In turbulent times like these for the Shipping Industry, Crowley Accord Ship Management offers a much-needed solution for the Ship owners. The ‘The Win-Win Solution’ offer, or as Mr. Sanjay Shesh, Managing Director of Crowley Accord Ship Management, likes to call it, ‘Cooperating 100% with the owner’.
Staying true to its name, the concept basically entails that the Ship Management Company only makes profits when the Ship owners make a profit. Putting into words the requirement for this solution, Mr. Shesh explains how the concept came about, “What I have observed having done Ship Management from India for the last 9 years, one of the biggest requirement from the ship owners has been to reduce the management fee. Although on the larger scale when it compares to the operating cost of the ship the management fee is significantly less, it is something that has to be reduced to save costs which is extremely important in the current market situation.”
The only requirement is for the ship owners to pay the management cost, for the Ship Management Company to be able to provide the service. However, they do not stand to make any profits unless the ship owners make profits themselves. In his own words, “If the owner covers the basic management cost, we work for them. Once he makes profits on freight rates, we then expect the ship owner to share with us a part of their earnings.”
The Ship Management Company put this concept into force about two years ago and has had considerable success with it, “We have carried this out with a couple of our clients and those clients have been very honest with us. Now the bulk rate has gone up and they’ve shared their freight rates with us, it works well with us and in a market which has been terrible for Shipping in the last two to three years, ship owners have welcomed this kind of change.”
However, every coin has two sides and even though this is quite an ideal deal, they have faced some challenges in operating it, “The biggest problem we have faced so far, is that due to the recession in the last two years, the ship owners have not had enough money to change the management and that is one of the reasons why they couldn’t accept our no profit management policy. Therefore, although there has been a huge response, when it came to changing management it was difficult because change of management does cost some money.”
Why should owners go for this? The answer to this is pretty simple; to save money and to build a long term relationship. “We have close relationships with our clients and we would like to share their pain and support them in tough times.”
Concluding, Mr. Shesh threw light on some of the important aspects the ship owner should keep in mind, “ The ship owner is the most responsible person in the entire chain of Shipping, he should not lose out on the long term, in order to save a couple of dollars here and there. Having high responsibility, the ship owner must be careful not to compromise on the payment of ships because one breach of safety can lead him to very big losses. Instead, the owner can cut down on management fee and on various overheads. As we are qualified to do it, we support them with this. We are very cautious and make sure there’s no compromise in safety.”
Source: Kavita Mishra / TST NewsdeskPrevious Next