There is far more to the port of Rotterdam than simply unloading and loading ships, even if it is one of the busiest ports in the world. The industrial area that surrounds it, the complex infrastructure needed to support it, the local community – all have needs that must be met. As Treasurer of the publicly owned company that runs this vital part of northern Europe’s trade activity, Tim de Knegt has a personal philosophy that reflects the ever-evolving nature of port life.
Tim de Knegt
Treasurer, Port of Rotterdam
The port of Rotterdam is the largest port in Europe. The business that runs it – the Port of Rotterdam Authority (Havenbedrijf Rotterdam in Dutch) – derives its main sources of income from harbour dues and long-term rents from businesses in its surrounding industrial area. Clients include tank storage firms, (bio)chemical and petrochemical operations, shipping companies as well as biofuels and energy producers. Since 2000, the Authority, which is jointly owned by the Municipality of Rotterdam and the Dutch State, has been investing heavily in port and IT infrastructure development, an ongoing project that includes the construction on reclaimed land of the impressive Maasvlakte 2.
For the third consecutive year, the Netherlands has been described as having the best port infrastructure in the world by the World Economic Forum’s “The Global Competitiveness Report”. True, its location and geography allows the lowland country to play host to the world’s largest ships, and its well-managed infrastructure facilitates the transport of goods across Europe. But then its key port – the port of Rotterdam – is not the largest port in Europe by accident.
Billions of euros have been spent on road and rail expansions and the development on reclaimed land of the new port and infrastructure, Maasvlakte 2. There has been construction of numerous bridges, tunnels, quays and terminals, and the encouragement of the refinery and chemicals sector, tank storage, biofuels and energy firms to make themselves at home in this massive expanse of economic activity.
Running a modern port is a complex, hugely expensive and brave venture that requires people with vision and an unwillingness to sit still for five minutes. Tim de Knegt, Treasurer for the Port of Rotterdam, fits in perfectly with the aspirations of the port’s owners and stakeholders and, of course, the World Economic Forum’s continued view that it is part of a system that is consistently rated higher than serious contenders for the crown such as Singapore and United Arab Emirates.
Framework for the future
The traditional core of de Knegt’s role entails payments, cash and liquidity management. But he also handles corporate finance which gives him responsibility for the Authority’s long-term financial position. In port management terms, this often sees projections 20 to 30 years down the line. The €3 billion Maasvlakte 2 project, for example, is well under way but will not be fully operational until 2030.
By taking a view with his in-house developed ‘Financial Framework’ on how the business might evolve under different scenarios, he is able to present options to the Board and even to stakeholders, so that the most appropriate areas of focus can be agreed upon well in advance. A balance between the values created for different stakeholders, not just shareholders, is key for continued success.
Looking this far ahead can make the treasurer’s job difficult, especially in such a volatile world. But because the Authority is intended to serve companies within the port area, the city of Rotterdam and the wider Dutch and European economy, it can also be relatively easy. Maasvlakte 2 is an essential investment because without it the whole Port of Rotterdam area and its customers would by now have run out of space. This would ultimately be a far bigger issue than working out the complexities and risk of financing it. Put into perspective, the new site enables many more businesses to benefit from the investment. Of total Dutch GDP (around €450 billion), about 3.5% (or approximately €21 billion) and 180,000 jobs are directly linked to the Port of Rotterdam: it must evolve and innovate to sustain a significant portion of the Dutch economy.
However it is viewed, there is a heavy duty of responsibility to get it right, but by openly discussing the relevant topics when creating strategy it will be steered in the right direction. One of the main topics of conversation right now is sustainability of operations over the long term. This covers a very broad remit in that the perspective could be environmental, ecological, financial or social (which naturally includes employment and staff concerns). It too comes with a great responsibility in that there needs to be no damage or wastage in terms of cash, skills, energy, pollution and a host of other considerations, but if the Authority is seen to be responding to this theme then hopefully so too will the other businesses that operate in the port area as a form of virtuous circle.
Bringing it together
There is no way that de Knegt and his team would be able to mould treasury’s response to the big picture without the willing co-operation of other functions within the business. The reverse is true too of course, and other functions have learnt to call upon the expertise of treasury to support their own endeavours; after all, the aim of the game is the same for all players. But when he first joined the Authority in July 2012, de Knegt found a function that was not well connected to the business; few outside of it understood the role of the treasurer. This is something that he has tried to change over the years as it is key to the success of treasury and finance as a whole. Now he is involved in a number of commercial and business projects to ensure that people know what that function does, and vice versa. “The business needs to understand what value can be added by treasury and other finance functions. The time for finance to sit back and just account/report is over and a more pro-active stance is essential to support and develop the business.”
The reach of these discussions unusually extends to clients, vendors and partners of the Authority. Here, involvement helps de Knegt to shape treasury policy and financing structure to fit the needs of all. A recent example found him explaining to both client and bank how to amend the funding proposal so that the deal would be beneficial for both parties and bring in additional goods and services to the port area. “It is vital for us that these companies are stimulated to grow as we can facilitate growth and instigate the growth ourselves.”
Indeed, one of de Knegt’s other roles is investor relations. The traditional role is about discussing with banks treasury’s own position but he also talks about the complete supply chain, talking to the banks about investors considering entering the market with Authority clients. There is good reason for this too. “It is the only way that the supply chain will grow and ensure additional business will come into the Netherlands and into this area,” he explains. “I have an obligation to my partners, stakeholders and supply chain to also facilitate them besides in a business and financial manner. Only then will growth be imminent.”
Operation of an international commercial sea port is done in the face of intense global competition. There are only so many ports that can handle today’s ultra-large commercial vessels; fail to make the right investments and support the clients and it is highly likely that those clients and the shipping traffic they generate will go elsewhere. The problem is that once these stakeholders have gone elsewhere, they will be investing for the next 20 or 30 years of operational benefit. “If you miss the deal, you miss it for a long time,” states de Knegt.
To offset this risk, his role is very much aimed at bringing treasury in line with the business. “Treasury is rarely a business leader. This is something I have tried to change with my team; we try to add value to the company,” he comments. Getting involved with internal and external clients is very much on the agenda and if there is a problem with a financial institution of any description, the treasury door is wide open.
Mixing and matching functions is a long-standing interest for de Knegt. In his teens he dabbled with FX trading and then, having undertaken an internship as a Business Analyst at the University of Newcastle in the UK, he moved into financial consultancy. He started his career in finance, taking various jobs in financial control and management accounting before landing his first treasury role at Dutch development bank, FMO. “It taught me a lot about how the derivatives and financial markets work and how in treasury it was possible to add value to the local businesses we worked with.” From here he moved to treasury roles with greater responsibilities, further rounding his skills as he joined Dutch navigation and mapping products firm, TomTom, first as junior then senior Treasury professional.
It comes as no surprise that de Knegt stresses the importance of ‘reading around the subject’ and accumulating different skills. “As treasurers, we are in the luxurious position of being able to see quite a broad spectrum of business operations and their impact on value creation. That means we can help other functions that might not have access to the same breadth of experience or view.” With currency exposure, for example, he sees the story from the group’s perspective whereas a buyer who only purchases for a specific business unit may not be aware that a better deal is available elsewhere.
Since joining the Port Authority de Knegt has undertaken a number of technology projects including implementing a new TMS (including accounting), introducing the above mentioned Financial Framework, a new Long Term Finance Model and overseeing the roll-out of the group’s six-month complete SEPA project. “I’m a very keen user,” he states, “but technology is never the solution; it is only ever an enabler of reaching the solution”. Indeed, he argues that human intelligence remains absolutely essential in producing the proper analysis of and response to data. “If you don’t understand what’s happening with the figures it will be hard to do the right thing.” An over-reliance on IT could lead to a loss of such a capacity, he feels. The ensuing lack of decision-making skills would be disastrous for businesses. “I always try to bring people into treasury that share the broad view that I hopefully have. I can develop further and I hope this extends to my colleagues so that the right skills stay in the business.”
On bankers and regulators
Of course, technology can save a lot of time, but besides “more hours in the day”, de Knegt believes less regulation would improve the life of treasurers everywhere. “Politicians often jump to the conclusion that everything can be solved by more regulation. It is often not the case.” If a clean sweep of the existing rule books were possible, then bringing all remaining regulations into line with each other would be the next step for him. “EMIR and Dodd-Frank are two regulations doing the same thing but approaching it in completely different ways,” he states. “It’s a complete headache to work with.”
It is as well perhaps then that the Port of Rotterdam Authority is a publicly regulated entity with a number of lobbyists working on its behalf in The Hague and in Brussels in respect of both financial and more general regulation. At a personal level, de Knegt’s activism extends to membership of the Treasury Peer group (run by industry character, Magnus Lind). This is a vocal, Europe-wide forum for discussion on treasury matters which goes straight to the top, having made representations to the likes of the ECB, the Fed and the Bank of England, speaking with senior policy makers, “offering our insight as treasurers on all the issues”.
If regulators have a tendency to unsettle the business environment then the general reaction to bankers has at times been bordering on hostile. Banks are talking a lot more about service than about products these days, notes de Knegt, but he believes there are still a few “that need to change their attitude and their offering”. That said, he can see banks that are making good headway; the real performers are even looking at competition outside of their direct market, eyeing the fintech companies that de Knegt poetically describes as “springing up like flowers on a March day”.
Regardless of who is in the game, the balance of power has definitely changed in recent times and if he, and probably many other treasurers, do not feel there is “mutual benefit”, it would be “relatively easy to walk away”. Just as it was once said that the countries that succeed are not those with the most resources but those with the capacity to change, de Knegt argues that if the banks don’t run with the market “they will perish”. Indeed, it is apparent that flexibility and speed are essential for the success of all types of organisation – and that includes the Port of Rotterdam Authority. “Policy should be following business, not business following policy.”
In trying to stimulate adaptability, he insists that it is not necessarily a case that an action is right or wrong, but that it is done at all. “You are allowed to fail, as long as you can give good account of what you are trying to achieve,” he explains.
There is a sound philosophy of empowerment and accountability that underpins this view. It is important to understand the distinction between delegating a problem and delegating the solution, says de Knegt. The latter removes any capacity or intention to outperform the task; the answer is fixed. “People are not motivated when they are given a task; they are motivated when you give them a challenge.” In fact, this is part of his own work ethic that says for a business to flourish, its employees need to be professionals first but must also be able to take pleasure in their work and have fun; a sensible work/life balance is vital. With this approach in mind, de Knegt reiterates the need to add value to the role, to the department and to the organisation. “You always need to show what that value is to the other party,” he states, adding that this must be a “two-way street” in which both employee value and employer value must be demonstrated equitably.
Unfortunately, in the wider community, this open approach is rarely shown when it comes to knowledge-sharing. “People tend to keep it to themselves because they feel it makes them stronger,” observes de Knegt. His own view is that sharing allows people to demonstrate the value that they add to a concept to the people around them, and then they can take back what those people add to that knowledge, moving continuously forward, always increasing that knowledge base. However, he believes that many businesses are far too defensive and therefore fail to move forward as fast or as far as they might. “Standing still is far more of a risk than being open and flexible,” he warns.
The direction de Knegt’s role will take within the Authority over the coming months and years is predicated on where he feels he can add value. Further diversification seems likely, allowing him to continue broadening and applying his knowledge. For anyone moving into their first treasury role, his advice is never to be afraid to take opportunities. “If you think you are doing the right thing then do it; never be afraid to fail.” Naturally, de Knegt is keen to encourage all-comers to broaden their scope. “Always keep your eyes open and look around you and think how you can use what’s happening to your benefit.”
It is, he agrees, a tiring prospect being constantly alert, but to counter this he is adamant that people find the time to do the things they like to do: “It gives you energy”. In an ideal world, he would pull together all his skills, interests, knowledge, contacts and enthusiasm and dive straight in as an entrepreneur. He is already part-owner of the first ‘authentic American cupcake’ business in the Netherlands, although clearly he would have little difficulty in persuading people of the value on offer here.