Monday, 26 December 2011

A revival in shipmanagement?

A report by global maritime consulting firm Drewry says that shipmanagement companies may finally see some growth even after a year during which more shipowners have taken their vessel's 'in house' in an attempt to cut costs. 

"Shipmanagers, it seems, have failed to persuade the industry of the value of the services they offer," the report says, pointing out that attempts by shipmanagement companies to push their two major advantages- lower costs based on economies of scale and access to trained crews- have failed to enthuse shipowners in recent times. Less than a fourth of the world’s fleet is under third-party management control, Drewry says, adding that shipmanagement companies have been struggling against low management fee and market penetration issues for long. 

Many shipmanagement companies hoped that the recession would bring greater business to their doors as a greater number of banks and financiers foreclosed on struggling owners. Earlier recessions have had this effect when banks have found themselves stuck with ships and no clue as to how to operate them. This time round, however, it appears that banks have been hesitant to push shipowners too far too soon, fearing that a glut of vessel's on sale in the market would kill asset prices completely. 

That may be about to change. "With a renewed economic crisis unfolding over the summer, the patience of under-pressure banks is wearing thin, and this could open up more opportunities for third-party managers as the number of non-professional owners increases," Drewry says
Few analysts believe that the road to growth in third-party management will be anything but bumpy. "For one, it is difficult to see management fees going north from here on in the present economic climate," one told us. Shipowners are struggling against the recession and the collapse in both freight rates and asset values, observers point out; many will be tempted to give shipmanagement a miss and to go it on their own to reduce costs.

Drewry feels, however, that a 'critical driver' may be access to trained crews. "The recent hysteria surrounding potential shortfalls of officers has subsided," the report says. "However, it has not entirely gone away. The rate of growth in the commercial fleet has slowed – but there is no evidence that it will decline in the medium to long term. Furthermore, in some regions, the senior officer cadre is ageing and looking at retirement. Elsewhere, there have been signs that officers want to come ashore at a much younger age than their predecessors". All of which, it says, may help shipmanagers push their advantages of crew recruitment, training and retention in the marketplace.  

"The critical question is, how crucial a bargaining chip could this become? Most managers have a mix of full technical and crew management contracts. Could a situation arise where being able to supply the crew enables managers to look to arrangements where crew might only be supplied if the owner commits to a full technical management contract?"

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