Shipmanagement fails to convince
In-house or outsourcing? A complex industry where risk and responsibilities are fast moving. Drewry's latest report takes an in-depth look at the market and the implications for third party management.
- The nature of ship ownership
- The implications for ship management
- The market for third party ship managers
- Technical management
- Commercial management
- Risk management
- Administration
The shipping industry by its nature requires significant levels of investment and therefore careful management, whether it's through in-house operations or outsourced to a third party.
The effects of the global financial crisis have ment costs are more closely monitored with some owners claiming in-house management is the route to cost reduction. However there are examples of banks foreclosing on loans associated with ship finance. Therefore the ability to keep these ships running until a more reasonable resale value is achievable has been an influence on the creation of demand for specialist shipmanager.
1. Executive summary
• Technical management
• Commercial management
• Risk management
2. Ship managers and shipping operations
• Different types of shipowner
• Different types of ship manager
• Selected independent third-party shipmangement company profiles
• V Ships
• Bernhard Schulte Shipmanagement
• OSM Group
• Fleet Management
• Wilhelmsen Ship Management
• Thome Ship Management
• Columbia Shipmanagement
• Illustrative smaller scale operations
• A question of scale?
• Costs and other considerations shaping the in-house versus third-party decision
• Budgets and fees
• Some realities behind the budget
• In-house versus third-party? How can factors other than fees be evaluated?
• Intermanager and key performance indicators
• KPIs - the potential and the risks
• Final comments from the industry
3. Technical management
• Crewing and crew management
• Sourcing and recruitment
• Retention
• Training
• Crew wages
• Repair and maintenance regime
• Marine purchasing
• Lubes
• Process and procedures ... purchasing or procurement
• The regulatory environment
• The major IMO conventions
• The International Convention for the Safety of Life at Sea (SOLAS)
• Key management requirements arising from SOLAS
• Other IMO conventions
• The ILO Maritime Labour Convention (MLC)
• Other regulatory influences
• Insurance considerations
• Management software
4. Commercial management
• Market cycles
• Shipping-related market sectors
• The economic cycle
• Trade and commodity cycles
• The finance cycle
• The shipbuilding cycle
• The shiprepair cycle
• The ship demolition market
• The bunker market
• Reading the market
• Comparative values
• Backlogs and delivery schedules
• Freight rates and underlying costs
• Contrary views?
• The forward curves
• Sentiment and over reaction?
• Back office practicalities and considerations
• Voyage estimating
• Cost input assumptions
• Bunker prices
• Port dues and disbursements
• Canal and seaway tolls and related disbursements
• Post-fixture activities
5. Risk management
• Operational considerations - commercial management
• Operational considerations - technical management
• Risk transfer
• Insurance
• Outsourcing
• Hedging
6. Administration
• The unavoidable
• The optional
Appendices
• Shipping KPI Quicksheet V20
• ITF Uniform "TCC" collective agreement
• Paris MOU Black to Grey flag state listings
• Tokyo MOU Black to Grey flag state listings
Tables
• Indicative manning and administration cost budgets for major ship categories
• PI measures and KPI connections
• Seagoing manpower supply estimates, 2010
• Sample dry cargo wage rates for selected countries
• Sample tanker wage rates for selected countries
• Class survey requirements - special survey elements
• The SOLAS Chapters
• The STCW Chapters
• The STCW White List
• Ballast Water System Status, using active substances, as per MEPC meeting in
October 2010
• IMO conventions other than SOLAS, STCW and Marpol
• Piracy related advisory circulars
• Selected examples of shipmanagement software packages
• Bulk carrier and tanker newbuilding order schedules
• Cost responsibilities under different charter modes
• Indicative regional bunker price variations in Europe and Far East, early
August 2011 market conditions
• Suez canal toll structure, 2011
• Panama canal toll structure, 2011
• Panama canal transit reservation system
• JWC hull War, strikes, terrorism and related perils - listed areas
Figures
• Shipmanagement and administration overview
• Key technical management activities
• Key commercial management activities
• Risk issues
• Key tramp shipowner motivations
• Indicative tramp pool structures
• Indicative management and administration cost trends
• Evolution of officer supply/demand
• Shipmanager's overview of planning for drydocking
• Estimated representative price ranges for steelwork renewal
• Coatings industry raw material price increases, Jan 2011 v Jan 2009
• Purchasing or procurement
• Key compliances under the ISM Code
• Key compliances under the ISPS code
• Key indicators of the shipping cycle
• Indicative trend in spreads
• Newbuilding orders
• Demolition price trend
• Crude oil and bunker price trends
• VLCC comparative values
• Capesize bulk carrier comparative values
• Selected operating cost and timecharter rate relationships
• Container market: box rate and timecharter trends
• Capesize bulk carrier futures - the forward curve and the 4TCs
• $ per SDR
• International Group reinsurance programme for owned entries, 2011-2012
• Dry bulk FFA contract lots
• Tanker FFA contract lots
Report focus
The Shipmanagement report provides an independent and detailed assessment of the shipmanagement market, analysing the main areas of management, how it aligns with the overall risk management evaluation and the options for outsourcing.
Focusing on the implications of shipmanagement and the market for third-party ship managers, the report assess the nature of ship ownership, commercial management, technical management, risk management and administration.
Shipmanagers and shipping operations
Describing the various ship owner types and multiplicity of the shipping business, Drewry identifies the areas of risk management. Providing an overview of both commercial and technical management, it reports the options for third party management and questions of liability.
Technical Management
Drewry focuses on the availability and costs of manpower and key management issues relating to the crew, alongside the evaluation of the ship repair and maintenance regime - including classification requirements, equipment recommendations and policy choices.
Technical management also has a remit covering areas such as procurement policy and the stores and supplies budget, insurance, regulatory requirements and response planning.
Commercial Management
This section examines the shipping market and its economic cycles, the impact on ship chartering and differences across industrial sectors.
It also monitors and measures the fundamentals of the freight market and rates. The report includes the analysis of key ship running costs and the influence of the forward market, the newbuilding market and the demolition market.
Risk Management
Risk management covers a variety of different elements and is something that is practised across many sectors. It can be assumed that a ship owner's decision to outsource management to a third party is a risk management strategy.
This section of the report concentrates on the fact that risk cannot be eradicated, but it must be insured against, hedged against and either transferred or outsourced. Each of these options is detailed and explained, whilst also expanding into new areas of risk that are now of concern, namely counterparty risk and credit default risk.
Administration
An analysis of the key activities associated with shipping companies covering the unavoidable and the optional as well as the core administrative needs within a ship management company.
![Drewry - Independent Maritime Advisors [logo]](/i/drewry-publishing.gif)
