Shipmanagement Explained

Introduction

Ships are similar to large factories. But in addition to being large in size and requiring constant technical expertise, they travel large distances on a regular basis. This complicates matters further. The ship owner must work logistics to provide necessary resources across different continents while complying with changing local regulations.

This can be difficult for ship owners as the shipping vessels are a means to an end in most cases. The owner’s primary business may be mining, construction, oil production, agriculture etc. and their need for ships is limited to obtaining resources or distributing their products. They do not have the technical expertise of running a ship.

This is where shipmanagement comes in. In this article, we shall discuss a host of fascinating subjects such as:

• What is shipmanagement?
• Services under shipmanagement
• How to choose the right shipmanagement company for your needs?

What is shipmanagement?

As the name suggests, shipmanagement is a sector in the shipping industry that focuses on all aspects of managing a ship’s needs reliably and efficiently. This enables the ship to achieve high efficiency in cargo operations which directly translates into profitability.

Shipmanagement is a colossal venture and requires technical awareness and timely execution on many fronts. Any delays or errors can lead to ship detention, huge fines and even litigation.

A company that takes up this challenge of managing ships is known as a ship management company. This company may either be a third party ship manager that manages ships for various owners or charterers or could also be a sister company of a ship-owning organization.

A shipmanagement company usually offers a wide range of ship management services tailored to a client’s specific requirements.

Services under ship management

Shipmanagement encompasses a range of ship-related services. The type of service provided to a ship depends on the requirement of ship owners. In some cases, the shipowner may only have specific needs from a ship manager while setting up internal teams for other services.

The type of services required by a ship depends upon factors such as vessel type, size, age, condition, voyage and sailing particulars. Since these factors can vary a lot from ship to ship, a ship manager must be capable of handling vastly different scenarios to manage different vessels.

Most ship managers are capable of providing many services. Some of these services are as follows:

• Technical management
• Crew management
• Inspection
• New building
• Commercial services

Technical management

Technical services are one of the most sought-after services from a ship management company. Most ships use the latest technology in various departments such as propulsion, control, ballast water treatment, cargo loading/unloading, etc.

Any breakdown or non-compliance is a danger to life, property and the environment. Shipmanagers provide much-needed assistance in dealing with technical emergencies in an intelligent and timely manner.

Besides, there is continuous improvement in the onboard equipment to improve the vessel lifecycle cost or comply with changing regulations. Shipmanagement companies can help the owners navigate the intricacies of different regulations while maintaining unmatched productivity onboard.

Ship managers put entire teams in place ashore, in addition to skillful crewmembers, to make this happen. These teams are experts in various areas such as marine engineering, safety, quality, purchasing, IT, environmental protection and insurance.

To ensure efficiency, they use advanced software and systems that help them maintain their fleets from different owners under one roof.

Technical management involves many services. Some of these are:

• Budgeting
• Maintenance
• Drydocking
• Comprehensive reporting
• Energy efficiency
• Emergency contingency
• Performance monitoring
• Certification

Crew management

According to an analysis of 6,091 claims by the UK P&I club, about 62% of major insurance claims (> 100,000 USD) from ships are attributable to human error. It is indeed one of the most difficult challenges in ship management to ensure that a ship is manned by a competent crew.

Besides the right certifications, a ship’s crew must have the experience, skill and technical knowledge to assist in running a safe and efficient ship. It must be capable of managing the demanding daily routine as well as any contingencies that appear from time to time.

Finding such a capable crew can be an onerous task. Most ship owners entrust this task to ship management companies. The management companies build a crewing pool and take care of various crew-related aspects such as recruitment and employment, wages, welfare, performance monitoring, certification, insurance, travel, training and education.

In addition to general education and skill development, they can impart vessel-specific and client-specific training to a crew member to ensure smooth assimilation into an owner’s fleet.

Inspection

Many ship management companies offer inspection services for vessels. Entities that may require these services are vessel owners, buyers, sellers, ship managers, brokers, banks, investors, fund houses, etc.

A ship management team comprises of proficient employees to discover any technical, operational, safety and conditional inconsistencies. These anomalies can cause the vessel to be unsafe, off-hire, accident-prone or susceptible to pollution.

The inspecting entity receives exhaustive reports, feedback and recommendations that assist it in accurately determining the value of a vessel based on the current condition.

It can then fix the highlighted issues in time as well as prevent the occurrence of undesirable incidents by taking proactive steps in establishing appropriate maintenance and operational procedures. Such inspections may also help the ship secure cargo from lucrative clients such as oil majors.

Newbuilding

When an owner wants to order the building of a new vessel, they often reach out to ship management companies to facilitate and supervise its construction and delivery.

They maintain tight control on the various aspects of newbuilding such as the construction of hull, machinery and cargo spaces; electrical, automation and piping design, painting and administration.

They ensure that the construction follows the schedule right from yard evaluation to sea trials and delivery, all while complying with international and local regulations.

They conduct frequent inspections to ensure that the construction follows the recommended levels of safety and excellence. On discovering a non-conformity, they can coordinate with the shipyard to take remedial steps. They can also ensure that the documentation and certificates for the vessel are in order.

A well-built ship can be the difference between a profit and loss-making business. It ensures lower operating and capital expenditure ultimately delivering greater value.

Commercial services

In addition to managing ship construction and administration, established ship managers can provide a host of commercial services that are difficult to provide for traditional financial institutions. Due to their global presence, they can provide commercial services such as:

• Chartering and daily operations as well as bidding for longer-term contracts.
• Purchase and sale of vessels
• Investment consultation
• Asset protection of distressed assets
• Insurance and claim handling
• Loan management

All these services are extremely in-demand and are right in the wheelhouse of ship management companies.

How to select the right ship management company for your needs?

There is no shortage of the number of companies offering ship management services in the world today. Due to this, it becomes difficult for new as well as veteran owners to select the right ship management company for their needs.

They usually invite bids from shipmanagement companies to evaluate how the company would fit in with the owner’s requirements and set expectations and goals for the management team. When trying to search for the right ship management company, the following factors must be considered:

• Range of services
• Organization characteristics and values
• Industry experience with similar kind of vessels
• Market reputation
• Safety record
• Dedicated support
• Global footprint and network of clients, partners and consultants
• Automation and web-based software solutions in use to efficiently manage their fleet.