Boston's Evan Efstathiou is best known in maritime circles for his freight-tech landscape product, a frequently updated display that puts ocean shipping's technology ecosystem into visual context. Since he began curating the "map" in 2009, a "B&V" emblem has been in the picture. It is the logo of Burmester und Vogel – a company that Efstathiou has just purchased. He is finally on his own map.
The centerpiece of B&V, a software company founded in Hamburg, Germany in 1983, is a calculator that determines demurrage charges for voyage charters. Over the decades, this calculator has become a widely accepted industry staple used by over 1,000 customers in over 100 countries, including global giants such as ADM, BHP Billiton, Cargill and Glencore.
In an interview with FreightWaves, Efstathiou confirmed that a Series A preferred share venture-capital raise to fund the deal was conducted by a newly created Delaware corporation, Burmester and Vogel Ltd. That funding round closed on Oct. 18. The Delaware corporation acquired the Germany company on Oct. 24. He declined to provide information on the amount of Series A funding, the investors or the purchase price.
B&V was founded by Wieland Burmester and Andreas Vogel. Vogel passed away in 2002. Burmester remains a shareholder in the new B&V and will serve as a consultant.
A number of much larger software companies have sought to purchase B&V through the years, but Burmester ultimately opted to sell to Efstathiou, an individual entrepreneur, because "he wanted to know his baby was in good hands and that he could see it grow," said the new owner, who added that Burmester "really loves and believes in the software he built and he didn't want someone to buy it just for the customer base."
Why Demurrage Is Important
Demurrage is both an incredibly important variable in the ocean-freight equation and an aggravating, time-consuming chore for those who have to deal with it.
When a company books a voyage charter, it pays the basic freight rate in dollars per ton of cargo. The amount of time to be spent in port for loading and unloading, called "laytime," is preset in the voyage charter contract. If the ship is delayed in port and takes longer than the laytime, the voyage charterer pays the vessel operator damages at a contractually predetermined rate, known as "demurrage."
Demurrage is a big-ticket item, estimated to amount to 5-10% of total freight in dollar terms, and requires an "outsized amount of time" for administration, said Efstathiou.
"From the vessel owners' point of view, it's fairly straightforward. You send an invoice for the delay. But from the commodity traders' and charterers' point of view, once they get invoiced, they might have to rebill parts of that demurrage to suppliers or receivers, and if there are multiple parcels of cargo onboard, it can get incredibly complicated."
To handle the process, customers have loyally stuck with their B&V calculator, which has become a trusted tool. That built-in user base will cut down on the customer acquisition costs going forward.
What Will Change And What Won't
What will not change is the algorithm and methodology behind the calculator, the B&V branding and the ease-of-use aspects that attracted customers in the first place, emphasized Efstathiou.
What will change is the decidedly "old-tech" aspects of the product, which has outputted a PDF (with that information often having to be rekeyed into other systems) and has provided no historical perspective.
"We're going to migrate the product to the cloud and basically unlock what being on the cloud gives you in terms of mobile access and analytics. It will be an even better experience, and customers will not have to relearn the tool," he said. All of the historical data is in hand, meaning that longtime customers will be able to analyze their demurrage charges across their entire company over time.
Greater visibility will allow charterers to better track their total demurrage P&L exposure and will allow vessel operators to better track the total demurrage that's due to them, which is essentially an interest-free loan until it's paid. Theoretically, the more visibility, the more quickly demurrage issues can be resolved.
Furthermore, historical analytics will allow customers "to see patterns in weather risk by port by time of year – you'll be able to quantify the cost of rain," explained Efstathiou. "You will also be able to detect patterns of certain counterparties or types of cargo or vessels costing you more in demurrage than you anticipated, where you may have been mispricing your freight due to the terms of the demurrage clauses."
Yet another change will involve customer service. B&V was previously a one-man shop with customers served out of Hamburg. In the new B&V, there will be account management support in Europe, Asia and from the main office in Boston.
What's Next For Efstathiou
Efstathiou will serve as CEO and is focusing his efforts on B&V, as opposed to his consultancy SkySail Advisors, which curates (and will continue to curate) the Maritime Technology Landscape product.
When FreightWaves asked Efstathiou what comes next, he replied, "I've got incredible support from customers and investors. I helped draw the [maritime tech] map and I'm taking a step toward redrawing the map."
The implication between the lines, although he's circumspect on his plans, is that the acquisition of a demurrage calculator is a beachhead, not an endgame. More FreightWaves/American Shipper articles by Greg Miller
The SkySail Advisors Maritime Technology Landscape