Maritime & Trade Blog

Video: The changing face of ship owning




Ship management companies, which provide crewing and technical expertise, play a growing role in setting maritime safety and operational efficiency standards.

Richard Clayton

Interview Transcript

How has the emergence of new investors in shipping led to changes in the way ships are operated?

The past five years have been quite difficult for traditional ship owners; with low freight rates providing poor returns for highly leveraged companies. The upturn for the dry cargo and the tanker freight markets began at the end of 2012 and the early months of 2013. And as the traditional owners gathered their money for an assault on the market, they were overtaken by outside investors - asset managers, pension funds - who saw ideal opportunity with low new building prices on the one hand, and the prospect of much higher freight rates on the other. Many new building deals were signed by these non-shipping companies. But of course, they did not have, and still do not have, technical or operation teams to take over the running of these ships after they were delivered. So they signed agreements with ship management companies.

What does this mean for traditional ship owners, and for established ship managers?

Over the past 30 or 40 years, ship management has grown to become one of the key sectors of the shipping industry. Ship managers provide crewing and technical expertise for smaller companies. During the difficult five years, traditional shipping companies have maintained their crewing and technical and operational expertise. But now they are having to compete with the ship managers for the best qualified and the most highly-trained seafarers and marine superintendents. And these managers now look after 300, 400, perhaps even 500 ships. The managers have invested in crew training facilities, and provide new building supervision for dozens of ships. So as the asset managers gave their ships to the ship managers, the traditional shipping companies are finding it a real struggle to compete.

How will ship ownership look in 2020 if the current trends are played out?

I think it's fair to say that things haven't gone the way asset managers would like. As we reach the final quarter of 2014, dry cargo freight rates remains stubbornly low. And while the tanker market is better, it's not significantly so. Which means that shipyards are delivering ships into a market with asset prices that have hardly moved in the past two years.

I think ship managers will be able to provide full management services for several years to come. And that's important because it gives them a long-term prospective. Ship managers are new leading the way in safety initiatives and in operational efficiency. And they're setting the standards that ship owners are having to meet. They won the confidence of oil majors and of maritime regulators. So at the end of the day as we approach 2020, by which time there will be far fewer quality seafarers available, ship managers will be seen as ship owners in all but name.

Richard Clayton Chief Analyst, IHS Maritime & Trade