Third party ship managers are ring fenced from the ravages of the current financial crisis and could even see business increasing as owners strive to keep fixed overhead costs down by delaying taking ships back in-house and ships repossessed by banks are forced to seek third party management expertise.
According to Guy Morel, InterManager General Secretary, there is also good reason to believe that high vessel running costs will abate “because of the misery being experienced by ship owners,” especially in the area of lub oils and dry dockings.
“The proof is that during the boom times in the shipping markets when ship owners were making a lot of money, managers were making the same amount of money as they were before. That proved that movements in the shipping markets are not affecting ship managers,” he said.
“For third party ship managers, the number of ships afloat will not change and the number of ships managed will either remain the same or increase. I do not think in this period of turmoil, that we will see any ship owner making the decision to increase his fixed overhead costs by taking his management activities back in house. There will be some but they will be very daring. Most ship owners will think they may have to dispose of their assets in time and will have to remain very liquid.”
This will be positive for ship managers, he stressed as the level of business from banks looks to generate more business for ship managers. “All in all we will have a market situation that will be rather positive for managers.
“Where we will be feeling pressure is from owners forced to reduce costs in an environment where running costs were growing at a very fast rate. But that could be to the advantage of ship managers because the larger managers will be able to reduce running costs through their economies of scale. Secondly I do think crew shortages and the increase in crew costs may abate because there will be fewer deliveries and more vessels scrapped and laid up. So there is likely to be reduced growth in demand.
“I also think that the number of officers who have deserted a seafaring career may return to sea. I am thinking Indians in particular who have been turning to shore-based jobs and now may find themselves unemployed. This may just balance things out,” he told SMI.
