects the previous pilotage area division. The area-specific key figures are shown on the map: pilotage by number of assignments and piloted miles as well as the number of operational personnel.

ACTIVITIES AND KEY FIGURES

The corona pandemic had a strong impact on Finland’s foreign trade and, correspondingly, on the number of pilotage assignments.

In addition to the decrease in the amount of imports and exports, the lack of cruise traffic during the summer was highly visible in Finnpilot’s turnover, which was 12.5 per cent lower than in 2019 (EUR 40.9 million).

Highlights from 2020

Successful corona measures

Spring 2020 saw the onset of the worldwide corona pandemic, which also has a significant impact on Finnpilot’s year. From the start, our key priority was to ensure the safety of our personnel, who work within an international environment. With the help of our guidelines, drafted in collaboration with the Finnish Institute for Health and Welfare, and our effective protective measures, we ensured safe pilotage into and out of Finnish ports, also for vessels that had established corona cases. In addition to securing the safety of our personnel, we instigated numerous measures to keep our financial situation stable: investments were postponed, holiday time was utilised flexibly, we changed holiday pay into time off and maintained tight control over our expenses.

To this point, not a single Finnpilot employee contracted the coronavirus in the course of their work tasks.

We renewed our organisation

Finnpilot underwent reorganisation on 1 October 2020. The aim of the reorganisation was to find sufficient time and resources for supervisory work, management and procurements, so as to enable us to correspond to the expectations placed on us by society and our own personnel. Along with the reorganisation, our former six-pilotage-area division was abandoned and we merged them to form four operational areas. As a means of managing the communications, supervisory tasks and customer work of the new areas, we assigned each area its own District Manager, all of whom previously worked as district chief pilots.

In connection with organisational changes, a new Operational Executive Committee was established for Finnpilot. The duty of the Committee is to implement development measures in a more effective manner and to facilitate communications and mutual learning between the different areas.

The Sea for Value programme got underway

Finnpilot serves as a pilotage expert for the Sea for Value – Fairway (S4VF) programme initiated in February 2020 by DIMECC. The purpose of the programme is to establish the means to facilitate advanced autonomous operations and navigation in the future. The programme focuses on the development and testing of fairway services for the future and remote pilotage. The project supports the target of One Sea, which is to achieve an autonomous maritime ecosystem by 2025.

For Finnpilot, the utilisation of new technologies would, in the future, make it possible to offer new types of pilotage services. The objective is to achieve a shared understanding of the requirements for safe remote pilotage by spring 2022 and then, three years beyond that, for Finnpilot to be ready to apply for the first remote pilotage permits.

Certification of our environmental management and energy efficiency systems

The past year was a year of advancements in environmental and energy management for Finnpilot. We have examined our operational policies from environmental and energy-efficiency perspectives, developed the assessment of our environmental impacts and established a development programme concerning environmental and energy issues. External auditing has been carried out extensively throughout our network of pilot stations, and we have also trained internal auditors in our environmental and energy management system.

In 2020, our work received recognition when our environmental and energy management system was granted ISO 14001 and ETJ+ certification. External auditing found that our objectives and targets were stated clearly and were measurable. Our operational locations had already earlier been granted ISO 9001 certification.

New incident management system

Daily observations, the sharing of incidents, data analyses and continuous, knowledge-based advancement of operations form a positive cycle that allows us to efficiently support joint learning. In spring 2020, we initiated the use of a new incident management system, Incy, which takes our incident management to the next level.

The ease of logging observations, mobile user interface, clear classification system, specification of the handling process and the naming of persons responsible have advanced our transparency and efficient exchange of information. It is also possible to report the observations and incidents anonymously. Anomalies were reported with an even lower threshold. As a result of the reorganisation, altogether 859 anomaly reports were filed in 2020, which is 52 per cent more than during the previous year (565).

STRATEGY AND OPERATING ENVIRONMENT

Our mission is to draw on our competence and knowledge to guide ships safely and smoothly through the fragile maritime environment.

In our vision, customer-focused services and top expertise make us the most desired partner within the field of navigation.

Our values are portrayed in the shape of a propeller:

Our professional competence helps us to ensure safety for people, navigation and the environment.

We put our trust in one another, while our customers and society put their trust in us.

We exchange information, utilise our skills and establish the best operational methods together.

Setting the course

Our activities and targets are guided by Finnpilot’s strategy, which was updated in spring 2020. As part of our strategy, we have specified the factors in which we must be especially successful in order to achieve our vision. If we wish to be the most desired partner, we must create value for our customers, we must be at the forefront of development in terms of navigational digitalisation, we must continue our well-initiated cultural change and we must resource our operations and related development work properly. Through cost-efficient activities, we bring value to the State and society at large. Our strategy covers the years 2020–2024.

We offer our customers an excellent customer experience
The specifications concerning our customer management work and the development of the customer experience form one of our strategic focal points. One significant aim of the organisational change, realised in October 2020, is to acquire more resources, in particular, for local, pilotage area-specific customer work. We also expanded our customer and stakeholder survey from a quantitative study to a qualitative one. We interviewed shipmasters and representatives of onshore organisations to gain a more thorough picture of what our customers expect from us. Research results help us to better understand the needs of our customers.
We are forerunners in the utilisation of maritime information and digital services
We hold a strong position in future digital fairway navigation and its specifications. The current fairway infrastructure does not allow for the transfer to remote pilotage, so the development of the necessary technologies and processes means work for many of those working within the maritime ecosystem. We are currently involved in, among other projects, the Sea for Value – Fairway (S4VF), ISTLAB and MasterSIM undertakings, and we conduct bilateral development co-operation with Wärtsilä. Within these projects, Finnpilot serves as a pilotage expert helping to brainstorm the technical and practical aspects of remote pilotage. Technological development is not, however, sufficient on its own. The expertise of pilots is necessary for the practical aspects of remote pilotage, such as testing and the drafting of specifications. It is important that the methods and training necessary for the task of remote pilotage be established and tested together with the personnel. The first development pilots for remote pilotage, selected from within our own personnel, will take on this task from the beginning of 2021.
Shared information and new learning are key aspects of our operational culture
Several years ago, we bravely set out to reform our operational culture with a more conversational and interactive approach. The aim of the cultural change has been to include all those who are interested in contributing to our development and general collaboration, and to encourage mutual learning and sharing. The increase in trust within the organisation is already reflected in the results of our personnel’s work satisfaction surveys and as an increase in the desire to participate in the development of personal work tasks and shared operational models, such as ways to manage occupational safety. Our aim is for our employees to be able to solve matters regarding their own work environment within a common framework. Along the way, we can share areas and ways in which we have been successful and less successful. Both cases offer key opportunities to enhance our learning. An atmosphere of mutual trust and collaborative culture will support us as we face other changes in the future as well..
Sufficient resources for active development
Our development work and investments are based on long-term planning. In recent years, we have initiated several development projects, trials and reforms. The continuous development of safety, quality issues, technological advancements, training development, the key role of responsibility and customer relationship management all require effective measures and coordination to both initiate projects and to see them through to the end. We must have the capacity to lead and prioritise the overall organisation and the parts thereof, to ensure that the right resources are being used in the right place at the right time. The new District Managers and Operational Executive Committee, appointed as part of the organisational change, play an important role in assuring the efficiency of development measures and shared learning.  
Outlook for 2021: Responsibility is an even more vital aspect of our strategy
The Government Resolution on Ownership Policy, issued in April 2020, clearly defines the aims of the State: it requires state-owned companies to strongly integrate corporate social responsibility (CSR) as part of their business activities and to adopt goal-oriented CSR management. Furthermore, state-owned companies must be forerunners in the transition to a carbon-neutral circular economy and the use of digitalisation. During 2020, Finnpilot initiated the preparation for the Carbon-neutral Finnpilot programme. The programme development will continue during 2021 and, alongside the programme, we will establish our first Responsibility Programme, which identifies the climate impacts of our operations more broadly and advances the indicators used to measure our levels of responsibility. Additionally, state-owned companies are expected to integrate corporate social responsibility into their remuneration system. Indicators measuring customer satisfaction, employee satisfaction and service quality and accessibility were already included in our remuneration criteria. For 2021, we will add an indicator for environmental targets to the remuneration criteria for our management. This will further support the company’s aim to reduce CO2 emissions. 

Change is the only constant in our operating environment

With more than 320 years of history, pilotage activities are currently experiencing a change within their operational environment. The first remote pilotage trials are only a few years away. The aim is to further improve the scalability and cost efficiency of the services, which, for our customers, will signify an alternative to line pilotage, for example. Digitalisation and, correspondingly, emphasised cyber security, the mitigation of climate change, the varying competence of crews and financial uncertainty are challenges for which we must be ready. Our own continuous developments and training play a key role.

Climate change has become a shared challenge for the entire field of navigation. New environmentally friendly energy sources are feverishly being sought for sea transports that currently rely on the use of fuel oil and diesel. Environmental aspects and the mitigation of climate change must be taken into consideration in all of Finnpilot’s decision-making processes. We critically examine the environmental impact of our own fleet, our properties and our operational methods. Finnpilot is systematically increasing the use of biodiesel in its vessels, and the first trials in the use of solar and wind power at pilot stations have been initiated.

Digital competence and networking are vital when we are seeking future operational models. The digitalisation of the pilotage processes is advancing step by step. On the whole, we talk about this concept as ePilotage. Our strong network and technological partners, as well as our own open-minded development work play a key role in this undertaking. We are continuously gaining more and more data about our own operations. Data alone is of no use but, rather, is important when analysed and incorporated into future development work. Finnpilot has digitalised the internal aspects of the pilotage process, and next, we will be working to digitalise pilotage itself, working towards remote pilotage. Throughout this entire development process, we are producing better data and smoother, safer services for our customers. The first remote pilotage trials are only a few years away. The aim is to further improve the scalability and cost efficiency of the services, which, for our customers, will signify an alternative to line pilotage, for example. The further we advance with digitalisation, the more essential it is to identify the challenges presented by cyber threats. The reinforcing of cyber security goes hand-in-hand with the development of ePilotage.

 

The challenges of everyday work must also be faced alongside climate change and digitalisation development. The varying competence levels and turnover rate of international onboard crews have increased in recent years, and placed even more demands on the professional skills of pilots. In addition to fairway navigation, pilots are increasingly being tasked with guiding ships into and out of port. Our own continuous training is vital in this aspect. Shared learning also gains a higher level of relevance: we must be able to share our competence and to learn from cases that have gone well or poorly. The establishment of this type of learning circle within an organisation in which the primary task of the personnel is to be able to make independent decisions requires a high level of collaboration.

Financial uncertainty and lack of predictability were everyday challenges already before the corona pandemic. The year 2020 took away the last shred of confidence that we could, with any certainty, predict what tomorrow would bring. Finnpilot is constantly balancing between the efficient use of resources and the securing of service availability. What looks like a slow day today may turn into a peak day tomorrow. Being able to adapt to changes in demand requires agility from our organisation, in which the requirements for job performance include staunch experience in merchant shipping and extensive internal training. In addition to pilotage work, we must have the resources to develop our operations. We have managed to diversify our work tasks so that we are able to correspond to even rapid changes in local demand and to develop the quality of our services to provide a better customer experience.

 

YEAR 2020 PRESENTED IN TABLES

ENVIRONMENT

The tables in the environment section show the development in the number and mean age of Finnpilot’s pilot cutters, fast pilot boats and vehicles. The mean service age of the pilot cutters has increased, and at the same time, we have renewed our fast pilot boats. The table reflecting fuel consumption and CO2 emissions shows that consumption per pilotage assignment increased during 2020, but, in accordance with the decrease in the number of pilotage assignments, the CO2 emissions also decreased last year. The table concerning the environmental perspectives of our stakeholders shows the types of expectations we have identified that our stakeholders have for our environmental work.

PERSONNEL

In 2020, Finnpilot employed 337 persons, of which 30 are women. This distribution corresponds to the distribution within the field of navigation in general. The gender distribution of our administration, the Pilot Dispatch Centre, our management and our Board of Directors is notably more equal (see the Corporate Responsibility Report on page 17). The response rate for our personnel survey increased to a new record high and our overall rating remained at a good level. The number of accidents dropped in comparison to 2019. The average age of the personnel in 2020 was 51 years.

CUSTOMERS AND SOCIETY

The Customers and Society section outlines our stakeholders’ expectations for Finnpilot’s operations. The section also includes our comparison of the number of pilotage assignments and the number of piloted miles. During 2020, the number of pilotage assignments decreased by 14% from the previous year. The decrease in terms of piloted miles was 8.7%. On the basis of the confirmed pilotage fees for 2020, Finland still remains the most inexpensive country in international comparison.

FINANCES

Finnpilot’s turnover for this financial period was EUR 35.8 million. This represented a 13 per cent decrease from the previous year. The company’s operating loss for the entire year was EUR -0.6 million with a loss for the financial year of EUR -0.4 million. The company’s financial standing and solvency were at a satisfactory level at the end of the financial period.