Smooth Operators – what it takes to be a good operator (Part 1)

Smooth Operators – what it takes to be a good operator (Part 1)

In the commodities world, traders naturally take centre stage as the persons responsible for commercial success. However, supporting them is an equally important operator whose technical knowledge and understanding of how to move cargo from origin to destination plays a vital role in the trade.

Although traders themselves usually have oversight across the entire deal, hands-on operations are carried out by a hardworking group of operators (hence the name) on call 24/7 who resolve any issues that occur and take responsibility for managing the vessels and cargo that underlie a trade. From contracts to cargo loading, documentation, discharging or transferring cargo, and settlements; an operator has to keep on top of these issues.

Having spoken with numerous operators of various seniority and specialty in the industry, I have gained some insight into what makes an operator a vital component of a trading environment and how much of an impact beyond mere logistics they may make.

A common thread across operations is a focus on assuring that the movement of cargo runs in a smooth and timely manner, with additional concerns towards not just savings in terms of cost, but more importantly preserving and adding value to the entire process. A key prerequisite of being able to do so is a good understanding of the entire deal and how each component fits into the big picture (and thus an understanding of how any issue in a particular area may have knock-on effects down the road).

Attaining such an understanding of the process requires that the operator be fluent in the technical aspects of the role, with a deep understanding of incoterms, UCP, maritime terminology, and product specific knowledge. It will not do if an operator is unable to correctly calculate lay time and demurrage for example. In fact, understanding the technical requirements of a particular supply chain is the bare minimum and an operator needs to be able to utilize and manipulate the various components to best optimize the process.

Having a forward thinking and curious nature is also an advantage, being able to anticipate where issues may most likely occur and preparing in advance what needs to be done in order to address the obstacles in the best manner possible.

Being able to work constructively with the trader that they are supporting is also an important factor with interpersonal dynamics often being a defining factor in the longevity of a working relationship. Giving an operator the autonomy and trust to run a contract without micromanaging or dictating the process will allow them to ramp up significantly, with the end goal being an operator who can handle any problem, manage any cargo, and identify further trading opportunities that may not be initially apparent (for example noticing that there are a larger than usual number of vessels awaiting loading/discharge suggesting higher demand).

On the flip side, dictating the operations process in detail may lead to an operator being good at executing but with no idea of how the process fits together, and thus no idea of how he can value add. On the more human side of the process as well, without the opportunity to learn and grow, being an executor can become tiring very quickly.

Of particular interest is a divide within the market between operators who can handle product across the barrel from start to finish, and operators who specialize in a particular product or segment. As businesses mature and volume grows, specialist operators are required to manage cargoes, necessitating a shift in focus between generalists and specialists.

Experience is a key differentiator, with more senior operators having had firsthand knowledge of how to handle issues common (or uncommon) to their product or trade routes. Understanding and specializing in the nuances of a product is a key attribute of a good operator.

Ultimately as a supporting function of the trade itself, a good operator has to have cost savings and optimization at the back of his/her mind and an awareness of where potential pitfalls might occur in order to avoid or mitigate issues. Beyond ensuring that cargo arrives on time with no delay, a good operator will find opportunities to minimize cost to the organization and hence maximize the margin, which impacts the bottom line directly.

It is a particular and underappreciated breed of person (though they rarely complain about it) who wakes up at 2am to speak with a terminal to give instruction, or has to deal with angry counterparties because cargo cannot be released.

Operations as a function, has never been a glamourous one due to the demands of the role and as such, there is always a constant shortage of experienced talent within the industry. As the market picks up and volumes moved in a particular product increase, operators specializing in them command a premium due to the scarcity and criticality of their role.

by John Ongview my profile

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