With the regulatory burden of managing a vessel unlikely
to lighten any time soon and with operational dangers
such as piracy to counter, the technical management of
bulk carriers is becoming ever more onerous. This should, theoretically
at least, put a premium on the services of those companies able to
leverage economies of scale generated from providing technical
services to large fleets. But, leading third party ship managers tell
DCI, management rates remain under pressure.
The workload of technically managing any vessel continues to
grow. Apart from the cost pressure that is naturally placed on
any ship management process — be it in-house or outsourced
to a third party — by a global financial crisis such as that
suffered last year, a gamut of new environmental regulations are
in the pipeline relating to emissions and other pollution, some of
which could potentially see the criminalization of both crew and
owners (see box on p133). Attempts to improve the treatment
and pay of seafarers and laudable safety initiatives such as the
IMSBS Code which enters into force next year will all also be
delivered with a management price tag.
Of course, these initiatives are aimed at improving the
environmental, safety and humanitarian performance of the dry
bulk shipping fleet and should be welcomed. But meeting their
requirements is no easy task. For smaller owners, the burden
can be back-breaking.
This is usually where the world’s leading ship managers come
in. With hundreds of vessels on their books, they are able to
spread the cost of understanding, processing and acting on new
regulations across their respective fleets on behalf of clients. But
many claim that the role of ship managers remains vastly
under-valued and underpaid.
“It is bordering on being ludicrous that management fees are
what they are,” said Rob Grool, group managing director of
Wallem Group, the Hong Kong-based third party management
group. “We protect an owner’s best interest, we are earmarked
as operators of the ship, we are the ones in the frontline to face
the music and deal with claims, emergencies, accidents, casualties.
But we do not get paid commensurate with the potential
Peter Cremers, chief executive officer of Anglo-Eastern
Group, said rates were always under pressure and warned that
even though owners were under financial pressure, “technical
management is not an area where a lot of costs can be cut”.
Despite the rates pressure, managers contacted by DCI have
generally seen their fleets swell with new business and
newbuilding deliveries over the last 12 months.
Anglo-Eastern now has 315 ships under full management, plus
60 or so ships under crew management, representing net growth
of around 40 vessels compared to a year ago.
Kishore Rajvanshy, managing director of Fleet Management
Ltd, said his company has increased the size of its fleet to 220
ships compared to 205 this time last year. Seventy-six ships or
35% of the fleet are bulk carriers. “We also see a continued
trend towards a younger fleet, with older tonnage heading for
scrap and new buildings rushing in. Our average ship age now
stands at less than eight years, enabling a leaner and more
attractive profile,” he added.
Like his peers, however, Rajvanshy said that while since the
onset of the downturn there had been a visible move by ship
owners towards outsourcing their ship management functions, as
with other cost headers, owners continued to resist any rise in
management rates.
“However, we do find an increased awareness amongst
owners for the role of the ship manager, and recognition of the
services he provides.”
Grool was, as ever, stout in his defence of the benefits thirdparty
ship managers can offer bulk carrier owners. He told DCI
that third party managers can perform ship management more
efficiently and more cost-effectively than in-house operations
because ‘managing’ is the primary task of the company.
“It is all we do, day in, day out,” he explained. “Owners may
have good reasons for doing the management by themselves —
and those reasons are well respected — but they have to be
prepared to pay the price on the tag.
“If they compare apples with apples and are clear about the
quality of ship management service they need, third- party ship
management is always an option to consider seriously. We have
the emergency response capability, the management systems, the
capability to comply with regulations and charterers’
requirements, the accountability, the transparency of costs and
operational info and we offer the flexibility to expand or shrink
the owned fleet without having to adjust the size of the owners’
shore organization.”
One of the key services third party managers provide is
crewing. While the labour shortages and wage inflation that
plagued the officer and ratings recruitment sector for much of
the last decade eased last year, the plague of piracy, the
criminalization of seafarers and the failure of ship designers to
provide adequate space for cadet berths on newbuildings
continues to undermine efforts to increase supply.
A total of 406 incidents of piracy and armed robbery were
reported in the 2009 annual piracy report issued by the ICC
International Maritime Bureau’s Piracy Reporting Centre. The
last time piracy figures crossed 400 incidents was in 2003.
The International Transport Workers’ Federation along with
owners’ organization Bimco has now backed the use of armed
military personnel on board ships transiting piracy prone areas
“where appropriate”, although they are still resisting the arming
of seafarers.
InterManager, the international trade association for in-house
and third party ship managers, said legislative actions following
an accident or incident have made the seafarer increasingly
susceptible to criminalization.
“A one-sided view of public interest coupled with political
expediency has severely curtailed the human rights of the
seafarer,” said Brian Martis, chairman of InterManager’s
Criminalization Committee. “These factors have had a direct,
negative impact on crew retention and the natural replenishment
of the work-force: potential recruits are hesitant to take up a
career at sea. The current shortage of skilled and qualified
seafarers — already a significant crisis in the maritime industry
— is further exacerbated.”
One manager told DCI that seafarers were now both a target
for pirates and national regulators. “They are caught in the
middle, it’s no wonder it’s getting more difficult to recruit,” he
Rajvanshy said that in the last year crew wage pressures had
eased in the dry segment, particularly for smaller and less
specialized categories of ships, but, added Grool, shortages
remained and would not go away any time soon.
“Only a small portion of the fleet is in cold lay-up,” he said.
“Ships in hot lay-up still have their [skeleton] crew on board. It
does not help the tanker and bulker sector if containerships are
laid up or waiting for cargo. And new ships are still coming out
of the yards and they need crews.”
Jon Osborne, managing director of Bibby Ship Management
Group, said that while crew shortages in some sectors had
eased, the underlying problem of a shortage of experienced and
competent officers remained, especially in the senior and
specialist disciplines. “Therefore it is essential that the industry
retains its training programmes to ensure that they are in a
secure position to take advantage of the opportunities when the
recovery comes,” he added.
“The sharp rise in vessels delivered during the boom times
has increased the underlying base level of crew required globally
and mitigated the drop in demand due to economic conditions.
As more ships become chartered, before too long we could
reach the same situation as before the recession.
“Officers, rather than ratings, are going to be most difficult to
recruit so the industry needs to focus on securing a route in for
intelligent and capable people, who have the necessary character
to be leaders and take responsibility.”
Roberto Giorgi, president of both V.Ships and Intermanager,
called for regulation of ship designs to ensure the provision of
dedicated cadet berths on commercial vessels.
Living space had been significantly reduced on most vessels
over the last decade, damaging the efforts of owners and
managers to train and recruit seafarers, he added. “The design of
modern accommodation is proving to be a real constraint in
terms of the number of cadets we are able to train and,
importantly, the way in which cadets are inducted into a life at