Third party ship managers improve the quality of shipping. True ?

Abstract

Third Party Ship Managers (TPSM) can be entrusted with either commercial, technical management or both, should shipowners decide to outsource their vessels’ management. Under the acclaimed excellence of well management and maintenance of vessels by TPSM, shipowners are promised the gain of competitive advantages. However, despite the claim that TPSM can excel on behalf of shipowners, only 20% of the world fleet are managed by TPSM which highlights that shipowners may not have sufficient confidence in TPSM to provide better quality of shipping. While the backgrounds of shipowners who engaged shipmanagers have been widely examined in previous literatures, few have focused on the examination of TPSM alone. In addition, little research has been done on the idea of quality of shipping. To address these gaps, this report aims to address the idea of quality of shipping from the perspectives of shipowners and TPSM in the following 3 areas: (i) Cost efficiency, (ii) Technical management of vessels, and (iii) Crew performance and welfare. In this report, only technical and crew management are examined in detail. Performance indicators are then proposed with respect to the 3 areas identified to allow shipping stakeholders to measure and monitor the effectiveness of management systems and practices. Interviews with 7 shipping stakeholders and a survey with a target sample size of 218 were carried out to collect information and data for this report. From the results, shipowners felt that engaging TPSM do not bring about more benefits despite the claim that shipowners may gain competitive advantages from being part of TPSM’s large size of fleet. However, it is to be noted that TPSM do provide a minimum standard of quality of shipping by helping shipowners meet the regulatory requirements to run the vessels. Several other factors such as control and transparency, communication within cross-functional departments, knowledge and commitment were also identified as areas that may allow TPSM to provide higher quality of shipping in the eyes of the shipowners. Even with these areas of quality of shipping identified, shipowners remain doubtful as to whether TPSM do improve the quality of shipping. From this report, quality of shipping could be better understood in the eyes of shipowners and shipmanagers. With incrementally conscious efforts for quality vessel management, this report aims to help shipping stakeholders to understand the improvement of quality from the perspectives of TPSM. However, due to constraints in this study, future studies could be done to analyse quality from perspectives of other shipping stakeholders and in specific shipping sectors such as containers, dry bulk and wet bulk.