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Shipmanagers can expect rapid evolution ahead, but it won’t all be smooth sailing

In an increasingly digital future, ship management should anticipate challenge and change — but this could be the decade of real growth for managers with vision and values

SHIPMANAGEMENT is set for an exciting decade. The evolution of digital shipping, increasing regulatory pressure, and the need to step up the level of crew training — all call for a dedication to technical and crew management that shipowners will struggle to provide.

The key to managing a fleet of vessels won from several owners is to think of the venture as the management of people, of resources, of risk. Shipmanagement, oddly, isn’t merely about the management of ships. Ships are a client’s asset, like a hotel. For the client, his asset is the only thing that matters; so for shipmanagers, the client must be treated with equal care whether they have contracted two ships or twenty-two.

Shipmanagement is now more than 30 years old. The basics are well-rehearsed. They include dedicated superintendents who take responsibility for clients’ vessels, senior technical managers who ensure vessels’ needs are anticipated, executive leadership who build partnerships to keep clients’ expectations high.

However, what’s likely to make the sector exciting is the depth of experience now resting with the larger managers. The top three shipmanagement companies now control over 500 ships, the next five managers have between 200 and 400 ships. All have pools of dedicated, and increasingly-specialised crews; all are investing in training centres; and all are busy putting in place partnerships with technical and connectivity businesses.

“The depth of managers’ experience makes this partnership of equals exciting”
Such size makes shipmanagers stand out across the industry. But size matters less than reputation, which can easily be damaged by a serious oil spill or an allision. Avoiding accidents and incidents, both by putting measures in place proactively to prevent them and by reacting to accidents by learning lessons and upgrading training, is a common theme across shipmanagement. Reward comes in the form of client respect, which often leads to contracting a vessel for management, which in turn leads to growth in the number of managed ships.

A reputation for being proactive and progressive is an attractive quality, especially for shipowners who need to explore the benefits of digitalisation, or a new piece of technology, or even a push into a new sector such as gas shipping. The manager of an owner’s existing ships is an obvious starting place for discussions about investment of this nature. It can develop into a partnership of equals.

It’s the depth of technical, crewing, and operational experience combined with a steely focus on quality throughout the business that makes this partnership of equals an exciting prospect.

Wallem Ship Management

Shipmanagement is not for everyone: some cultures like to keep their assets in-house and only contact a ship manager when the need goes beyond their own resources (such as Greek owners); others are more focused on commercial opportunity and are more open to outsourcing their assets to the right manager (Norwegians and Japanese). Some businesses use a shipmanager to run vessels until such a time as they are sold on; other businesses demand the ships are run more cheaply than they can run them themselves.

Using shipmanagers for short-term benefit has always been a feature of the sector, which is why even the best-run managers experience an annual loss of at least 10% of the existing fleet through sales. In order to grow, they need to gain more ships from their existing clients or attract the interest of new clients. Both of these are in play: good management is rewarded by more ships, while a tougher environment prompts smaller owners to seek options.

A brave new world for shipmanagement — with several managed fleets now among the largest fleets on the planet — presents challenges they have not yet tackled. Managing people is fine when there are 50 dedicated staffers working from a single office in a vibrant maritime region. When the office-based staff reaches 1,000 in half a dozen locations, managing 10,000 or 20,000 seafarers on 400 or 500 ships, it’s a different order of magnitude. That requires a new organisational structure, with significant external shareholders whose motivation might not square with the executive leadership team. At this point, shipmanagement becomes corporate. Corporate culture matters, but something vital may be lost: the personal touch.

Lloyd’s List is hosting a webinar on October 10 to dig into how shipmanagement companies can move from being people-focused to a more corporate structure. What would be gained by such a shift and what would be let go? How would clients benefit if their ships were managed by a global corporate rather than an overgrown team? Would quality suffer as external shareholders demand returns on their investment or, conversely, would quality be boosted by an injection of serious funding that was not available before?

The future of shipmanagement is emerging as an exciting prospect for a shipping industry that has so far taken only a marginal interest. With ship ownership under real commercial pressure and demands from regulators to clean up their act becoming louder year after year, shipmanagement’s breadth and depth of expertise could be worth exploring. But excitement comes with danger.

Join Lloyd’s List to explore whether the excitement is real and whether the danger is overplayed.

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