By Roger Symes, Director, Marine Debt Management

It is hard to know what percentage of the world fleet is contracted to third-party ship managers, that is, managers unrelated to the vessel owners. According to Lloyd’s List, the world’s 10 largest ship management companies claim to have the sum-total of approximately 6,000 ships under full technical management. Taking that figure at face value, we can extrapolate that the total number of ships contracted out is, perhaps, in the range 12,000 to 15,000 vessels. UNCTAD estimates there are approximately 56,500 vessels over 1,000 grt. So, in ballpark terms, I estimate 20%-25% of ships are managed by third parties. Some say the figure is closer to 30% but the situation is complicated. I suspect the figure of 6,000 ships includes some ships under crew management contracts only. There is also the growing trend for individual ship owners to form joint ventures with ship management companies. Their vessels are, no doubt, included in the figures given to Lloyd’s List.

How do the above percentages align to your company’s business? How are your annual sales split between ship owners and ship managers? It should be possible to do a quick calculation as, due to their overall fleet sizes, ship managers will likely be among your largest customers in terms of turnover. What about getting paid? How do the ship managers compare to the rest of your customers? Are the efforts you put into collecting payments from ship managers proportionate to their importance in your list of customers?

In my experience, when ship suppliers get together, it is not long before the talk turns to ship managers and difficulties experienced in receiving timely payments. The excuse of “awaiting funds from owners” is glibly given and far too often. Of course, this is not true of all ship managers but companies that use this excuse damage the reputation of the ship management business.

---

"In my experience, when ship suppliers get together, it is not long before the talk turns to ship managers and difficulties experienced in receiving timely payments."

---

Against this background, the International Ship Managers’ Association (“InterManager”) is to be applauded for launching its “General Principals of Conduct & Action” (available to download from intermanager.org). The aim is to drive up quality across the industry. Recognising the differences between ship managers, the intention is to be encouraging and aspirational. Ship managers are invited to use a comprehensive worksheet to document their progress. Initially the General Principles rely on self-assessment but there will then follow periodic, confidential audits by a third party. They make brief references to suppliers and, in more detail, to partners. It can be argued that ISSA members fall into both categories.

Each InterManager member is expected to document and evidence its “Code of Conduct” including commitment to creating and promoting behaviours that generate value to all interest groups (customers, employees, suppliers, environment and shareholders) in the context of a socially responsible culture that is reflected in the development of a sustainable Company. They should demonstrate, “Commitment to foster an open and participatory dialogue between members/partners with an emphasis on consultation and sharing of information from the earliest stages of the relationship”.

They also need to show, “Third parties and suppliers are evaluated in terms of Ethics, Compliance to applicable laws/regulation, sustainability and social responsibility as applicable. Rejected third parties are communicated to InterManager”. If InterManager is able to raise standards, ship managers will not be the only ones to benefit. Ship suppliers will too.

www.marinedebtmanagement.com

By JULIAN BERRY 5th APRIL 2024