Who is a Ship Operator?

Who is a Ship Operator? 

Ship Operator, can also be used in plural as Ship Operators. This name rarely appears in a Charter Party except sometimes as a signatory.

In a Charter Party, one party can only be an owner or charterer. Ship Operator is someone who is speculating on the direction of the freight market.

Ship Operator charters in ship at cheap levels before the market rises and/or Ship Operator will take in cargoes under the form of a COA (Contract of Affreightment) at hopefully higher equivalent levels.


Ship Operator as Freight Market Practitioner

In theory, the ships should always have contracts to go in ballast (empty) to a port of loading and then carry that loaded (laden) cargo. In practice, ships go out of position and expected dates of cargo readiness change. Therefore, depending on the size of Ship Operator, in other words the number of ships on time charter and number of cargoes under control, the Ship Operator may come into the freight market either:

  1. Ship Operator looks for a ship from the market that will carry a spare cargo. In this case, if a ship is chartered in, then under that relevant Charter Party the Ship Operator will become charterer and the true owners of the chartered vessel will be the Actual Shipowners (Head Owners or Beneficial Owners)
  2. Ship Operator looks for employment from the market for a spare ship within his chartered fleet. In any resulting Charter Party, the ship operator who has the ship on period Time Charter (T/C) (as charterers) becomes the owners for the Re-let Voyage or Time Charter Trip (TCT). Ship Operators who have become owners are sometimes called Disponent Owners or Time Charter Owners and the original owners, who still own the ship and pay for its upkeep and for the crew, are called Head Owners or Beneficial Owners.

These terms are often used in shipping conversations and it can become confusing, so it is important to be precise which type of owners are meant. Good examples of Ship Operators are Cobelfret, Bocimar, HandyBulk LLC or Kleimar.

Ship Operators can sometimes have limited financial strength, since effectively they are performing a balancing act between chartering in and out. Ship Operators may be less financially secure than an owner who owns ships or a charterer who owns coal mines. However, many operators are very substantial. Some even move into buying ships such as Bocimar. In this case, these Ship Operators are called Owner Operators.

What is the difference between ship owners and operators in the dry bulk shipping?

In the dry bulk shipping industry, there is a distinction between ship owners and operators.

A ship owner is the individual or company that owns the vessel. They are responsible for financing the purchase or construction of the ship and hold legal ownership of the vessel. As the owner, they are entitled to the profits generated by the vessel and are responsible for its maintenance, insurance, and any other related costs.

On the other hand, a ship operator is a company that operates the vessel on behalf of the owner. The operator is responsible for managing the day-to-day operations of the ship, including crewing, chartering, and cargo handling. They may also be responsible for ensuring that the vessel complies with safety and environmental regulations, and for arranging any necessary repairs or maintenance.

In some cases, the owner and operator may be the same entity. However, in many cases, the owner may choose to outsource the operational management of the vessel to a specialized ship operator. This allows the owner to focus on their core business of ship ownership, while the operator takes care of the operational details.


Ship Operator Vs Ship Owner

A ship operator and a ship owner are two distinct roles within the shipping industry, each with their own responsibilities and functions. While there can be some overlap in their roles, they generally have separate duties.

Ship Operator: A ship operator is responsible for managing the daily operations and commercial aspects of a vessel or a fleet of vessels. Their main responsibilities include:

  1. Navigation and voyage planning: Ensuring the vessel follows the most efficient and safe routes.
  2. Chartering: Negotiating and entering into contracts with charterers to lease the vessel for a specific period or voyage.
  3. Cargo handling: Coordinating the loading, stowage, and unloading of cargo, as well as managing any cargo-related issues.
  4. Regulatory compliance: Ensuring that the vessel adheres to all relevant maritime regulations, including safety, environmental, and customs requirements.

Ship Owner: A ship owner is an individual or company that owns a vessel or a fleet of vessels. The ship owner is typically responsible for:

  1. Financing: Acquiring the necessary funds to purchase or build a vessel and cover its operational costs.
  2. Risk management: Insuring the vessel and cargo against potential losses, damages, or liabilities.
  3. Investment decisions: Deciding whether to buy or sell vessels, invest in upgrades, or expand the fleet.
  4. Overall performance: Monitoring the profitability and performance of the vessel or fleet, and making strategic decisions to maximize returns.
  5. Crew management: Ensuring that the ship is adequately staffed with trained and qualified personnel.
  6. Ship maintenance: Overseeing regular maintenance and repairs to keep the ship in optimal condition.

In some cases, a ship owner may also act as the ship operator, especially in smaller shipping companies where the owner directly manages the vessel operations. However, in larger organizations or when an owner owns multiple vessels, the owner may contract a ship management company or a third-party ship operator to handle the day-to-day operations of their ships. This allows the ship owner to focus on the strategic and financial aspects of their business while the operator ensures the efficient and safe functioning of the vessels.


Ship Operator Vs Ship Manager Case Study

In the case of the Stema Barge II, the Admiralty Court examined the Limitation Convention 1976 in detail to determine whether the third defendant company, Stema Shipping (UK) Limited (Stema UK), was entitled to limit its liability. The Court also looked at the meaning of “Operator” and “Manager” in the Convention, which had not been previously considered by an English court.

The background to the case was that in 2015, severe weather caused damage to a railway line in England. Stema UK was contracted to provide rock for repairs, which it purchased from its associated company, Stema A/S. The rock was transported on the Stema Barge II from Norway and anchored in an agreed location. However, in November 2016, the barge dragged anchor in gale force winds and allegedly damaged an electricity cable owned by Reseau de Transport D’Electricite (RTE).

RTE accepted that the registered owner of the barge, Splitt Chartering APS, and the charterer, Stema A/S, were entitled to limit their liability, but argued that Stema UK was not entitled to do so.

The Admiralty Court considered the meaning of “Operator” and “Manager” in the Convention, as it was necessary to determine whether Stema UK fell within these definitions and could therefore limit its liability. The Court examined the Convention in detail and provided a thorough analysis of the relevant provisions.

This case is significant as it is the first time that an English court has considered the issue of the meaning of “Manager” in the Convention. The Court’s analysis provides useful guidance for future cases involving the interpretation of the Convention.

An agreement in writing existed between Splitt and Stema A/S, regarding the transportation of rock from Norway to the United Kingdom for a certain project via Stema Barge II. While the contract did not conform to conventional charter party form, it was uncontested that Stema A/S acted as the Charterer. However, there was testimony from a Stema A/S employee who claimed to be “an Operator” with daily obligations for the Splitt-owned barges’ operation. This individual followed the Barge Operator Manual, which detailed procedures such as tug fixing, insurance, load and discharge port surveys, and weather routing.

Although Stema UK was the contracting party with the primary railway repairer on land for the supply of rock, it had some involvement with the barge. Stema UK submitted a Method Statement to the rail repairer, which contained information such as anchorage and transshipment locations. They also submitted a Safety Statement and other documents, including a Man Overboard Procedure.

Upon the barge’s arrival off the coast of England in November 2016, Stema UK assigned a barge master and a crew member, who were working under a shore-based superintendent, also from Stema UK. These personnel were jointly responsible for dropping the barge’s anchor and adhering to a checklist, which included verifying the navigation lights’ illumination, the emergency towing wire’s readiness, ballasting arrangements, generator operations, and monitoring the barge’s position.

On the night of the incident, while the decision to leave the barge anchored to weather the storm was ultimately made by Splitt, the choice was based on a meeting’s conclusion on-site, attended by two individuals from Stema A/S and two from Stema UK.

Based on the facts presented, it is evident that both Stema A/S and Stema UK played a role in the physical activities surrounding the barge. Stema UK asserted that their responsibilities amounted to management and control, qualifying them as the Operator. Conversely, RTE contended that Stema A/S was both the Charterer and Operator, and Stema UK was merely a purchaser of rocks, with limited tasks on the barge that did not warrant Operator status.

In order to interpret Article 1(2) and understand the meanings of “Operator” and “Manager,” the Judge considered various sources. These sources included the travaux preparatoire of the 1976 Limitation Convention, the Australian Federal Court decision in ASP Ship Management Pty Ltd v The Administrative Appeals Tribunal, the language of BIMCO’s Shipman contract, as well as practitioners’ textbooks and industry dictionaries.

Both parties in this case acknowledged the potential for overlap between the meanings of Operator and Manager. The Judge ultimately concluded that a “Manager” in the context of the Limitation Convention is someone entrusted by the Owner with sufficient tasks to ensure that a vessel is safely operated, properly manned, properly maintained, and profitably employed. If someone is entrusted with only one limited task, they may be described as assisting in the management of the ship rather than being the Manager of the ship.

As for the meaning of “Operator” in the Limitation Convention, the Judge noted that it includes the Manager, and in many cases involving conventional merchant vessels, there may be little scope for the definition to go further than that. However, in this case, which concerns a dumb barge, the Judge asserted that those who cause an unmanned ship to be physically operated have some management and control of the ship. If individuals are permitted by the Owner to send their employees onboard the ship to operate the ship’s machinery in the ordinary course of the ship’s business, then they can be considered the Operator within the ordinary meaning of that phrase, even if they are not the Manager.

The Judge astutely observed that Article 1(2) explicitly encompassing both the terms “Operator” and “Manager” implies that there may be entities that meet the criteria to qualify as an Operator but not as a Manager.

In defining the aforementioned term, the Judge recognized that the definition of “Operator” should be construed in the context of the Limitation Convention’s objective and purpose. To elaborate, the Judge pointed out that if a non-motorized barge, for instance, was utilized in such an operation, it would necessitate anchoring upon arrival, and typically the Owner would be responsible for arranging the necessary measures. The Judge opined that if an Owner could limit their liability for losses resulting from negligent performance of such tasks, but a third-party engaged to perform the same tasks could not, it would hinder international trade via sea.

Applying the Judge’s framework to the case’s particulars, it was evident that Stema UK could not be deemed the Operator at any point before the barge arrived off the English Coast. It was also apparent that Stema A/S retained some operational authority after the barge was anchored. However, the Judge noted that once the barge reached its destination, Stema UK had “real involvement” with the barge, including anchoring and ballasting. Additionally, only employees of Stema UK boarded the barge while it was anchored. Equally, if not more significantly, the decision to leave the barge at anchor on the evening of the mishap was made by the Owner, Splitt, based on advice from Stema UK personnel on-site.

Taking into account all of the evidence, the Judge concluded that the nature of Stema UK’s barge operation during the relevant period was such that it was appropriate to describe them as the Operator, thus entitling them to limit their liability.

In arriving at the aforementioned verdict, the Judge rejected RTE’s contention that the use of the term “the” preceding “Operator” in the Convention indicated that there could only be one Operator. The Judge did note, however, that the facts would have to demonstrate that, as in this case, the division of operational tasks was sufficient to justify describing both parties as Operators.


What is the Difference Between a Shipowner, Disponent Owner and Carrier?

The terms “Shipowner,” “Disponent Owner,” and “Carrier” refer to distinct roles within the maritime industry.

A Shipowner is the individual or company that legally owns a vessel. The Shipowner may also be responsible for the vessel’s operation, maintenance, and management, or they may hire third-party entities to perform these functions.

A Disponent Owner is a person or company that charters a vessel from the Shipowner for a specific period. The Disponent Owner typically assumes the responsibilities and risks associated with the vessel’s operation during the charter period, such as arranging for cargo loading and unloading, hiring crew, and maintaining the vessel’s seaworthiness.

A Carrier is a person or company that transports goods or passengers by sea on behalf of others. The Carrier may be the Shipowner, Disponent Owner, or a third-party entity hired by either of them to transport the cargo or passengers. The Carrier assumes responsibility for the cargo or passengers’ safe and timely delivery and may provide additional services, such as warehousing, packing, or customs clearance.



Top Dry Bulk Ship Operators 

Dry bulk ship operators specialize in the transportation of dry bulk commodities such as coal, iron ore, grains, and other raw materials. These companies typically own or manage fleets of dry bulk carriers, including Handysize, Handymax, Panamax, and Capesize vessels. Here are some of the top dry bulk ship operators:

  1. Oldendorff Carriers: A German shipping company, Oldendorff is one of the largest dry bulk operators globally, known for its large fleet of owned and chartered vessels.
  2. Pacific Basin Shipping Limited: A Hong Kong-based shipping company, Pacific Basin specializes in the Handysize and Supramax dry bulk vessel segments.
  3. Star Bulk Carriers Corp: A global shipping company based in Greece, Star Bulk operates a diverse fleet of dry bulk vessels, ranging from Supramax to Capesize.
  4. Norden: A Danish shipping company with a long history, Norden operates a fleet of Handysize, Supramax, and Panamax dry bulk carriers.
  5. Golden Ocean Group Limited: A Bermuda-based shipping company, Golden Ocean operates a fleet of dry bulk vessels, including Panamax, Supramax, and Capesize carriers.
  6. Genco Shipping & Trading Limited: A US-based shipping company, Genco focuses on the transportation of dry bulk commodities with a fleet that includes Handysize, Supramax, Ultramax, Panamax, and Capesize vessels.
  7. HandyBulk LLC: A Panama-based shipping company, HandyBulk operates a fleet of Handy, Hadymax, Supramax, and Ultramax dry bulk carriers.
  8. Western Bulk: A Norwegian shipping company, Western Bulk specializes in the chartering and operation of Handysize, Handymax, and Supramax dry bulk carriers.
  9. Navios Maritime Holdings Inc.: A Greek shipping company, Navios operates a diverse fleet of dry bulk carriers, including Handysize, Panamax, Capesize, and Ultra-large carriers.
  10. Wisdom Marine Lines: A Taiwanese shipping company, Wisdom Marine focuses on the operation of Handysize and Supramax dry bulk carriers.



Top Ship Operators 

Currently, the following are some of the top ship operators (including container, bulk, and tanker) in the world:

  1. A.P. Moller-Maersk Group: A Danish conglomerate, Maersk is the world’s largest container shipping company, operating a fleet of over 700 vessels.
  2. Mediterranean Shipping Company (MSC): A Swiss-Italian international shipping line, MSC is the second-largest container shipping company globally, with a fleet of more than 500 vessels.
  3. CMA CGM Group: A French shipping company, CMA CGM is one of the world’s leading container shipping operators, with a fleet of over 500 vessels.
  4. COSCO Shipping: A Chinese state-owned shipping and logistics services company, COSCO is one of the largest dry bulk and container shipping operators globally.
  5. Hapag-Lloyd: A German shipping company, Hapag-Lloyd is a leading global container shipping operator, with a fleet of over 200 vessels.
  6. Ocean Network Express (ONE): A Japanese shipping company formed through the merger of three major Japanese carriers, ONE is a major container shipping operator with a fleet of over 200 vessels.
  7. Evergreen Marine Corp: A Taiwanese shipping company, Evergreen is a prominent global container shipping operator with a fleet of over 200 vessels.
  8. NYK Line: A Japanese shipping company, NYK Line operates a diverse fleet, including container ships, bulk carriers, and tankers.
  9. MOL (Mitsui O.S.K. Lines): Another Japanese shipping company, MOL operates a varied fleet of vessels, such as container ships, bulk carriers, and tankers.
  10. Hyundai Merchant Marine (HMM): A South Korean shipping company, HMM is a significant container shipping operator with a growing fleet of vessels.

Please note that the shipping industry is dynamic, and rankings may change over time. Make sure to check for the most recent information when evaluating the top ship operators.