THE TECHNICAL CODE
Blogging, sometimes is tiresome, but having written /
compiled couple of them, am driven to write another one, something that I had
worked on during my stint at being a Technical Superintendent. I refrained from
posting it for this period to avoid any contractual bars put-up, either
directly or in-directly.
To start with, while the major part of the Blog is
written, before posting it, had to put out a subject / heading and what
eventually came to the mind “Deciphering the Technical (Ship Management) Code” gave
a refreshing feeling.
But, importantly, the necessary disclaimer, the views
expressed / data so shared in this is completely mine, doesn’t necessarily
represent any of my past / present or future(!) companies, and I may be wrong,
so those who disagree may do so, I won’t mind adverse comments, but please keep
them strictly professional. It is my humble understanding and an attempt of how
technical budgets are made and what lacks in terms of transparency in them. I
am of the firm belief, that the owners are the best people to manage their
ships. Why? Simplest answer I can give is, because you own them, everyone else,
only manages them for you. But, then do you seriously own them?
I also believe, the ISM code came into existence,
because of proliferation of 3rd Party Management Companies. The
serious need to have ethics, principles and base policies was the root to bring
out an ISM Code.
Before I get into, the details of the budget, can’t
impress more on the need for as much information that you can have about the
vessel, before you draft and present the budget. I would consider, as a
minimum, the following is of utmost importance (together with your own research
of the market, which will help you in projections).
Following is a list that comes to my mind, of the
minimum data that you’d need to best accomplish a project.
1
|
VESSEL NAME
|
Not very relevant, but good to have for identity purposes for
past history research.
|
2
|
IMO NUMBER
|
3
|
OWNER NAME (BENEFICIAL)
|
Very relevant to check on the standing of the owners
|
4
|
TYPE OF VESSEL
|
Every type of vessel has its own requirments, from statutory to
trading, including crew requirements.
|
5
|
FLAG
|
What legislative authorities are you dealing with?
|
6
|
CLASS
|
Maintaining some Class is more expensive then another
|
7
|
VESSEL GROSS TONNAGE
|
A lot of Port calls and costs are based on Gross Tonnage or Net
Tonnage.
|
8
|
VESSEL NET TONNAGE
|
9
|
VESSEL DEADWEIGHT
|
Will give you an idea of the requirements of the vessel, in
terms of trading and commercial possibilities.
|
10
|
NORMAL TRADING AREA
|
11
|
YEAR BUILT / DELIVERED
|
Will give you a serious update on
what the vessel needs would be, based on her age, class status etc.
|
12
|
BUILT AT
|
Though no longer a good indicator of
quality of built, because, in the end, you can get only peanuts, if you pay
for them. For cashew nuts, you need to pay more, and every yard in the World
would provide that. But coupled together with the Vessel class under which
she was built, it will give you a good idea of maintenance requirements.
|
13
|
LIFEBOAT CAPACITY
|
Manpower requirements and tolerance
|
14
|
COPY OF MINIMUM SAFE MANNING
|
Minimum requirement, though more
often then not, if these were to be complied, its best to adopt a policy of
employing riding gangs for periodic maintenance.
|
15
|
PRESENT & EXPECTED COMPLEMENT
|
Owners wish and reasoning, and your
ideas
|
16
|
CREW NATIONALITY EXPECTED
|
Owners wish, if any
|
|
ITF STATUS
|
Important, since affiliations to trade unions will also affect
the individual salaries of men onboard
|
17
|
OFFICERS NATIONALITY EXPECTED
|
Owners wish, if any
|
18
|
PREVIOUS MANAGEMENT COMPANY NAME
|
Relevant to know, to find out, why
the owners may be looking for a change?
|
19
|
HAS VESSEL CHANGED CLASS, IF YES, PREVIOUS CLASS
|
Self-Explanatory
|
20
|
VESSEL BUILT BY THE PRESENT OWNER?
|
Self-Explanatory
|
21
|
WAS THE VESSEL ORDERED BY ANOTHER PARTY, AND BOUGHT IN THE YARD
BY THE PRESENT OWNER?
|
Self-Explanatory. If you did not
order it, you don’t really emotionally “own” it.
|
22
|
LAST SPECIAL SURVEY
|
Future survey requirements
|
23
|
LAST DRYDOCK
|
Current status, hull condition
assessment etc and when to expect drydocking
|
24
|
LAST ANNUALS
|
Future and current survey
requirements
|
25
|
LAST INTERMEDIATE
|
26
|
COPY OF CLASS SURVEY STATUS REPORT
|
27
|
P& I CLUB
|
To check on deductibles, class rules
and work on contractual associations for relevant
|
28a
|
WHO WILL TAKE CARE OF VESSEL'S INSURANCE (P&I OR H&M)
|
More often then not, its done by the
owners. However, if owners want you to take care, you need to get quotes from
your insurance brokers.
|
28b
|
Deductibles in P&I and H&M
|
Crew Medical requirements is the least. In the event of a minor
/ major incident what cost could be expected to be on your head.
|
29
|
MORTGAGES HELD
|
Who owns the ship. How are the lien
placed?
|
30
|
NUMBER OF VESSELS WITH THE PRESENT OWNER
|
Self-Explanatory. After all, you need
more business always, correct?
|
31
|
CHARTERER OR COMMERCIAL OPERATOR INFO
|
If you know your industry, you’ll
know what to expect in terms of trading, and until when. It is but obvious
that they won’t let you have the commercial agreements or C/P at this stage.
|
32
|
CARGOES NORMALLY CARRIED
|
Demands of the trade, equipment
functional requirements.
|
33
|
TYPE AND POWER OF MAIN ENGINE (MAKE / MODEL/TYPE)
|
Industry has written off some
Engines, some were sold cheap as retrofit. Find out, if this is one of them.
Further, how are the spares placed, availability, service availability etc.
|
34
|
TYPE AND POWER OF AUXILIARY ENGINE
|
35
|
CARGO TANK COATED OR STAINLESS STEEL
|
Type of Paint, paints requirements.
Cargo flexibility.
|
36
|
TYPE OF COATING, IF COATED
|
37
|
TYPE OF CARGO & BALLAST PUMPS
|
If submersible, Framo are considered
the best. But then there are many others in the market, and they’ve their own
hiccups. Knowledge is the key.
For pump-room ships, the type of
pumping systems is very relevant.
|
38
|
NUMBER OF TANKS AND PUMPS
|
39
|
VESSEL EXPECTED TO GO TO US /CANADA OR NOT
|
View this question from the OPA
perspective. Contractual and regulatory requirements.
|
40
|
VESSEL EXPECTED TO GO TO CHINA OR NOT
|
View this question from Chinese SPRO
requirements.
|
41
|
VESSEL EXPECTED TO CALL SECA AREAS
|
Fuel requirements.
|
42
|
VESSEL HAS INCINERATOR ON BOARD, YES / NO
|
Sludge and garbage management
|
43
|
VESSEL HAS FRESH WATER GENERATOR, YES OR NO.
|
Fresh water requirements, to be
supplied. Type and capacity will also guide this, and together with trading
areas, this
|
44
|
IF YES, FWG CAPACITY
|
45
|
VESSEL HAS RO FILTERS FOR DRINKING WATER, YES / NO
|
If yes, condition? Otherwise, you’ll
end up supplying mineral water to crew.
|
46
|
VESSEL HAS GARBAGE COMPACTOR
|
Garbage management, though
personally, I think, no one uses it proficiently, except for on FPSOs or oil
platforms.
|
47
|
VESSEL'S PAST PSC, FSC HISTORY
|
What are you taking on?
|
48
|
ACCOUNTS VARIANCE REPORTS - DATE OF REPORTING
|
That’s something you need to agree
with the owners, what kind of variance / accounts
|
49
|
DETAILS OF MAIN & AUXILIARY EQUIPMENT & MACHINERY ON
BOARD
|
Cost and availability of Spares and
Service Network
|
50
|
HYDRAULIC EQUIPMENT
|
Type of Oil to be used, replenishment
needs.
|
51
|
ME LO Conusmption - Cylinder Oil - average specific consumption
|
g/kW h
(Lubes Requirement)
|
52
|
ME LO Consumption - System Oil - average specific consumption
|
g/kW h
(Lubes Requirement)
|
53
|
AE LO Consumtion - System Oil - average specific cosumption
|
g/kW h
(Lubes Requirement)
|
Then you check with the owners, if they’ve any
specific needs, or requirements.
To start with, the first hype, that Crewing costs are
in effect nearly 50% of the total ship management budget, howsoever arrogant it
may appear, is mostly true. But besides the grand-standing that all the Ship
Management Companies take in this, trying to push down their ranks and files
onboard in terms of wages, the same ranks and files are made the guinea pigs
for 100% of the accidents, incidents and 99% blamed completely on human error.
So, while a machinery may have erred and the technical budget may have been
used up or unplanned, be the actual reason behind the issue, the blame games
will be on the Ship’s officers, that they did not register the warning signs.
But, as we go ahead deciphering this code, you’ll see, how it works and contributes
to this nearly “50%” cost.
To begin with, the minimum wages, as set even by the
unions (ITF) are only with respect to a person’s certificates, not abilities or
responsibilities. Sadly, our unions hardly acknowledge that some onboard need
to work longer hours than most, have greater responsibilities, despite the Work
and Rest hour schedules, they do.
So, for the manpower, the minimum wages are set-up by
ITF or other national / international unions, including ILO. The following link
would give you a glimpse.
Keeping the “Basic wages” low is a gimmick to ensure
that any compensations from insurance or against contractual liabilities the
company takes for you are calculated / pro-rated on this and not your full
wages. So If you were to get 3 days extra wages for transiting the Gulf Of
Aden, well this is 3 days extra basic wages only. An employee friendly outfit
will ensure to go above the minimum wages and strike a balance with the other
elements of the wages.
It is my opinion that keeping fixed overtime payment
for all ranks is today possible and must be done. Reasons –
1)
Work and Rest hours (especially
the rest hours) are highly regulated.
2)
Most seafarers with variable
payment end up keeping work and rest hours record as an overtime record. It can
be exaggerated as well as can be kept low to meet the regulations.
3)
Two records that do not mirror
each other will only create doubt. Remove the need for duplication.
4)
It may be a good idea to leave an
item for the Master to award his crew as a morale booster, on his own
prerogative, that need to be justifiable too, but that is something that will
leave on individual ship managements to decipher (I mean the need).
Then on the crew head you’ve miscellaneous costs. Some
can be very transparent, some can be manipulated to get the owners to fork out
extra outside the budget.
The transparent and fixed budget items could be :
1)
CERTIFICATION
2)
CLOTHING / UNIFORM
3)
MEDICALS
4)
SOCIAL COSTS / WLEFARE FUNDS /
ITF OR UNION DUES / PROVIDENT FUND
The manipulative ones are expenses on Travel and
indirect Manning costs, such as manning agency charges, bank charges and
sometimes the training costs.
So Travel : Ship managements make a lot by using
in-house, said to be “third party” travel agencies. While these do provide an
efficient and bankable flexibility of travel, they also charge premiums for
keeping that status. In lot of cases, you could possibly get a cheaper air
ticket on the same terms, booking directly on the airlines website or travel
portals then using them.
So, on one hand the management fee is charged, then
manning agency is charged and then the owners may be shelling out for
advertising, as well.
Joining
and Leaving Fares (Per movement)
|
Joining
and Leaving Hotels (Per movement)
|
Sea
Transport (Per movement)
|
Port
Agency Disbursement: (Per movement)
|
Travel
Subsistance (Per Contract – what you receive as joining and signing off dues)
|
Manning
Agency Charges (Lumpsum – per man per month)
|
Bank
Charges & sundries (per month)
|
Communications
(per month)
|
Owners
contribution to Ship Recreation fund (per month)
|
HSSE
Training and In-House Courses (per month)
|
Onboard
CBT (per vessel per year)
|
Engagement
Fees for Officers (per man / per contract)
|
Engagement
Fees for Cadets (per man / contract)
|
Engagement
Fees for Ratings (per man / contract)
|
Working
Clothes (per man / contract)
|
Retention
Strategy (lumpsum, charge anyways, you’ll be paying it again as seniority)
|
Seafarers
Family Health Insurance Plan (per man / per month)
|
Hatch/Tank
Cleaning Allowance (per month or actuals)
|
Scavenge
Space / Boiler Cleaning Allowance (per month or actuals)
|
Drug
and Alcohol Testing (per man/contract)
|
Medical
Surveilance (Chemical Vessels) Post employment (per man / contract)
|
Then comes Victualling, oh I love this one. Owners
fall for the companies that claim that their victualing rate is only say USD 5
per man per day or USD 7.5 or whatever. The budget when proposed keeps this
low, and hence you see a lower quotation for managing your vessel. But in
practice, you’ll always find actuals to be higher, because they are actually
higher and every month a variance is shown with a variety of reasons, provided
by the Master. This despite the fact that there are often other budget items
covering agency, transportation etc. So, does the low prescribed rates, help
anyone? I guess “no” is the best answer.
So following could be the potential victualing heads :
Agents charges
|
Cleaning
|
Freight & Handling
(Requirement of sea-transportation)
|
Fresh Water (especially
for vessels without FW Generator and a drinking water filter)
|
Galley
|
Laundry Onboard
|
Laundry Sent Ashore
|
Slop Chest / Bond
|
Victualling
|
Allowance for additional
Meals
|
Following are the sample heads that could be
considered in a Deck stores (consumables) list for budgeting. You may consider
grouping them together, or you may consider keeping them separate.
DECK ITEMS
Anodes
|
Charts & Publications
|
Communications
|
Crane & Derricks
Wires
|
Deck Machinery &
Fittings
|
Fire & Safety
|
IT
|
Log & Record Keeping Books
|
LSA & Equipment
|
Maintenance Equipment /
Repair Equipment
|
Medical Supplies
|
Mooring Ropes (I’d assume
1/4th of the total ropes are replaced every year as a minimum).
Please specify the ropes taken into account are normal Mooring Ropes and not
HMPE.
|
Navigation Equipment
|
Paints
|
Rentals
|
Deck Stores
|
Stationary
|
Transport, Handling &
Agency Costs
|
Lashing Gears/Hatch
Ceiling Tapes
|
Clothing
|
Divers - Underwater
Cleaning
|
Following are a list of Engine Stores and Consumables
:
Workshop Consumables
(Adhesives, abrasives, rags, lubricants, dyes)
|
Chemicals
|
Cleaning Materials
|
Electrical Consumables
|
Fastenings
|
Fire & Safety
|
Fuel Testing
|
Gases
|
Gaskets, Packing &
Seals
|
Greases
|
IT
|
Paint
|
Rentals
|
Stationary
|
Transport, Handling &
Agency Costs
|
Wires & Ropes
|
Workshop Supplies (tools
& instruments)
|
Lubes
|
Estimate the lubes requirement :
For M/E :
|
Cylinder Oil Consumption Calculations
|
|
|
|
|
|
|
|
|
|
(i)
|
Average Specific Consumption
|
|
1.8
|
g/kWh
|
(ii)
|
Engine Max Power (MCR)
|
|
7,980
|
kW
|
(iii)
|
Engine Running Power
|
85%
|
|
6,783
|
kW
|
(iv)
|
Oil Quantity
|
(i)*(iii)*24
|
|
293
|
kg
|
|
|
|
1,000
|
|
|
|
(v)
|
Cylinder Oil Specific gravity
|
|
0.920
|
kg / Litre
|
(vi)
|
Daily Consumption
|
(iv)/(v)
|
|
319
|
Litres
|
|
System (Sump) Oil Consumption
Calculations
|
|
(i)
|
Average Consumption
|
|
4.5
|
kg/cyl/24hr
|
(ii)
|
Number of Main Engine Cylinders
|
6
|
Units
|
(iii)
|
Oil Quantity per 24 hours
|
(i)*(ii)
|
27
|
kg
|
(iv)
|
System Oil Specific gravity
|
|
0.910
|
kg / Litre
|
(vi)
|
Daily Consumption
|
(iii)/(iv)
|
29.67
|
Litres
|
For A/E :
|
Auxiliary Engines
|
|
|
Power
|
|
|
|
1,000
|
kW
|
|
System Oil Specific gravity
|
|
0.920
|
kg / Litre
|
|
Average Specific Consumption
|
|
0.8
|
g/kWh
|
|
Daily Consumption
|
|
|
19
|
|
|
|
|
|
AE1
|
AE2
|
AE3
|
|
A/E Sump Capacity:
|
|
|
|
|
|
m/e Sump Capacity:
|
|
|
|
|
|
M/E Lub Oil Storage Capacity:
|
|
|
|
|
M/E Cyl Oil Capacity: Hi- Sulphur
|
|
|
|
|
M/E Cyl Oil Capacity: Low- Sulphur
|
|
|
|
Estimate the number of running hours, basis trading
patterns, type of vessel
No.
1
|
Running for
|
|
|
180
|
Days
|
|
Lube Oil Consumption per year
|
3,420
|
Litres
|
No.
2
|
Running for
|
|
|
180
|
Days
|
|
Lube Oil Consumption per year
|
3,420
|
Litres
|
No.
3
|
Running for
|
|
|
180
|
Days
|
|
Lube Oil Consumption per year
|
3,420
|
Litres
|
The lubes rate is crucial. In today’s competitive
world and dependent on the size of your fleet, every lubes supplier is more
than happy to offer you (as a company) preferential rates, discounts etc. It is
also imperative to know that the lubes rates are not the same across the World,
so what might be available at a cheaper rate in Singapore or Rotterdam may not
be so in Shanghai or Genoa.
And the only plus point of a ship management is its
said capabilities of attracting discounts on the size of its fleet. The bigger
it is, the better you get, and thrown in together with the lubes supply
contract is the lubes analysis. Its not rocket science to understand that profits can be made by higher pricing and/or by volumes of sail, keeping the profits low, so a supplier is not doing any favours by providing you lower pricing.
CABIN / GALLEY ITEMS :
Cleaning &
Housekeeping
|
Cooking & Serving
Utensils
|
Crockery & Cutlery
|
Electrical Supplies
|
Fire & Safety
|
Domestic Usage Fresh
Water
|
Soft Furnishings & Linen
|
Waste Disposal Costs
|
General Cabin Stores
|
SERVICES - REPAIRS & MAINTENANCE - 3RD PARTIES
Auxilliary Machinery
|
Waste Disposal Machinery
|
Cargo Pumps
|
Crew Accommodation &
Hotel Services
|
Deck & Cargo
Machinery
|
Cargo Handling Equipment
|
Access Equipment
|
Hatches & Tank Covers
|
Electrical Equipment
|
Fire & Safety
|
Generators & control
systems
|
IGS
|
IT Equipment
|
Lifeboats, Liferafts & LSA
|
Main Engine - cyl head,
fittings, valves & fuel inj sys
|
Main Engine - pistons,
liners, rods & casing
|
Main Engine -
shafting,gears,thrust blocks & other
|
Main Engine - exhaust,
scavenging & start systems
|
Main Engine - controls
& auxiliary equipment
|
Navigation Equipment
& Communications
|
Steam Plant
|
Coal System
|
Ash System
|
Steering System
|
Structural -
Accommodation
|
Structural - Deck
|
Structural - Hull
|
Oil Testing &
Analysis
|
Waste Disposal
|
General Repairs
|
Radars
|
Gyros
|
GMDSS
|
Other Navigation
|
DECK SPARE PARTS :
Dozer / Grab spares
|
Platform & Traction
Winch Hyd Motors
|
Platform & Traction
Winch Sys & Controls
|
Platform & Traction
Winch G/box & Drums
|
Handling Cranes &
Monorails Winches
|
Tanks/Cargo Hold Cleaning
& Maintenance
|
Control Room & Nav
Equipment
(Recording Papers,
sensors, PCBs, fuses)
|
Radio & Communication
Equipment
|
Control & Navigation
Equipment
|
Cooling Water / Ballast
& Bilge System
|
Machine Control Centre
|
Remote Sounding System
(UTI's)
|
Sampling Equipment
(Samplers)
|
SUL Field devices, PLC
& drivecards
|
SUL Hardware For Transfer
& Boom Conveyer
|
Hydraulic Control System
& Valves
|
Hydraulic Pumps Station
|
Hydraulic Motors &
Winch
|
Dozer Winch Drives &
Controls
|
Unloader System
|
Dozers Maintenance
Contract
|
Buoy Maintenance
|
SUL Hardware for Marine
Leg
|
ENGINE SPARE PARTS
Auxilliary Machinery (SW, FW, HFO,MGO,Air sytems)
|
Shaft Generator
|
Cargo Pumps (Agregates, control systems, pumping systems)
|
Cathodic Protection
|
Cranes &
Derricks(Lifting Gear)
|
Cargo Handling Equipment (Tk Clng, Tk Calibration, Control equipment)
|
Access Equipment
|
Deck/Cargo Machinery (winch, windlass, cargo pipelines, heating coils, valves &
fittings)
|
Electrical
|
Fire & Safety
|
Gangways & Pilot
Ladders
|
Diesel Generators (Prime Mover)
|
Hatches & Tank Covers
|
Hotel Services
|
IGS & Nitrogen Generators, Vapor Return & Gas Freeing Systems
|
Lifeboats & Liferafts
(Winches, davits &
Engines)
|
Main Engine - cyl
head,fittings,valves & fuel inj sys
|
Main Engine - pistons,
liners, rods & casing
|
Main Engine - shafting,
gears & thrust blocks
|
Main Engine - exhaust,
scavenging & start systems
|
Main Engine - controls
& auxiliary equipment
|
Navigation & Communications
|
Piping (Sea Water, Fresh
Water, Air, LO, HFO, MGO)
|
Pollution Control
(Incinerator, ODME, OWS, Sewage)
|
Refrigeration Equipment
|
Steam Plant (Boilers)
|
Steering Gear Equipment
|
Bow Thruster
|
Waste Disposal Machinery
(Compactors, Communitor & Shredders)
|
Water Maker (Fresh Water
Generator, RO Systems)
|
Logistics (Freight,
Warehouse and Packing)
|
Structural (Hull &
Deck)
|
Transport/Freight for
Maintenance Spares
|
CLASSIFICATION / FLAG / 3RD PARTY SURVEYS &
INSPECTIONS
Classification (Block Agreement & Surveyor Attendance)
|
Insurance
|
Port State
|
Registry
|
Vetting
|
Special Survey
|
Annual Survey
|
Periodical / Intermediate
Survey
|
COMMUNICATION COSTS (LEASE, LICENSES & CHARGES)
Communication Equipment
|
Fax - Phone - Email (Ship
communication costs - Voice & Data, Equipment Lease)
|
Licences - Software / IT
|
Office Communications
costs (Voice charges, related to vessel from shore personnel)
|
Satcom Charges
|
Support & Service
charges (Repairs, upgrades to the equipment)
|
AGENCY APPOINTMENT & PORT CHARGES (NON MANNING
RELATED)
Agents Attendance Fees
|
Port Charges
|
Pratique Costs
|
Security & Watchmen
|
Waste Disposal (Solid
garbage, sludge, sewage, special waste - cargo samples, medical, batteries,
pyrotechnics, plastics)
|
Crew boat service
|
Custom clearance, duties
& taxes
|
Postage & Courier
|
Fumigation
|
SHIP MANAGEMENT & CONSULTING FEES
Ship Management Contract
|
Accounting
|
Legal
|
Attendance
|
Professional Advisors
& Consultancy
|
ADMINISTRATION CHARGES – COMMUNICATION
3rd Party
Accounting Charges
|
Legal Charges
|
Flag State / Registration
/ Licenses Fees (non-manning related)
|
Registry Tax
|
Licenses
|
ASA Calls
|
Finance Audit
|
EXPERT & LEGAL RETAINERS
Annual Fee
|
Exceptional & Damage
Surveys
|
GENERAL ADMINISTRATION (Non-Crew)
Airfare / Travel / Visa
|
Hotel / meals
|
Communications
|
Postage & Courier
|
Sundry Expenses
|
Owners Rep Expenses
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Foreign Exchange
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Bank Charges
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INSURANCE & OCCASIONAL CALLS & CLAIMS
Premium
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Supplementary Calls
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Claims
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While the above fields would give a good description
of broad sections that could be used to work on a budget, it could further be
split into individual items, but an initial budget proposal to owners is never
given with much of details and most of the owners hardly compare them item to
item. They’d look at broad sums and compare between two ship managements and
decide.
In order to understand the ship manager’s budget or if
I may call it OPEX Variance report, it is important to understand how the ship
manager is compensated and where he can make his sustainable profits and also
assist you in reducing your costs. This brings to light what the ship manager
can legally charge and the areas that an owner must be vigilant to avoid
overcharging.
Ship managers in effect have their time and expertise
in ship management services on offer and accordingly are entitled to charge an
annual fee plus extraordinary costs basis a standard contract such as the BIMCO
Ship Management form. It is important to understand that he has limited
liability even in cases of gross negligence.
Ship operating costs and costs associated with
managing the vessel above the ship manager’s standard services are usually
charged to the Ship owner. The ship managers are competing against other ship
managers for quality of service. The operating costs of the vessel are of
little consequence because they are paid with the owner’s funds. In essence the
operating costs would make a difference based on how planned execution of
vessels maintenance and repair functions are, as well as the how productive the
crew is and what is their retention levels with the ship managers.
Ship managers control or influence a large part of
shipping expenses. The Ship Management team also affects the quality of
charters, the quality of crew, the quality of suppliers and the owner’s
reputation which in turn affects the potential earnings of the ship. So in
essence if the Ship Management fee and other quoted fixed fees are low by one
ship management it doesn’t necessarily mean that the overall costs would be low
as well.
Maintenance and Repair is one area where good ship
managers actually separate themselves from the bad ones. This area gains
excellence by keeping the ship’s crew productive and not performing repetitive
or unnecessary work. The technical department can keep the costs to a minimum
by adequate scheduling of periodical surveys and repair jobs, planning ahead in
time time to order spares and delivering to low cost ports. add value to the
vessel by improving its hull condition (coatings, corrosion control or
addressing known structural problems) and the machineries by retrofitting or
replacing poor equipment to standard ones.
Procurement
and logistics is an area where improvements are difficult, but expenses above
the budgeted are frequent. Procurement problems stem from areas such as poor
ordering practices of the crew and home office, poor interaction with the
suppliers, knowledge of markets, poor choice of suppliers and irresponsibly coordinated
deliveries. Excellent purchasing is characterized by good ordering practices
(clear orders with sufficient lead time), good selection of suppliers with
close relations and excellent coordination with others for delivery to the
vessel. A good ship management would also train its officers in good practices
and empower them to actively participate in budget process as well as
procurement. Procurement circulars / alerts would assist to minimize the
planning and execution problems.
The
insurance, including P&I, reflects the fleet composition, size and claims
records. A vessel with no incidents calling for a claim, will have low premium.
Furthermore, particularly with P&I, the perceived quality of the ship
manager has a significant effect on the premium. Even if as an owner you may
wish to deal with insurance directly, for starters, it may be a good idea to
take budget quotes for these costs. It would give you a great idea of the
P&I perception of the ship manager. After all, they are the people we turn
to for legal and claim advises!
A ship
owner will get less than expected results without good control over the ship
manager. The following is a guidance on what you could require for maintaining
the necessary level of control.
Reporting:
Reporting
of all happenings with the ship in a well-organized and detailed manner will
provide a constant flow of information to frequently evaluate the management
and the fleet. Excellent reporting will also allow for the owner to identify
problems before they occur and to consistently improve the operation. Poor
reporting is indicative of low standards and an indication of poor organization
within the ship management.
Owner’s Representative:
The
ship owner, especially in cases where third party management is used, must have
a representative that understands ship operations on all levels. This
representative must also be entrusted and willing to constantly follow up on
the manager and directly with the vessel. The owner’s representative must be
willing to visit the ships take an active role in inspections, audits and
witnessing all manner of operations. A good owner’s representative also
provides a morale booster to the crew because it indicates to the crew that the
owner cares about ship and all that happens onboard and around.
Up, close and Personal:
The
ship owner must maintain close contact at all times with the manager and the
vessels. This serves as a constant reminder to the manager and the crew that
the owner is aware of the activities. Keep in touch with the Master.
Ability to change management:
Changing
ship managers is a difficult and costly exercise for all parties. There are
transfers of records, audits/re-audits related to class, ISM, vetting and a
whole host of other issues. But a ship manager who senses that an owner is
reluctant to change management teams is automatically placed in a position of
not having to provide excellent service. An owner must make it abundantly clear
that the ship can and will be moved to other managers if the present system
provides less than satisfactory results.
Constant References:
Consistently
check references from a variety of sources to ensure the manager is providing
the expected level of service. If you may and can, don’t put all your eggs in
one basket. Consistently cross check the references to ensure validity. The
best possible way to get a subjective sense of how the ship manager—internal or
external—is to get references from a variety of sources. These include
suppliers, shipyards, individual crew members, insurance brokers, P&I
clubs, port agents, charterers and other owners. Recheck the references
frequently and follow up on why references are good or bad. Don’t forget, you
are the owner.
Most importantly, review the decision making process
practiced in the ship management. If you observe frequent delays in decisions,
frequent off-hires for longer durations then normal, especially due to factors
that could have been controlled, its time you move. I’ll give one example. While
I was a technical Superintendent, I was temporarily managing a vessel for another tech Suptd in our branch
office who was on leave. This vessel underwent a collision with a fishing boat
in the early hours of the night, off Chinese coast. Chinese coastguard asked
Master to deviate and proceed to the nearest port. During this time, China was
on a nearly 7 days holidays. But, before the vessel arrived at anchorage, I had
appointed an agent, called out Class (& P&I through the owners), had a
repair company standby to check and quote for repairs. The vessel’s hull was
breached and required a large plate to be replaced. By early PM hours, the
quote was in hand, by evening negotiated the quote to be reduced by about 3K
and had the owners approve the same. Repairs started next day early in the
morning, while the P&I negotiated settlement with fishing boat owner,
coastguard was happy, if the fishing boat owner was happy! On day 4 by noon,
the vessel sailed out fully repaired, free of any condition of class.
On the other hand,
later, a sister vessel belonging to same owners had a damage caused to her by a
tug in Korea. Owners, managers took 4 days to decide what repairs to be done,
where to be done and by whom. Thereafter vessel sailed with a CoC, temporary
repairs and landed in China, where final repairs were done in another 4 days.
Off-hire losses can be counted.
Rajesh Baran