2016-09-26

What’s ship management?

Thus far, companies associated under the Polish Ship Managers’ Association (PZZS) have been acting according to the so-called in-house ship management model, in which a company belongs to the shipowner’s group. However, all indications are that third party ship management, i.e. the performance of services for shipowners outside own group, is also possible. It guarantees faster industry growth and much higher rates related to this kind of activity.

Shipowners, who in today’s time are predominantly investors, often don’t possess knowledge and personnel necessary to manage a ship. That’s why they hire a third party ship manager who assumes control over the ship. The scope of management depends on the agreement concluded between the managing entity and the shipowner.

Nonetheless, the shift from in-house ship management to third party ship management is a most natural occurrence. Many companies all over the world have done just that. They started with a crew agency, transitioned to crew management and, subsequently, in-house ship management, and finally adopted third party ship management. It’s a gradual, step-by-step development to the highest possible level that allows to manage an unlimited number of ships. With internal management, there’s never more ships than those the shipowner with whom the management company is cooperating has at their disposal. However, at the beginning, establishing cooperation with a shipowner who has their own fleet provides a good starting position. When opening a new branch, one of the German shipowners’ groups had a custom of transferring 5 ships under the management of that branch, with the assumption that these 5 ships will turn into 15-20 vessels within 2-3 years and translate into tangible benefits resulting from the management of additional ships. In any case, if not for third party ship management, some of these companies would no longer exist. In difficult times of crisis suffered by the shipping industry, this solution allowed them to survive.

It’s also worth to keep in mind that such activity allows to train crews that may prove useful in critical moments. In the opinion of governing bodies of the Polish Ship Managers’ Association, in the years 2018-2020 some ships will be unable to operate, as shipowners will not have a sufficient number of crews, mainly mechanics. Companies that currently offer crew management as part of third party ship management or provide crewing services will begin to gather their resources on own ships. Entities who rely solely on external crews and don’t develop their own will find themselves in a difficult spot.

One of the panels at the Maritime Economy Forum Gdynia 2016 shall be dedicated to ship management.

photography: Tadeusz Urbaniak/ZMPG-a S.A