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Ship Management: Path To Competitive Advantage

The World Of Ship Management

80% of international trade is transported by sea where such operations have seen annual growth rates of 4%. It is evident that the maritime transport industry plays an essential part in the supply chains of modern day business.
Like in many other industries many ship-owners have looked to specialize in their value-adding activities and to outsource portions of their non-core competency operations. This is particularly prevalent for activities related to ship management.


Path To Competitive Advantage

Over the last two decades, studies have identified many factors that influences owners’ decision to outsourcing their fleet’s ship management. The more prevalent factors influencing such decisions are:

Country of origin: UK has a 70% outsourcing rate but other countries are not as hight
Size of fleet: the larger the fleet the more likelihood owners are to outsource.
Increase Regulations: the more regulations the ship is governed the higher the chance for outsourcing
Management: more established companies with more organised infrastructure tend to outsource more

The Implications

Outsourcing ship management can affect the logistics chain negatively as there is more loss of control, possible insecurities abo
ut responsibilities and higher costs. However, this decision is a common means for a shipping company to obtain a competitive advantage, an opportunity to focus on core skills and to access best-management practices and technologies developed by a third-party service provider.

Economies Obtained, Redundancies Reduced

Redundant costs are reduced, quality and reliability improved, and speed and flexibility increased. All these benefits have become very well-acknowledged in the modern day shipping sector. Outsourcing ship management is further expected to produce technical and operational economies of scale, marketing advantages and bargaining power.

Source: Pierre Cariou, Francois-Charles Wolff. Outsourcing ship management: Implications for the logistics chain. 2011. <hal-00593742>