Ship Management

There are now many such companies based in different parts of the world.  These companies contain all the different departments needed to provide an efficient service for which they charge a fee.  Because of their size they are able to attract top-class executives and the large numbers of ships under their management enable them to enjoy economies of scale. This is another way of saying that their fees charged to each individual ship is reduced in proportion to the number of ships they serve. There is, of course a dilemma for the medium sized shipowner who will have to consider the benefits of using his own staff over which he has direct control and balance this against the economies in using a third party to manage his ships.  Sometimes that problem is solved by sub-contracting only a part of the management function which is possible in view of the clear demarcation between the different activities in ship management.  A particular aspect of this partial sub-contracting will be covered later. Another device that has successfully overcome the lack of economies of scale for the medium sized shipowner has been contracting to manage other owners’ ships by the same personnel as are employed in caring for the owner’s own vessels. In view of the large amounts of money and capital assets involved, a very clear written agreement is essential if disputes and misunderstandings are to be avoided.  Each management agreement is probably unique but the Baltic & International Maritime Council (BIMCO) has compiled a printed Standard Ship Management Agreement known as ‘SHIPMAN 98’ which, even if it is not used in its entirety, provides a first class check-list of all the matters that should be considered in making such a contract. Each actual management agreement will be individual because the ship owner may choose to handle some of the activities itself or use a different manager for example to handle crewing.