Joint Ventures

Joint Ventures. Where those controlling cargoes negotiate and come to terms under a ‘joint venture’ arrangement with those controlling ships. Normally profits and losses will be shared, not only perhaps on the seaborne freight element, but also on production and/or purchase and/or sale costs of the goods involved. These ventures can be fairly simple and of a short duration – perhaps for a single, occasional cargo – or they can be of major importance, involving the mutual exploitation of a nation’s mineral deposits, the building and administration of ports, marketing of products, as well as the training of personnel for each section of the entire structure. An example of this degree of joint venture was the liaison between the Norwegian Klaveness Group and the Guinean Government in the bauxite production, transportation and marketing of the joint venture concern ‘Guinomar’. Shipping Pools. Where a group of Shipowners band together to ‘pool’ their tonnage and collectively market their combined fleet. They may well become involved in extensive contracts of affreightment and joint ventures with outside groups, and this type of operation is often used where a specialised commodity or trade is involved (e.g. reefers where numerous Charterers may become involved in contracts with the pool). Pool income is collected together and once pool running costs have been deducted, remaining income is distributed amongst members by means of a ‘weighting system’ by which each entered vessel’s individual characteristics are taken into account and measured against a ‘pool model average’, debits and credits being applied accordingly. Freight market risks are somewhat alleviated for an individual Shipowner – perhaps with little or no previous shipping experience – gaining admission to a well-run pool. Furthermore, management overheads will be considerably reduced by collectively managed chartering, commercial and financial operations.