Ship Manager

Ship management is the organized system through which a ship is kept seaworthy, commercially employable, properly crewed, insured, supplied, documented, and operated in accordance with international regulations. Managing a ship is not a single function. It is a coordinated activity involving technical supervision, crewing, insurance, operations, accounting, commercial planning, stores, port agency coordination, safety management, and legal administration.

A Shipowner must decide whether these tasks should be performed inside the Shipowner’s own organization or entrusted to a specialist outside manager. The decision depends on fleet size, cost, control, expertise, trading pattern, technical complexity, and the Shipowner’s long-term business strategy. A large fleet may justify a full internal management structure, while a small fleet may find it uneconomical to employ all the necessary specialists directly.

The first option is In-House Ship Management. Under this model, the Shipowner employs the necessary shore staff and operates the required departments directly. The main advantage is close control. The Shipowner can monitor daily decisions, supervise technical expenditure, maintain direct contact with crew and superintendents, and align management decisions with the Shipowner’s commercial strategy. For a large Shipowner, this approach can be efficient because the cost of technical, marine, crewing, insurance, and accounting personnel is spread over many ships.

However, in-house management can become expensive for a Shipowner with only a few ships. Skilled marine engineers, Master Mariners, insurance specialists, accountants, and crewing managers expect competitive salaries and meaningful professional responsibilities. If there are too few ships, senior staff may not have enough work to justify the cost or maintain professional motivation. In that situation, the management cost per ship may become disproportionate.

The second option is Third-Party Ship Management. Under this model, the Shipowner appoints an independent ship management company to manage all or selected parts of the ship’s operation. Third-party managers employ specialist staff and manage ships for several Shipowners. Their scale allows them to attract experienced personnel, maintain global purchasing networks, negotiate better service terms, and spread administrative costs across a larger managed fleet.

For small and medium-sized Shipowners, third-party management can provide access to expertise that would be too costly to build internally. The Shipowner pays a management fee and may outsource technical management, crew management, insurance administration, operations, accounting, stores, or a combination of these services. Some Shipowners retain commercial control while outsourcing technical and crew management. Others outsource almost every function except investment decisions.

Medium-sized Shipowners often face the most difficult choice. They may be large enough to want direct control but not large enough to obtain the full economies of scale enjoyed by major fleet operators. A practical solution may be hybrid management: retaining core strategic and commercial functions in-house while subcontracting selected activities such as crew management, insurance claims administration, technical procurement, or safety compliance. Another solution is for a medium-sized Shipowner to create an in-house management platform and then manage ships for other Shipowners to increase scale.

Ship Management Agreement

Because ships are high-value capital assets, a ship management relationship must be governed by a clear written agreement. The agreement should define the manager’s duties, authority, reporting obligations, fee structure, budget procedure, insurance arrangements, bank accounts, limitation of liability, indemnities, termination rights, dispute resolution, law, and jurisdiction. Without precise wording, misunderstandings may arise over spending authority, operational decisions, claims handling, and accountability.

BIMCO developed standard ship management agreements under the SHIPMAN series. Older industry practice often referred to SHIPMAN 98, while modern ship management contracting now gives particular attention to SHIPMAN 2024. Even where the parties do not use a BIMCO form without amendment, the SHIPMAN structure provides a useful checklist for drafting a ship management contract. The form identifies the management services that may be delegated to the manager and sets out a structured approach to operational authority, accounting, insurance, budgeting, liability, compliance, and termination.

Part I of SHIPMAN 98 identifies the ship, the parties, the services selected, and the main commercial details. Boxes 5 to 14 identify the functions that may be delegated, such as technical management, crew management, commercial management, insurance arrangements, accounting, and related services. This is valuable even for Shipowners using in-house management because it shows the range of functions that must be performed somewhere within the organization.

Part II of SHIPMAN 98 expands the manager’s responsibilities. It explains what the manager is expected to do under each selected service area. The agreement can be adapted because not every Shipowner requires the same level of management. One Shipowner may outsource only crew management, while another may transfer full technical, operational, and accounting management to the ship manager.

Clause 6.3 of SHIPMAN 98 is important because it deals with insurance. It provides that insurance policies are to be arranged in the names of both Shipowners and ship managers, giving both parties the benefit of cover. Clause 7 deals with the separation of the Shipowner’s funds from the ship manager’s funds, which is essential for financial transparency. Clause 8 deals with the Management Fee. Clause 9 sets out budgeting and reporting obligations so that the Shipowner can monitor expenditure and performance.

Clause 11 contains important responsibility provisions. In general terms, ship managers are not liable for losses unless they have acted negligently, and the Shipowner indemnifies the ship manager against certain losses and liabilities arising from the management service. Clause 11.4 includes a Himalaya Clause, confirming that the ship manager acts as agent for the Shipowner and may benefit from applicable exclusions or limitations of liability available to the Shipowner.

The remaining provisions of SHIPMAN 98 deal with administration, duration, termination, governing law, jurisdiction, notices, and related matters. Appendices provide space for details of the ship, crew, budgets, insurance, and other operational information. These practical schedules are essential because a ship management agreement must function not only as a legal contract but also as a working management document.

SHIPMAN 2024

SHIPMAN 2024 is the modern BIMCO standard form for ship management agreements and represents a major update to the earlier SHIPMAN forms. It reflects the way ship management has changed since the older editions were drafted. Ship management is no longer limited to technical supervision, crew administration, insurance coordination, and basic operational support. Modern managers must also deal with emissions reporting, carbon cost allocation, cyber risk, sanctions screening, anti-corruption procedures, digital documentation, pre-delivery services, affiliate services, data exchange, remote communication, and increasingly complex compliance duties.

The commercial importance of SHIPMAN 2024 lies in the fact that it gives Shipowners and ship managers a more current contractual framework. Earlier forms were often heavily amended by rider clauses because they did not fully address contemporary regulatory and operational issues. Heavy rider clauses can create uncertainty because individually drafted clauses may conflict with printed clauses, use inconsistent definitions, or fail to fit properly with the structure of the agreement. SHIPMAN 2024 reduces this problem by bringing many modern issues into the standard text itself.

SHIPMAN 2024 may be used for full ship management, technical management, crew management, commercial management, insurance arrangements, accounting support, procurement support, and related services. The parties can select which services are included. This flexibility is important because a Shipowner may not want to outsource the entire management function. One Shipowner may require only technical and crew management. Another may require technical, crew, insurance, accounting, and operational management. A third may require commercial management as well. SHIPMAN 2024 is designed to allow the parties to identify the chosen services clearly rather than assuming that every management function has been transferred.

The agreement remains fundamentally an agency agreement. The ship manager acts for and on behalf of the Shipowner within the authority granted by the agreement. This agency character is essential. It means that the ship manager is not normally operating the ship as owner or principal. Instead, the manager performs agreed functions, enters into operational arrangements, places orders, appoints service providers, and manages day-to-day matters on behalf of the Shipowner. Because ship managers routinely commit money, instruct agents, arrange repairs, employ service providers, and communicate with authorities, the scope of authority must be clear.

A major practical improvement in SHIPMAN 2024 is the clearer recognition of pre-delivery services. In many ship management relationships, the manager begins work before the ship is formally delivered into management. The manager may assist with takeover planning, crew planning, document review, class and flag arrangements, insurance coordination, ship inspection, budget preparation, safety management integration, spare parts review, IT setup, procurement planning, and port or dry-dock arrangements. These services require time and expertise even before the ship begins earning under the management agreement. SHIPMAN 2024 allows the parties to deal more clearly with pre-delivery work and the fee payable for it.

The distinction between pre-delivery management fees and annual management fees is important. Under older forms, disputes could arise where the manager had performed substantial work before delivery but the ship was delayed, the purchase failed, the financing changed, or the Shipowner postponed takeover. If the contract did not deal clearly with this period, the manager’s entitlement to payment could be uncertain. SHIPMAN 2024 addresses this by allowing the parties to record the fee structure more precisely. This is commercially sensible because the manager’s workload often begins well before the ship is formally handed over for management.

SHIPMAN 2024 also modernizes the way the agreement identifies the ship. The ship’s name and IMO number are central to any ship management agreement, and the form makes this information easier to locate. In practice, this avoids confusion where one Shipowner has several ships, where ships are held in single-ship companies, or where a management agreement covers more than one ship. The IMO number is especially important because a ship name may change, but the IMO number remains the permanent identifier.

The annex structure of SHIPMAN 2024 is also significant. Annexes can record ship details, crew details, budget information, associated ships, and fee schedules. A ship management contract is not only a legal document; it is also an operating manual for the relationship between Shipowner and manager. The annexes therefore help the parties organize information that will be used repeatedly during the management period.

SHIPMAN 2024 gives special importance to the relationship between the Shipowner and the entity responsible for ISM Code compliance. Under the ISM Code, the “Company” is the organization responsible for the safe operation of the ship and for pollution prevention. In some cases, the ship manager will be the ISM Company. In other cases, the Shipowner or another entity may hold that role. The agreement must therefore make clear who is responsible for ISM compliance, safety management systems, Document of Compliance matters, Safety Management Certificates, audits, reporting, emergency response, and corrective actions.

Where the ship manager is the ISM Company, the manager assumes a very serious role. The manager must maintain the safety management system, ensure proper reporting, monitor shipboard compliance, arrange internal audits, respond to non-conformities, support the master, and maintain emergency response arrangements. Failure in this area can lead to detention, loss of certificates, insurance complications, cargo claims, pollution liability, injury claims, or serious casualty exposure. SHIPMAN 2024 is therefore valuable because it fits the ship management contract more closely to modern compliance reality.

Environmental compliance is one of the most important reasons for the development of SHIPMAN 2024. Modern ship managers must deal with environmental rules that affect daily operation and financial exposure. These include greenhouse gas reporting, fuel consumption data, energy efficiency requirements, emissions trading obligations, carbon intensity monitoring, voyage data collection, and regional regulatory schemes. A ship manager may collect data, arrange reporting, monitor compliance, and support the Shipowner in meeting environmental obligations, but the cost consequences must be allocated clearly.

One of the most notable updates connected with SHIPMAN 2024 is the treatment of emission trading scheme allowances. Emissions trading creates a financial obligation connected with the ship’s greenhouse gas emissions. Depending on the trading area and applicable regulation, the Shipowner may need to surrender allowances or manage compliance balances linked to the ship’s voyages. The ship manager may have access to the operational data needed for reporting, but the Shipowner, Charterer, or another party may bear the economic cost. A modern management agreement must therefore state who performs the administrative work, who provides data, who pays for allowances, who holds accounts, and who bears consequences of non-compliance.

The emission trading provisions are especially relevant where the ship trades to or from regions with carbon pricing rules. The manager may be required to collect fuel data, monitor voyage scope, calculate emissions exposure, communicate with the Shipowner, support verification, and help ensure that allowances are surrendered on time. However, the manager should not unintentionally become financially responsible for carbon costs that commercially belong to the Shipowner or Charterer. SHIPMAN 2024 helps separate administrative responsibility from economic responsibility.

FuelEU Maritime considerations also make SHIPMAN 2024 more important. FuelEU-style regulation focuses on the greenhouse gas intensity of energy used onboard. This means compliance is not simply a matter of total fuel quantity, but also fuel type, energy content, emissions factor, operational profile, and compliance balance. A ship manager may need to coordinate bunker data, fuel documentation, sustainability certificates, voyage records, compliance statements, and communication with Shipowners and Charterers. Without clear contractual wording, disputes may arise over who is responsible for under-compliance, penalties, pooling decisions, banking or borrowing of compliance balances, and the cost of alternative fuels.

In practical ship management, environmental compliance now affects bunker purchasing, voyage planning, speed instructions, chartering strategy, port rotation, data verification, and accounting. The manager may not control every commercial decision that affects emissions. For example, a Time Charterer may order the ship to trade at higher speed, wait at congested ports, sail on a longer route, or use particular bunkering ports. The Shipowner may control technical efficiency, hull cleaning, machinery maintenance, and energy-saving devices. The manager may administer the system but may not control all the causes of emissions exposure. SHIPMAN 2024 is therefore useful because it encourages the parties to allocate roles carefully.

Cyber security is another important modern issue reflected in SHIPMAN 2024. Ships and shore offices now rely on digital systems for navigation, cargo operations, machinery monitoring, planned maintenance, purchasing, crew administration, payroll, electronic certificates, bunker reporting, chartering communication, and port clearance. A cyber incident may disrupt ship operations, compromise data, affect safety, delay cargo operations, or expose the Shipowner and manager to legal and commercial claims.

A modern ship management agreement must address cyber risk because the manager may operate or access many of the systems that support the ship. The manager may maintain planned maintenance systems, crew databases, procurement platforms, email systems, reporting platforms, electronic document repositories, and emergency communication channels. The Shipowner may own some systems, while the manager may supply others. SHIPMAN 2024 recognizes that cyber security is no longer an optional IT issue but part of operational risk management.

Cyber security obligations may include maintaining appropriate procedures, training personnel, protecting data, reporting incidents, controlling access, backing up records, applying software updates, monitoring suspicious activity, and coordinating with the Shipowner if a cyber incident occurs. The agreement should also clarify whether the manager must follow the Shipowner’s cyber policies, whether the Shipowner must provide secure systems, and who bears cost if new cyber requirements are imposed during the management period.

Sanctions compliance is another area where SHIPMAN 2024 reflects modern shipping practice. International sanctions can affect ships, cargoes, ports, banks, insurers, Charterers, managers, beneficial owners, crew nationalities, bunker suppliers, cargo receivers, and payment flows. A ship manager may be asked to perform services in connection with a trade that becomes restricted or commercially dangerous. The management agreement must therefore provide a mechanism for dealing with sanctions risk.

Sanctions clauses protect both Shipowners and ship managers. The Shipowner should not require the manager to perform unlawful services, deal with sanctioned parties, process prohibited payments, or expose the manager to penalties. Equally, the manager must act carefully and inform the Shipowner if a sanctions issue appears. Modern sanctions compliance requires screening of parties, monitoring of trading areas, careful review of cargoes, attention to payment routes, and rapid reaction when rules change. In today’s market, sanctions risk can arise with little warning, and contractual clarity is essential.

Anti-corruption provisions are also important in SHIPMAN 2024. Ships trade internationally and often deal with port officials, customs authorities, immigration officers, pilots, surveyors, inspectors, agents, police, health officials, and terminal representatives. In some ports, improper payment requests may arise. The manager must have authority and procedures to resist improper demands while still protecting the ship from delay, detention, or unsafe situations. Anti-corruption wording helps define expected conduct and gives the manager contractual support when refusing improper practices.

Anti-corruption compliance is not only a legal issue. It also affects reputation, chartering acceptability, bank compliance, insurance relationships, and corporate governance. Shipowners with strong compliance policies expect managers to follow those standards. Managers with strong compliance systems do not want to be instructed by Shipowners to act in a way that breaches anti-corruption rules. SHIPMAN 2024 helps place these expectations into the contractual relationship.

SHIPMAN 2024 also deals more clearly with affiliates and ancillary services. Many ship management groups operate through networks of associated companies. One group entity may provide technical management, another may handle crew management, another may provide purchasing services, and another may support accounting or IT. This can be efficient, but it must be transparent. The Shipowner needs to know whether services are being performed by the named manager or by an affiliated entity, and how fees or mark-ups are treated.

Affiliate services may create both benefits and risks. A large management group may achieve better procurement, wider technical support, stronger crew pools, and global office coverage through affiliates. However, Shipowners may be concerned about conflicts of interest, undisclosed margins, service quality, or accountability. SHIPMAN 2024 encourages the parties to define these arrangements rather than leaving them to assumption.

Change of control provisions are also commercially important. A Shipowner appoints a manager based on trust, reputation, expertise, personnel, systems, and financial standing. If the manager’s ownership changes, the Shipowner may no longer be dealing with the same risk profile. Similarly, if the Shipowner’s ownership changes, the manager may be concerned about payment risk, sanctions exposure, or commercial direction. A modern agreement should address what happens if control of either party changes during the management period.

Budgeting is another area where SHIPMAN 2024 supports better management discipline. Ship management requires continuous expenditure, and many costs are outside the manager’s complete control. Spare parts, dry-docking, repairs, lubricants, insurance, stores, crew travel, agency costs, regulatory inspections, class surveys, and emergency repairs can all fluctuate. The agreement should therefore define how budgets are prepared, approved, revised, and reported.

The manager should provide an initial budget and regular financial reporting. The Shipowner should fund the manager in time so that the manager can pay suppliers, crew, agents, insurers, and service providers. If funds are not provided promptly, the manager may be unable to perform services properly. A ship may then face delay, crew wage issues, supplier claims, detention, or operational disruption. Clear budget and funding provisions protect both parties.

Accounting transparency remains a central part of SHIPMAN 2024. The manager should keep the Shipowner’s funds separate from the manager’s own money. The manager should maintain proper records, provide supporting documents, and report expenditure accurately. This is especially important where the manager handles several ships for several Shipowners. Segregated accounting reduces the risk of confusion, misuse of funds, or disputes over which ship or Shipowner is responsible for a particular cost.

Insurance arrangements under SHIPMAN 2024 must be aligned with the management structure. Insurance may include Hull and Machinery Insurance (H&M), Protection and Indemnity (P&I), war risks, crew insurances, loss of hire, kidnap and ransom, cyber cover, pollution cover, and other specialist policies. The agreement should specify who arranges cover, who pays premiums, whose names appear on the policies, who handles claims, and who communicates with brokers, underwriters, and clubs.

Where the manager is named on insurance policies, the manager may obtain direct protection for acts performed within the scope of the management agreement. This is commercially important because managers may be drawn into claims even though they do not own the ship. A manager may be sued or blamed in connection with cargo damage, pollution, crew injury, technical failure, unsafe operation, or failure to arrange proper services. Insurance wording and contractual indemnities must therefore work together.

The liability and indemnity framework in SHIPMAN 2024 is one of the most important parts of the agreement. Ship managers perform complex services, but they usually do not receive a fee that would justify assuming unlimited liability for the value of the ship, cargo, pollution exposure, or third-party claims. The agreement must therefore balance accountability with commercial reality. Managers should be liable for negligence or breach within the agreed standard, but they should not become insurers of every operational risk.

A fair ship management agreement should encourage managers to act professionally while recognizing that ship operation involves inherent risks. Machinery can fail, weather can change, ports can delay, suppliers can default, crew members can make mistakes, and Charterers can give problematic instructions. The manager should not be responsible for matters outside its control unless the agreement clearly provides otherwise. SHIPMAN 2024 continues the long-standing approach of limiting manager liability while preserving responsibility for negligent performance.

The Himalaya Clause concept remains important in modern ship management. Managers, employees, agents, affiliates, and subcontractors may need protection equivalent to that available to the Shipowner under relevant contracts or limitation regimes. Without such protection, claimants may attempt to bypass Shipowner defences by suing the manager or its personnel directly. A carefully drafted Himalaya-style protection helps support the agency structure of ship management.

SHIPMAN 2024 is also useful for defining commercial management. Not every ship manager performs commercial management, but where it is included, the manager may fix charters, negotiate with Shipbrokers, prepare voyage estimates, collect freight, monitor hire, deal with demurrage, and manage Charterparty performance. These activities carry different risks from technical management. If the manager is responsible for commercial employment, the agreement should state the scope of authority, reporting duties, commission treatment, and limits on concluding contracts.

Commercial management under SHIPMAN 2024 should be distinguished from technical management. A technical manager may keep the ship in class and ready for service but may have no authority to choose cargoes or negotiate Charterparties. A commercial manager may make decisions affecting freight income, positioning, market exposure, and counterparty risk. Combining both functions can improve coordination, but it also requires clear controls because commercial decisions may increase operational risk.

Crew management under SHIPMAN 2024 may include recruitment, employment administration, certification, medical fitness, travel, payroll, training, welfare, relief planning, disciplinary matters, union arrangements, and compliance with flag-state and international requirements. Crew management must be closely connected with safety management because crew competence is central to seaworthiness, pollution prevention, cargo care, and safe operation.

Where crew management is outsourced, the agreement should clarify whether the manager acts as agent for the Shipowner or whether another entity employs the crew. This distinction affects employment law, wage obligations, social security, repatriation, insurance, and liability for crew claims. The ship management agreement must be consistent with crew employment contracts, flag-state rules, MLC requirements, P&I cover, and union agreements.

Technical management under SHIPMAN 2024 may include planned maintenance, class surveys, statutory certification, repairs, dry-docking, procurement, spare parts, technical inspections, defect reporting, emergency response, hull and machinery performance, and energy efficiency measures. Technical managers must ensure that the ship is maintained in a condition suitable for the intended employment. They must also coordinate with the master, class, flag state, port authorities, and service providers.

Procurement is an area where modern management agreements need care. The manager may purchase stores, spare parts, lubricants, paints, chemicals, equipment, and services on behalf of the Shipowner. The agreement should state whether the manager may use preferred suppliers, whether the manager may receive rebates, whether group purchasing arrangements are allowed, and how savings are reported. Transparent procurement reduces suspicion and protects the relationship.

Data handling is increasingly important in SHIPMAN 2024. Ship management generates large quantities of operational data, including noon reports, fuel consumption, maintenance records, crew records, incident reports, emissions data, certificates, invoices, Charterparty performance data, port documents, and safety reports. The agreement should address who owns the data, who may access it, how long it is retained, how it is protected, and how it is transferred when management ends.

Termination provisions in SHIPMAN 2024 are also important. Ship management relationships may end because of sale of the ship, change of manager, serious breach, non-payment, sanctions issues, prolonged force majeure, loss of ship, insolvency, change of control, or mutual agreement. The agreement should provide an orderly handover process. Poor handover can create serious operational risk because certificates, records, planned maintenance data, crew information, insurance documents, class files, and supplier accounts must be transferred smoothly.

At termination, the manager may still need to assist with handover, final accounts, crew repatriation, claims, audits, outstanding invoices, insurance matters, and document transfer. The Shipowner may need to pay outstanding fees and reimbursements before or during handover. SHIPMAN 2024 helps the parties plan for the end of the relationship before a dispute arises.

Dispute resolution under SHIPMAN 2024 should be selected carefully. Ship management disputes may involve unpaid fees, negligent management, repair costs, crew claims, insurance failures, sanctions issues, budget overruns, authority disputes, or termination claims. The parties should identify the governing law and dispute forum clearly. Arbitration is common in shipping because arbitrators with maritime experience can understand the commercial and technical context of the dispute.

SHIPMAN 2024 also helps Shipowners compare in-house management with third-party management. A Shipowner considering in-house management can use the form as a checklist of all services that must be performed internally. The form shows that ship management involves far more than appointing a superintendent and paying invoices. It requires a structured organization capable of technical, crew, insurance, environmental, accounting, safety, legal, operational, and emergency functions.

For third-party managers, SHIPMAN 2024 provides credibility and standardization. A manager offering services under a recognized BIMCO framework demonstrates that it is prepared to operate under a structured contract with defined duties, reporting requirements, and liability rules. This can make negotiations easier because both sides begin with a familiar industry document.

For Shipowners, SHIPMAN 2024 provides a framework for control. The Shipowner can decide which services are outsourced, approve budgets, monitor reports, review performance, require transparency, and preserve strategic authority. A Shipowner should not treat the management agreement as a formality. The quality of the agreement directly affects the quality of the management relationship.

One of the best uses of SHIPMAN 2024 is as a practical due diligence tool. Before appointing a manager, a Shipowner can review each management function and ask whether the manager has the staff, systems, experience, geographic reach, compliance culture, cyber security, insurance knowledge, crewing capability, and financial reporting structure needed to perform that function. The agreement therefore supports both contract drafting and manager selection.

SHIPMAN 2024 is also relevant for banks, leasing companies, investors, and other financiers. A financier with a security interest in the ship wants assurance that the ship is properly managed, insured, crewed, maintained, and compliant. A recognized ship management agreement can help demonstrate that management responsibility has been allocated professionally. Where a ship is financed through leasing or long-term charter structures, clear management arrangements are particularly important.

In modern shipping, environmental and compliance risks can affect ship value, chartering opportunities, insurance, and finance. A poorly managed ship may suffer detention, emissions penalties, charter rejections, insurance complications, or reputational damage. SHIPMAN 2024 responds to this reality by making the management relationship more suitable for today’s regulatory environment.

Although SHIPMAN 2024 is a standard form, it should not be used mechanically. The parties must still review every selected service, box entry, annex, and rider clause. They must ensure that the agreement matches the actual management structure. If the manager is not providing commercial management, the agreement should not suggest that it is. If the manager is responsible for emissions reporting but not for buying allowances, that distinction should be stated clearly. If an affiliate will provide crew services, that should be disclosed and documented.

The relationship between SHIPMAN 2024 and Charterparties must also be considered. A manager may be required to support Charterparty performance, but the Charterparty may impose obligations on the Shipowner that the manager cannot control unless properly instructed. For example, a Charterparty may require particular speed, cargo readiness, tank cleanliness, emissions reporting, vetting approvals, or port documents. The Shipowner must ensure that the manager receives the Charterparty information needed to perform properly.

The relationship between SHIPMAN 2024 and insurance must be equally coordinated. P&I Clubs and H&M insurers may require notice of management changes, ISM Company identity, trading areas, crewing arrangements, and technical management structure. If the manager is not correctly named or disclosed, insurance difficulties may arise. The Shipowner and manager should therefore align the management agreement with insurance arrangements before the ship enters management.

In practice, the most successful use of SHIPMAN 2024 will come from treating it as a live management framework rather than a document signed and forgotten. Budgets should be reviewed, reports should be read, meetings should be held, performance should be measured, incidents should be analysed, and obligations should be updated when regulations change. Ship management is continuous, and the agreement should support continuous communication.

SHIPMAN 2024 therefore represents more than a new edition of a familiar form. It reflects the modern transformation of ship management from a mainly technical and crewing function into a comprehensive compliance, data, environmental, financial, operational, and risk-management service. It helps Shipowners and managers allocate responsibility in a shipping world shaped by emissions regulation, digital systems, sanctions exposure, cyber threats, higher transparency expectations, and complex commercial structures.

For a Shipowner, the most important lesson of SHIPMAN 2024 is that the management contract should match the real management model. For a ship manager, the most important lesson is that authority, remuneration, liability, reporting, and compliance duties must be clearly stated. For both parties, the value of the form lies in reducing uncertainty before a problem arises.

Structure of Shipowning and Ship Management Organisation:

A shipowning or ship management organization is usually supervised by a Board of Directors (BOD), led by a Chairman or President. The Board of Directors (BOD) sets the company’s overall direction and approves the strategic framework within which management departments operate.

The Board of Directors (BOD) normally determines key policy areas such as:

The philosophy of the company
The type and size of ships
Fleet replacement strategy
Flag policy of the company
The routes and trades
In-house ship management or third-party ship management
The financial performance of the company

Once these policies are established, day-to-day implementation is delegated to internal departments or contracted to third-party managers. The structure must be clear because confusion between ownership decisions, commercial decisions, technical decisions, and operational decisions can create financial loss and regulatory exposure.

Structure of Ship Management:

Ship management functions may be performed by the Shipowner’s own departments or by independent ship management companies. Whether internal or external, the same essential tasks must be covered: purchasing or controlling ships, maintaining them, crewing them, insuring them, supplying them, operating them, fixing employment, accounting for their performance, and coordinating port calls.

Purchase of Ships

Before a shipping company can operate, it must control ships. Control may be obtained through outright ownership, long-term finance-based chartering, bareboat chartering, or ordinary time chartering. Each structure has different consequences for capital investment, operational control, balance sheet treatment, risk, and management responsibility.

1- Outright Acquisition

The traditional method is outright purchase. The Shipowner buys the ship using internal funds, bank finance, mortgage finance, private equity, or another funding source. The ship may be a newbuilding ordered from a shipyard or a second-hand ship acquired in the Sale and Purchase market.

Large Shipowners may employ naval architects, technical project teams, and newbuilding specialists to design ships that match long-term fleet strategy. Other Shipowners prefer standard shipyard designs that can be modified to suit cargo, fuel, trade, environmental, or port requirements. Some Shipowners focus on second-hand tonnage because it allows faster fleet growth and avoids the construction period associated with newbuildings.

2- Finance Based Long Term Chartered

Shipowners may also control ships through long-term finance-based charter structures. These arrangements may be used where the operating company does not wish to commit all the capital required for outright ownership, or where a financial intermediary can obtain tax, accounting, or funding advantages. The structure may resemble leasing a car rather than buying it.

In such arrangements, the operating Shipowner may be deeply involved in the ship’s design and commercial use, sometimes for most of the ship’s working life. The contract may include an option to purchase after a specified period. Historic tax-driven structures, such as the German KG scheme, allowed investors to own ships and pass part of the tax advantage to operators through competitive charter rates. Ships under these structures may be bareboat chartered or time chartered, depending on the intended allocation of control and responsibility.

3- Time Charters

Shipping companies may also time charter ships from other Shipowners rather than own them. Time charters are useful where the company needs temporary capacity, operational flexibility, or market exposure without capital commitment. Time chartering may be used to:

Meet short term commitments or fluctuations in the fleet
Replace ships during a dry dock programme
Meet a seasonal high level of demand

Time-chartered ships may be commercially controlled by the Time Charterer, but technical management usually remains with the Shipowner unless otherwise agreed. This makes time chartering a useful tool for fleet flexibility but not a complete substitute for ownership where long-term operational control is required.

Ship Management’s Technical Departments:

The technical department ensures that the ship remains seaworthy, cargoworthy, classed, certified, maintained, and capable of performing the work promised by the commercial department. A poorly maintained ship becomes unemployable and may be detained, delayed, refused cargo, lose class, suffer breakdowns, or expose the Shipowner to major claims.

Seaworthiness is wider than the ability of the ship to stay afloat. A ship may be physically strong but still unseaworthy if hatch covers leak, cargo ventilation is inadequate, tank coatings are defective, refrigeration fails, pumps cannot handle the intended cargo, or documentation is deficient. Cargoworthiness is therefore an essential part of technical management.

Technical management is commonly divided into two main areas:

Deck Department
Engine-room Department

The Engine-room Department supervises the main engine, auxiliary engines, generators, pumps, boilers, shafting, propeller, lubricants, bunkers, spare parts, planned maintenance, and machinery surveys. Shore-based marine engineers, often called Engineering Superintendents, monitor machinery condition, attend major repairs, supervise overhauls, and support the ship during breakdowns or inspections.

The Deck Department is usually staffed by experienced deck officers who have moved ashore. These Marine Superintendents supervise hull structure, cargo spaces, hatch covers, deck machinery, cranes, mooring equipment, safety equipment, coatings, dry-docking, surveys, and repairs. Marine Superintendents also monitor cargo-readiness matters such as hold cleaning, tank preparation, ventilation, and cargo gear condition.

Failure by the Technical Department can have severe consequences. Class may be suspended, Port State Control (PSC) may detain the ship, cargo operations may be delayed, insurance may be affected, or a casualty may occur. International Maritime Organization (IMO) conventions and national laws give Port State Control (PSC) authorities power to detain sub-standard ships until deficiencies are rectified.

The International Safety Management Code, known as the ISM Code, requires structured safety management, documented procedures, defined responsibilities, emergency preparedness, reporting systems, internal audits, and continual improvement. The ISM Code is a central part of modern ship management and applies through the flag state and international regulatory framework.

Ship Management’s Storing Department:

The Storing Department is responsible for supplying the ship with provisions, bonded stores, deck stores, engine stores, safety equipment, spare parts, chemicals, cleaning materials, and other consumables. Provisioning a ship is not simply a purchasing exercise. The department must consider crew nationality, religion, diet, medical needs, voyage duration, trading route, port availability, storage capacity, and cost control.

Food supply can be complex because crews often include seafarers from different countries with different dietary habits. The Storing Department must plan ahead if the ship is trading to ports where certain foods are expensive, unavailable, or restricted. Poor storing creates crew dissatisfaction, waste, emergency purchasing, and unnecessary cost.

Ship Management’s Insurance Department:

Marine insurance is one of the Shipowner’s largest recurring expenses after bunkers. Insurance protects the Shipowner and manager against physical damage, third-party claims, pollution, cargo liabilities, crew claims, collision liabilities, wreck removal, legal expenses, and other maritime risks. The Insurance Department must arrange cover, monitor renewals, handle claims, preserve evidence, coordinate with brokers, and communicate with underwriters and P&I Clubs.

Insurance for ships generally falls into two broad categories:

Hull and Machinery Insurance (H&M)
Third-Party Insurance – Protection and Indemnity (P&I)

Hull and Machinery Insurance (H&M) covers loss of or damage to the ship itself, including hull, machinery, equipment, and, depending on wording, certain collision and salvage exposures. Lloyd’s of London is historically associated with marine insurance. Lloyd’s developed from a London insurance market dating back to the seventeenth century, where underwriters accepted shares of risk. Today, Lloyd’s syndicates and other marine insurers provide global H&M cover through insurance brokers.

The Shipowner normally accesses marine insurance through a specialist insurance broker. The broker negotiates cover, premium, deductibles, conditions, exclusions, and claims handling. The premium is the price paid for the insurance cover. If a casualty occurs, the claim is usually presented to underwriters through the same broker or claims channel.

Third-Party Insurance is mainly provided through Protection and Indemnity (P&I) Clubs. P&I insurance covers liabilities to third parties, such as cargo claims, crew injury, pollution, damage to fixed and floating objects, wreck removal, stowaways, fines, collision liabilities not covered by H&M, and other legal exposures. P&I Clubs are mutual associations owned by their members, meaning Shipowners insure each other through a club structure.

Protection refers to legal and practical assistance in defending claims. Indemnity refers to reimbursement for liabilities that have been properly incurred and settled. P&I claims require constant attention because cargo claims, crew claims, collision claims, pollution claims, and port damage claims may remain open for long periods.

Ship Management’s Operations Department:

The Operations Department ensures that the ship performs the commercial commitment made by the commercial department. Once a ship has been fixed for a voyage or time charter employment, the operations team turns the contract into practical performance. Operations personnel coordinate the ship, master, agents, terminals, bunkers, cargo interests, surveyors, and internal departments.

The Operations Department makes sure the ship is sent to the correct port at the correct time, follows voyage instructions, maintains communication with Charterers and agents, and receives updated orders. The department plans bunker quantities, bunker ports, fuel grades, speed instructions, weather routing, port rotations, and voyage monitoring.

Operations staff also appoint or coordinate port agents, arrange crew changes with the crewing department, align dry-docking with commercial commitments, monitor cargo operations, collect Statements of Facts, track delays, and support laytime and demurrage documentation. In practice, the Operations Department is the coordination centre of ship management.

Ship Management’s Commercial Department:

Many Shipowners outsource technical, crew, and operational management but retain commercial management. Commercial management includes fixing ships with Charterers, negotiating Charterparties, working with Shipbrokers, evaluating cargo opportunities, monitoring freight markets, and managing liner marketing where applicable.

Where commercial management is included within the ship management company, the commercial and operations departments must work closely. The commercial team must understand the ship’s technical capability and position, while operations must understand the commercial promises made in the Charterparty. A profitable fixture can become a loss if operational details are ignored.

The Commercial Department studies market conditions, receives intelligence from Shipbrokers, prepares voyage estimates, compares cargo alternatives, monitors future employment after discharge, and decides whether a ship should ballast to a more attractive market. The Commercial Department carries responsibility for revenue generation and the overall profitability of the fleet.

Ship Management’s Crewing Department:

Despite technological progress, the safety and success of a ship still depend heavily on its crew. A well-run Crewing Department recruits, screens, trains, certifies, deploys, relieves, and supports seafarers. It must ensure that the ship is manned according to flag-state rules, STCW requirements, ISM Code obligations, union agreements, company standards, and Charterer expectations.

Crew safety is both a human duty and a commercial necessity. A ship with an inexperienced or insufficient crew exposes the Shipowner to casualty risk, detention, cargo claims, pollution, injury claims, and reputational damage. Statutory manning levels depend on ship type, size, trade, flag state, and certificate requirements. The flag of registry is therefore a key factor in crewing policy.

Crew costs vary significantly between countries. Some flag states require nationals to be employed, while others allow international crewing. Crewing companies may supply full crews, manage travel, monitor certificates, supervise training, and arrange timely relief. The Philippines and several other seafaring nations have developed strong reputations in international crew supply.

Labour agreements may also influence manning, wages, welfare, and employment conditions. The ITF (International Transport Workers Federation) represents transport unions worldwide and monitors seafarer welfare, wages, and working conditions. The ITF (International Transport Workers Federation) pays particular attention to ships registered under flags of convenience where manning and labour control may be weaker.

Flags of convenience may attract Shipowners through lower regulation, flexible crewing, and tax advantages, but they may also attract scrutiny from unions, Port State Control (PSC), Charterers, and insurers. Some traditional maritime nations have created Second Registers or Open Registers to retain shipping business while offering more flexible crewing and tax arrangements. Examples include Norway, the United Kingdom, Germany, Belgium, Denmark, France, and Spain. The Isle of Man is an example of a register associated with the United Kingdom’s offshore framework.

The ISM Code and STCW framework set minimum standards for training, certification, management, and safety administration. A Crewing Department must maintain records, monitor expiry dates, plan reliefs, verify competence, and ensure the crew onboard matches both legal requirements and the ship’s operational needs.

Ship Management’s Accounting Department:

The Accounting Department controls financial reporting, budgeting, cost monitoring, voyage results, management accounts, bank accounts, payment approvals, port disbursement accounts, supplier invoices, crew wages, insurance payments, management fees, and owner reporting. Because ship managers commit substantial expenditure on behalf of Shipowners, accounting procedures must be precise.

A Shipowner entrusting a ship manager with ships worth tens of millions of dollars must also trust that manager to spend significant daily amounts on bunkers, stores, repairs, crew, insurance, port services, and statutory compliance. The management agreement should therefore state how accounts are maintained, how funds are separated, how budgets are approved, how payments are authorised, and how reports are delivered.

Shipowners need to know whether ships are making a profit or a loss. The commercial department prepares voyage estimates before fixing new business. The accounting department later compares the actual result against the estimate so that future decisions become more accurate.

To make a voyage estimate, three (3) cost categories are normally considered:

1- Fixed costs: These costs arise regardless of whether the ship is trading, waiting, repairing, or idle. They include depreciation or amortization, loan repayment, interest, and other ownership-related costs. Depreciation reflects the need to write off the ship’s capital cost over its working life.

2- Operating costs: These costs arise from keeping the ship operational, whether or not the ship is earning freight. Crew wages, insurance, maintenance, stores, lubes, management fees, and routine technical expenses are common operating costs. Managers convert these costs into daily figures for use in voyage estimates.

3- Voyage costs: These are costs directly linked to a specific voyage, such as bunkers, port charges, canal dues, agency fees, towage, pilotage, cargo handling where for the Shipowner’s account, and other voyage-specific expenses. The voyage estimate also includes sea days, port days, ballast distance, laden distance, fuel consumption, loading rates, and discharge rates.

The estimated voyage income is calculated from Freight, cargo quantity, demurrage prospects, and any other earnings, less commissions, cargo handling costs, and relevant deductions. The result is compared against total voyage cost and daily running cost to determine expected gross profit. Several voyage estimates may be prepared before serious negotiations begin so that the Commercial Department can choose the best employment.

Post-voyage accounting is equally important. Actual bunker consumption, port expenses, cargo handling costs, delays, demurrage, despatch, repairs, claims, and agency costs must be compared with the estimate. This creates a continuous accounting dialogue between ship managers and Shipowners.

Ship Manager is an Agent

The Shipowner is the principal and the ship manager acts as agent. The ship manager enters into contracts, appoints agents, orders stores, arranges repairs, pays invoices, and gives operational instructions on behalf of the Shipowner. The scope of authority must be clearly defined in the ship management agreement.

Many Shipowners register each ship in a separate shipowning company for financing, accounting, tax, limitation, or legal reasons. A single ship manager may manage the entire fleet even though each ship is owned by a separate corporate entity. This structure makes agency authority and identity of principal especially important.

A ship manager may sometimes argue that it is only an agent and not personally liable for the Shipowner’s debts. Whether that argument succeeds depends on the facts, the contract, the manager’s conduct, and whether the third party knew the identity of the principal. Commercial reputation is therefore important. Suppliers, agents, repairers, and insurers must understand who is contracting and who is responsible for payment.

Ship’s Port Agents

Every port call requires practical local representation. The port agent arranges the ship’s entry, stay, cargo operation, and departure. The port agent deals with port authorities, customs, immigration, terminal operators, stevedores, pilots, tug companies, suppliers, surveyors, doctors, consulates, and local service providers.

Although the Ship Master could theoretically handle many port formalities, this is impractical except perhaps for small ships trading repeatedly on the same route. The Ship Manager normally appoints the port agent, though Charterers may request or nominate a particular agent under the Charterparty. Even where the Charterer nominates the agent, the agent appointed for the port call is generally the agent of the ship and must protect the ship’s interests.

The Ship Manager must keep the port agent informed of the ship’s ETA (Expected Time of Arrival), cargo requirements, crew changes, medical needs, bunkers, stores, repairs, cash requirements, documentation, and any special circumstances. The Ship Master also communicates directly with the port agent to advise operational needs, deficiencies, illness, damage, or urgent requirements.

As the ship departs, the port agent may notify the next port agent of ETA (Expected Time of Arrival), crew matters, bunker or store requirements, medical needs, and any special instructions. Efficient communication between Ship Manager, Ship Master, and port agent reduces delay and prevents avoidable cost.

Port Agents’ Duties:

1- Before Ship Arrival

The Port Agent arranges a berth and discusses the cargo handling details with the terminal operator and stevedores
The Port Agent books pilot and tug boats
The Port Agent arranges customs and immigration officers
The Port Agent arranges a doctor to attend for routine matters or in respect of illness
The Port Agent arranges the delivery of supplies of food, water, bunkers, and stores of all kinds
The Port Agent prepares the required ship’s documents, eg inward and outward clearance, light and port dues, etc.
The Port Agent collects mail for the ship
The Port Agent arranges a government official or consular officer to be present if a crew member is going to be embarked or disembarked
The Port Agent arranges the transportation to and from airports and railways stations for crew members arriving and leaving

2- On Ship Arrival

The Port Agent boards the ship promptly on arrival of the ship
The Port Agent meets with the Master, Chief Officer, and Chief Engineer Officer to discuss their various requirements of the ship
The Port Agent arranges cash to be brought on board for disbursement to the crew
The Port Agent arranges to visit a doctor or dentist for crew members
The Port Agent arranges well-defined details of loading/discharging of cargo such as mobile cranes for heavy lifts, space for hazardous goods, etc.
The Port Agent reports insurance and General Average (GA) claims, if any, to the Principal
The Port Agent arranges the attendance of surveyors for either cargo or ship damage, or both

3- During Ship Call

The Port Agent communicates periodically with the crew members and cargo superintendent on proceeding cargo work
The Port Agent arranges the signing of Mate’s Receipts (MR) and Bills of Lading (B/L) towards the end of cargo works
The Port Agent arranges payments of bills and invoices for goods and services provided to the ship
The Port Agent communicates regularly with the principal regarding the cargo progress and sailing prospects

4- On Ship Departure

The Port Agent obtains from the Master the ETA (Expected Time of Arrival) at the next port and informs the next port agent about the ship’s requirements

5- After Ship Departure

The Port Agent advises the Agent at the next port of the ETA (Expected Time of Arrival) and notifies the requirements of the ship on arrivals such as water and bunkers. The ship may have to wait at anchor for a berth, and bunkers, stores, and provisions must be delivered by boat
The Port Agent advises the Agent at the next port about special medical requirements of the crew members so that there is sufficient time to make the essential arrangements

The Ship Manager must instruct the port agent in good time. Instructions should cover CTM (Cash To Master), stores, bunkers, crew changes, cargo documentation, survey attendance, medical assistance, repairs, and any special requirements. Late or incomplete instructions may delay the ship, increase costs, or create disputes with Charterers and service providers.

Summary

Ship management is the professional coordination of the technical, operational, commercial, financial, insurance, crewing, storing, and agency functions required to keep a ship trading safely and profitably. A Shipowner may choose In-House Ship Management, Third-Party Ship Management, or a hybrid model. The best structure depends on fleet size, cost, expertise, control, and commercial strategy.

A properly drafted Ship Management Agreement is essential. SHIPMAN 98 provides a recognized framework for defining duties, fees, budgeting, insurance, liability, indemnity, agency, termination, and reporting. Even when amended, it remains a practical guide for identifying the full range of management responsibilities.

The Technical Department keeps the ship seaworthy and cargoworthy. The Storing Department supplies provisions and stores. The Insurance Department arranges Hull and Machinery Insurance (H&M) and Protection and Indemnity (P&I). The Operations Department coordinates voyages, agents, bunkers, crew changes, and port calls. The Commercial Department fixes employment and monitors profitability. The Crewing Department ensures that properly qualified seafarers are recruited, certified, relieved, and supported. The Accounting Department monitors budgets, voyage estimates, payments, and financial performance.

The ship manager usually acts as agent for the Shipowner. This agency role must be understood by suppliers, port agents, service providers, and Charterers. Port agents are also essential because every port call requires local coordination, documentation, clearance, cargo support, crew assistance, and communication with the next port.

Effective ship management protects the Shipowner’s asset, supports safe operation, reduces regulatory risk, improves commercial performance, and ensures that the ship remains a reliable revenue-earning unit in the international shipping market.

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