LM1928 Module1

DIPLOMA IN
SHIP SUPERINTENDENCY
2007 / 2008
MODULE 1
The Role of the Ship Superintendent
AUTHORS
Chris Gladish
BSc, C Eng, FRINA, UK
Paul Russell
Head of School
National Sea Training Centre, UK
Lloyd’s and the Lloyd’s crest are the registered trademarks of the society incorporated by the Lloyd’s Act 1871 by the name of Lloyd’s.
CONTENTS
Page No.
1. A STUDY GUIDE FOR THIS DIPLOMA 5
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.2 Learning and How to Use the Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.3 Assumptions About Adult Learning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
1.4 Structure of the Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.5 Course Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.6 The Organisation of the Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
1.7 Ideas and Any Causes for Concern that You Have Identified . . . . . . . . . . .10
1.8 Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
1.9 Our Tutorial Seminars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
1.10 Learning Styles Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
1.11 Managing Your Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
1.12 The Concept of Distance Learning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
1.13 Help to Prepare for Your Programme of Study . . . . . . . . . . . . . . . . . . . . . .25
1.14 A Guide to What is Expected of You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
1.15 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
PART ONE Introduction to the Superintendent’s Role
2. THE SHIPPING COMPANY 36
2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

2.2 The Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
2.3 Financiers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
2.4 Market Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
2.5 A Transaction Fundamental to the Demand for Shipping . . . . . . . . . . . . . .41
2.6 A Brief History of Maritime Commercial Developments . . . . . . . . . . . . . . . .42
2.7 The Merchant Fleet at the Beginning of the 21st Century . . . . . . . . . . . . . .47
2.8 Company Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
2.9 Commercial Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Diploma in Ship Superintendency 2007 / 2008 (LM1928) 1-1

Contents Module 1
PART TWO The Responsibilities of Management
3. TRADITIONAL ORGANISATION AND MANAGEMENT STRUCTURES 57
3.1 Chief Executive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57

3.2 Managing Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
3.3 Technical Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
3.4 Financial Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
3.5 Personnel Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
3.6 Operations Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
3.7 Technical Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
3.8 Training Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
3.9 Superintendents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
3.10 Cargo Superintendent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
3.11 Insurance Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
3.12 Procurement Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
3.13 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
3.14 Quality Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
4. MODERN SHIPPING COMPANY STRUCTURES 66
4.1 Reasons for Changing Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66

4.2 Taxation Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
4.3 Ship Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
4.4 Introduction to the International Safety Management Code (ISM) . . . . . . . .69
4.5 Introduction to the International Ship and Port Facility
Security Code (ISPS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
4.6 “Small Ship” Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
5. EXPECTATIONS OF THE SHIP’S SUPERINTENDENT FROM THE

SHIP’S AGENTS 73
5.1 The Freight Forwarder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

5.2 The Ship’s Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
6. PORT STATE CONTROL (PSC), FLAG STATE CONTROL 77
6.1 The Role of Port State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78

6.2 Ships Considered for Priority Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . .81
1-2 Diploma in Ship Superintendency 2007 / 2008 (LM1928)

Module 1 Contents
6.3 Flag State Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

6.4 The Superintendent’s Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
7. CLASSIFICATION SOCIETIES, IACS, IMO, INTER-GOVERNMENTAL

ORGANISATIONS 84
7.1 International Association of Classification Societies . . . . . . . . . . . . . . . . . .84

7.2 International Maritime Organisation (IMO) . . . . . . . . . . . . . . . . . . . . . . . . .88
7.3 Inter-governmental Organisations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89
8. P&I CLUBS, INSURERS, SALVAGE ASSOCIATION 91
8.1 P&I Clubs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91

8.2 Insurers and Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91
8.3 Salvage Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91
9. THE SHIPBROKER 92
9.1 Why Use a Broker? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93

9.2 What is Shipbroking? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93
9.3 Valuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94
9.4 Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94
10. THE SERVICE PROVIDERS 96
10.1 Manning Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96

10.2 Consultancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
10.3 Employment Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99
PART THREE Communications and Customer Focus
11. THE CONCEPT OF STRATEGIC MANAGEMENT AND MARKETING 101
11.1 Strategic Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101

11.2 Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104

Contents Module 1
12. QUALITY AND QUALITY SYSTEMS 107
12.1 Quality Control (QC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108

12.2 Quality Assurance (QA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
12.3 Investors In People (IIP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
12.4 BS 5750 / ISO 9000 / EN 29000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110
12.5 Total Quality Management (TQM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111
13. QUALITY CIRCLES AND QUALITY GURUS 113
BIBLIOGRAPHY 116
TUTOR MARKED ASSIGNMENT 118
APPENDIX – TABLES 120
PLEASE NOTE
● Self-Assessment Questions have been provided

periodically throughout this module. These questions are
designed to help you with your study. The questions are for
your personal study only; do not send in your answers to
these questions as they will not be assessed.
● For candidates taking the Diploma option, your Tutor

Marked Assignment is at the rear of this module. Your
worked Assignment should be sent to the TMA
Administrator (details are given at the end of the Tutor
Marked Assignment) for processing.
© Copyright Informa UK Limited, 2007. All rights reserved.

No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical,
including photocopying, scanning, recording or by any information storage or retrieval system, without the prior written
permission of Informa UK Limited.

1. A STUDY GUIDE FOR THIS DIPLOMA
LEARNING OUTCOMES
After reading this chapter, you will:
● have an understanding of open learning;
● know how to plan your study routine;
● know what is expected of you; and
● know what help and assistance you can receive.
1.1 INTRODUCTION
1-001 This distance learning course is made up of nine compulsory core modules plus
optional specialist modules. The course is also accompanied by two optional
seminars.
1-002 This introduction on self-management should take you no more than an evening
and we suggest you try to complete this before you start this first module.
1-003 The modules themselves should take you no more than about four weeks each,
but it will depend on your background experience.
1-004 This introduction is included because we anticipate most learners will not have
used distance learning material before. You also may be apprehensive or con-
cerned that you have not been in a formal learning situation for years. We recog-
nise this potential problem and have designed the introduction around how
adults learn. This should help you to focus on learning and integrating what you
have learnt with your duties at work. All the modules are practical and have been
specially designed to help you to become more effective and pass the exam
without generating any extra unnecessary stress.
1-005 So what exactly are we going to cover?
● Learning and How to Use the Material
We will begin by explaining some of our basic beliefs concerning distance

learning and adult learning. We will then look at how the course will be
delivered. We will finish by reassuring you about exams.
● The Organisation of the Course
We will work through your probable causes for concern in beginning a

distance learning course. We will also explain the role of support and what

A Study Guide for this Diploma Module 1
we will be doing during the first seminar. To finish we will ask you to
complete a questionnaire the results of which we will use to explain the
different ways in which people learn.
● Time Management
This is devoted to getting data on how you manage your time and
analysing it in order to enable you to plan the use of your time more
effectively. The objective is to help you to organise your life so that you still
have time for your family, and some outside interests.
As you will need to have completed a time log for use at the first seminar
we recommend that you have a look at this section first (on pages 1-30
and 1-31), and record your time log while you are going through the rest
of the material.
1.2 LEARNING AND HOW TO USE THE MATERIAL
1-006 On completion of this section, you will be able to explain:
● the characteristics of distance learning;
● the distinguishing features of adult learning; and
● how the course is delivered.
1-007 There are two ways in which this course differs from the usual school or college
situation we have all experienced.
● It is delivered at a distance:
– You don’t have to be at a particular place to learn.
– You can study when you like.
– You can decide what you want to concentrate on most of the

time – there is not a “teacher” to provide control and motivation.
– Most people doing the course will have a common interest and
common objectives.
– Most of the time you will be working alone.
● It is for adults:
This is important because our basic belief is that adults do not learn in the same
way as children. It used to be thought that we learned slower as we got older,
now it seems that it’s more a case of us wanting to learn different things in
different ways. We have a tremendous capacity to learn, but we are selective in
how we use it.

Module 1 A Study Guide for this Diploma
1-008 So let us look at some of our other beliefs. While you are going through them,
we would like you to think about them. How do they apply to your recent learning
experiences? Decide whether you agree or disagree with the statements which
follow in para 1-009 and put a tick or cross by each one. Your experience could
have been, for instance, a language problem in dealing with a work contact, a
resource problem at work or at home dealing with children or a domestic
appliance.
1.3 ASSUMPTIONS ABOUT ADULT LEARNING
1-009 These are as follows:
● We only want to learn what we see as being important to us and we want

to be able to use whatever we learn immediately.
● Most of our learning involves doing – we want experience and not theory.
● We prefer to learn from real life problems.
● We want to be involved in the planning of our learning so that we can be

sure it meets our needs.
● We prefer immediate feedback to reassure us that we are coming up with

the right answers, e.g. if there is a question in the module then we want a
suggested answer so that we can confirm our understanding.
● We learn from one another because it seems more practical, and this can
happen without planning or trying to achieve it.
● We tend to get more set in our ways as we get older.
● Our readiness to learn is determined by the situations we face and what

we want to do about them. Or to put it another way, if we recognise a situ-
ation as a problem or opportunity then we are likely to learn from it as we
try and handle it. If we do not see it as a problem or opportunity then we
tend to learn less from it.
1-010 If you agree with most of these statements, I think you will enjoy working through
this course. If you do not agree with some of them, try talking them through with
your friends and other work associates. If there is a high level of disagreement
with a statement, I am sure you will let us know at the seminar!
1-011 Working on these beliefs about adult learners, we have structured this material
so that it helps you to:
● identify problems and opportunities as team-work situations;
● deal with these problems/opportunities;
● plan how to use what you have learnt in your role at work; and
● evaluate any changes you introduce to see if you can make further
improvements.

1-012 So, these are our beliefs and your thoughts about adult learners. Now let us
move on.
1.4 STRUCTURE OF THE COURSE
1-013 We have designed the course to work at two levels which can be used in
different ways:
● The text in the workbooks.
● The space in the workbooks for you to write in your ideas and comments.
1-014 Let us look at these in detail:
● The text in the modules.
● The space in the modules is there to write in. This applies to both the
boxes built into the modules where you can write your answers to ques-
tions and the space in the margins which you can use to make notes in.
What you write down is personal to you. The modules are yours and do not
form part of the assessment process.
Assessment
1-015 Most people enrol on this type of course to become more competent and to gain
a qualification proving their competence. On this course, the Assessment
process is in two parts:
● Tutor Marked Assignments (TMAs) – there is one per module. This gives
you the opportunity to demonstrate your understanding and also gain
feedback from the assessor on how well developed your understanding
and ideas are.
● Examination – a three-hour open book written paper with one compulsory

question on your specialist module and a choice of questions on the core
modules.
Please see the Course Handbook for full details.
1-016 Now let us look at what we have covered so far:
● The content of the course.
● Assumptions about learning.
● Use of modules.
● Examinations.
1-017 What else do you want to know about before we continue with this introductory
chapter? This is an opportunity to write down your ideas or causes for concern.

1.5 COURSE CONCERNS
1-018 In starting this course the things I am worried about or want to know more about
are:
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1-019 Do not continue until you have given this some thought and preferably jotted
your ideas down. We will be addressing your concerns next. Do not forgot that
you accompanying Course Handbook may be able to answer some of our
questions or concerns.
1-020 If there are parts of this section which are not clear to you, there is no reason
why you should not go through it again as many times as you want.
1.6 THE ORGANISATION OF THE COURSE
1-021 On completion of the following sections, you will be able to:
● recognise and work through any causes for concern that you identified
above;
● explain the role of support;
● explain the role of course seminars; and
● explain how people learn and, in particularly, how you learn.

1.7 IDEAS AND ANY CAUSES FOR CONCERN THAT YOU HAVE IDENTIFIED
1-022 Some of the causes for concern that we think might worry you are:
● What do I do if I do not understand a section?
● I will not be able to remember all this.
● I find it hard to concentrate.
● I do not see how I am going to have the time.
1-023 If we take the first idea or comment “what do I do if I do not understand a

section?” Our response would be:
1. We hope that the meaning in the text becomes clear when you have been
through it a couple of times. Most importantly of all, do not be worried as
stress does not improve one’s ability to learn. It is normal to want to go
through something a couple of times to get it clear.
2. If it still is not clear, you might want to use the support. We will give more
details about that shortly.
3. If it is a subject that really needs face-to-face discussion, then we can

tackle it at the seminar.
1-024 For the second comment “I will not be able to remember all this”. First we would
suggest that you do not need to be able to repeat it word for word. If you get the
basic idea and know where it is in the module, you can always look it up later.
Remember, the modules are yours to keep and you can take them with you into
the final exam.
1-025 If you find it “difficult to concentrate”, this is frequently due to distractions. Can
you examine the cause of this and:
● find somewhere quiet and without visual distractions; or
● get agreement with your family not to interrupt you for a given period of
time.
1-026 This potential conflict over time and space in which to study is one of the larger
problems that you will have to face as a distance learner. You may find it more
convenient to study at work, outside normal hours.
1-027 If you “cannot see how I am going to have the time” – that is normal. We all fill
our time with important and less important things.You probably know the expres-
sion “if you want something done give it to someone who is busy”. If you want to
do the course you will find a way. It may just be a matter of rearranging priorities.
We will help with that when we look at finding and making the time for distance
learning later in this introduction. This will help you plan your time.

1-028 We hope that this is helping to calm any fears you have about the course. The
next two points on the support and seminars should help even more.
1.8 SUPPORT
1-029 The authors of most modules are accessible by e-mail if there are any sections
where you feel you need immediate guidance. The Course Director is always
available as your first point of contact. They should be able to give you a
response within three or four days, depending on their immediate commitments.
1-030 The relevant e-mail address are found in the Course Handbook.
1.9 OUR TUTORIAL SEMINARS
1-031 The other support that you may be able to use on the course is through the two
tutorial seminars. The first is scheduled around half way through the course so
that you have had an opportunity to experience distance learning before you
arrive.
1-032 The seminar will enable you to talk through any problems you have experienced,
to identify your co-learners and, if necessary, to work out mutual support groups.
We can also use the workshop to help you plan how to find the time to do the
course.
1-033 The contents of the second seminar will be based on the second half of the
course and will also give guidance on dealing with the examination.
1-034 At the seminar, you will have the opportunity to learn from your own and
other people’s experience. What we expect you to find is that people learn in
different ways.
1-035 So how do we learn? To help you identify your preferred learning style we would
like you to complete the questionnaire which follows.
1.10 LEARNING STYLES QUESTIONNAIRE
How People Learn and, Particularly, How You Learn
1-036 We will explain the purpose of the questionnaire later, but we do encourage you
to complete it as we think you will benefit from it throughout the course.
1-037 This questionnaire is designed to find out your preferred learning style(s). Over
the years, you have probably developed learning “habits” that help you benefit
more from some experiences than from others. Since you are probably unaware
of this, this questionnaire will help you pinpoint your learning preferences so that
you are in a better position to select learning experiences that suit your style, or
to look at experience in different ways which will improve the speed and depth
of your learning.

1-038 There is no time limit to the questionnaire on the following pages and there are
no right or wrong answers, only your preferences. It will probably take you 10 to
15 minutes. The accuracy of the results depends on how honest you can be.
Read through each statement and put a tick or cross by each one according to
whether you agree or disagree with it.
● Be sure to mark each item even if it looks like another.
● Try to answer it as you think you are, not as you would like to be.



This is a truncated version of the Learning Styles Questionnaire which forms

part of “The Manual of Learning Styles” written by Peter Honey and Alan
Mumford and published by Peter Honey. It cannot be reproduced without
permission.
When you have completed the questionnaire, turn to the next page which will
help you to identify and interpret your learning preferences.

LEARNING STYLES QUESTIONNAIRE – SCORING
You score one point for each item you ticked. There are no points for items you
crossed.
Simply indicate on the lists below which items were ticked.
1 8 2 3
4 10 7 5
12 11 9 6
18 16 13 15
22 19 14 20
24 21 17 26
25 23 30 28
27 29 37 33
36 31 38 34
40 32 39 35
Count up the number of questions you have ticked in each column, double them
and enter in the totals below.
Preference:
Strong
Low
Totals 20 20 20 20
Activist Reflector Theorist Pragmatist

Preference:
Strong 11 15 16 15
Low 3– 8– 7– 8–
Your maximum score for any style is 20 and the minimum is 0. If you scored at,
or above, the figure given for strong preference for any style, look at the relevant
paragraph on the next pages and see if you agree with their description of you.
If you scored at or below the figure given for low preference, look at the relevant
paragraph, this should describe the things you seldom do!

LEARNING STYLES QUESTIONNAIRE – GENERAL DESCRIPTIONS
● ACTIVISTS (Doers)
Activists involve themselves fully and without bias in new experiences.

They enjoy the here and now and are happy to be dominated by immedi-
ate experiences. They are open-minded, not sceptical, and this tends to
make them enthusiastic about anything new. Their philosophy is:
– “Will try anything once”.
They dash in where angels fear to tread. They tend to throw caution to the wind.
Their days are filled with activity. They revel in short-term crisis firefighting. They
tackle problems by brainstorming. As soon as the excitement from one activity
has died down they are busy looking for the next. They tend to thrive on the chal-
lenge of new experiences but are bored with implementation and longer term
consolidation. They are gregarious people constantly involving themselves with
others but, in doing so, they hog the limelight. They are the life and soul of the
party and seek to centre all activities around themselves.
● REFLECTORS
Reflectors like to stand back to ponder experiences and observe them

from many different perspectives. They collect data, both first hand and
from others, and prefer to chew it over thoroughly before coming to any
conclusion. The thorough collection and analysis of data about experi-
ences and events is what counts so they tend to postpone reaching defi-
nite conclusions for as long as possible. Their philosophy is to be cautious,
to leave no stone unturned:
– “Look before you leap”
– “Sleep on it”.
They are thoughtful people who like to consider all possible angles and
implications before making a move. They prefer to take a back seat in meetings
and discussions. They enjoy observing other people in action. They listen to oth-
ers and get the drift of the discussion before making their own points. They tend
to adopt a low profile and have a slightly distant, tolerant, unruffled air about
then. When they act it is as part of a wider picture which includes the past as
well as the present and others’ observations as well as their own.
● THEORISTS (Thinkers)
Theorists adapt and integrate observations into complex but logically

sound theories. They think problems through in a vertical, step-by-step
logical way. They assimilate facts from different sources into coherent

theories. They tend to be perfectionists who will not rest easy until things
are tidy and fit into a rational scheme. They like to analyse ideas and
rearrange them. They are keen on basic assumptions, principles, theories
models and systems thinking. Their philosophy prizes rationality and logic:
– “If it is logical it is good”.
Questions they frequently ask are:
– “Does it make sense?”
– “How does this fit with that?”
– “What are the basic assumptions?”
They tend to be detached, analytical and dedicated to rational objectivity rather

than anything subjective or ambiguous. Their approach to problems is
consistently logical. This is their “mental set” and they rigidly reject anything that
doesn’t fit with it. They prefer to maximise certainty and feel uncomfortable with
subjective judgments, lateral thinking and anything flippant.
● PRAGMATISTS (Planners)
Pragmatists are keen on trying out ideas, theories and techniques to see
if they work in practice. They positively search out new ideas and take the
first opportunity to experiment with applications. They are the sort of peo-
ple who return from management courses brimming with new ideas that
they want to try out in practice. They like to get on with things and act
quickly and confidently on ideas that attract them. They do not like “beating
around the bush” and tend to be impatient with ruminating and open-
ended discussions. They are essential, practical, down to earth people
who like making practical decisions and solving problems. They respond to
problems and opportunities “as a challenge”. Their philosophy is:
– “There is always a better way”
– “If it works, it is good”.
1-039 It can be predicted that you have scored on all four styles. This is because nearly
all of us can learn using each of the four styles. We may have preferences but
using all our styles can turn any problem into a learning opportunity. The best
way to do this is to use the styles in sequence. So let us first explore it and then
try it.

ACTIVIST
(Doing)
Having an
Experience
PRAGMATIST REFLECTOR
(Planning) (Reflecting)
Planning the Reviewing the
Next Steps Experience
THEORIST
(Thinking)
Concluding from
the Experience
1-040 Let us look at an example given below.
1-041 John is late for a management meeting concerning the implications of the new
security code that is being introduced at the ports his ships on the liner trade
regularly call at. He cannot find where he left the supporting documents to
explain that an additional crew member will be required to cope with these new
requirements. He knows the rest of the management team are against the idea
of increased crew numbers although the chief executive is sympathetic if there
is justification for it. John knows that the hard work he put into this will show that
justification. John thinks to himself:
“Why do I always mislay papers when I really need them? I must tidy my desk
and get a proper filing system. Ah, I know what I can do, I will get it out of my
computer files and print it out. I will be late for the meeting, but I will try to give
an excuse . . . but I must sort this ‘losing things’ problem out once and for all.”
1-042 So far he has been through the activist stage (mislaying his papers) and reached
the reflector stage. This has happened before, but if he predicts it could happen
again then he has stepped over the theorist stage, for example:
“This is happening because I have not sorted my filing system out.”
1-043 He also visited the pragmatist stage, for example:
“I have a solution to the immediate problem. It is not perfect, but it will work today
and I will do something for the future.”

1-044 So going through this simple loop could help John learn how to solve his
problem. A problem or difficulty has been turned into a learning situation.
1-045 You may not have thought of this when we started, but you probably now realise
that one of the objectives of this exercise is to enable you to turn the problems
or situations that you face into learning opportunities. What you now have is a
learning technique you can use to help you through this course and also help
you to learn from situations you meet every day. Let us start with the learning
situation you may be in right now.
DOING
I am working through
this module
PLANNING REFLECTING
To cut down distractions What I am finding
either at home or at work out is that I am being
by arranging specific distracted by what is
periods where I can have going on around me
a quiet room to myself
THINKING
If noise or visual distraction
makes it difficult to study,
how can I cut out the
distractions?
1-046 Now it is your turn. Think about an event that you learnt from recently. This may
have been an activity, reflection, period of thinking or planning. Briefly describe
it in the appropriate box below and move round the cycle completing the boxes
as appropriate. Finish with the fourth stage and this will take you round the
complete learning cycle.
1-047 If there are any sections that you have difficulty with, try looking back at the
paragraphs that describe the learning styles (pages 1-17 and 1-18).

1-048 We are now going to look at managing time. But you may want to look back at
the section on learning before you continue.
DOING
PLANNING REFLECTING
THINKING
1.11 MANAGING YOUR TIME
1-049 On completing this section, you will be able to:
● explain the reason for keeping a time log;
● explain how to get the data;
● complete a time log; and
● explain how to apply the learning cycle to improve use of time.
1-050 You may feel your time is all spoken for and that finding time in which to do this
course is going to be a problem. We recognise that finding time may be difficult,
so first we are going to help you to look at how you are currently spending
your time.

Where Does Your Time Go?
1-051 We all have a pretty good idea, but the only way of making sure is to keep a
record. This is important because there are frequently big differences between
what we actually do with our time and what we think we do.
1-052 The early part of this course is designed to let you record how you spend time.
This is one of the reasons why the workshop is some weeks after the course
starts. You can record your time usage in that period and then analyse the data.
To record your data we have designed a form to act as a time log (on pages 1-34
and 1-35).
1-053 Some people already have to keep records of their work activities. This one is
different because you need to record all your hours. We have put headings down
the side to cover a range of activities and we have also left space to add others
if necessary.
How Do You Get the Data?
1-054 You may already have a lot of information from your records. This tells you your
activities and break times. So, for work related times, you may be able to pick up
the details from existing documents but for non-work it is best to write these in
as soon after the events as possible. This is done by writing the start and finish
time of each activity.
1-055 Shortly we are going to ask you to start completing your own time log but, before
you start, we have a few interpretation guidelines, which you may have already
worked out from the example:
● Start recording when you start your day. If you are on shifts, then start
when you get up. It does not matter too much if you record more or less
than 24 hours in any one day, but the total for all activities for the week as
a whole should be about 168 hours.
● In recording time away from home, there is space to record particular

activities like sleeping, eating and socialising.
● Do not bother to record activities lasting less than 10 minutes. Lump them
in with something else, e.g. breakfast and washing is included in getting up
and out.
● Include minor travelling time with the purpose of travelling, e.g. 15 minutes
to get to the supermarket is included in shopping.
● Include preparation and cleaning up within the purpose of the activity,

e. g. cooking and cleaning up is included within eating and getting ready is
included within the social activity itself.
● Write your entries in pencil so, if you make a mistake, you can change it.
● You do not have to wait until Monday to start – start today!

1-056 If you want spare sheets to practise on, photocopy the blank time log at the end
of this chapter. Be honest in keeping your records. We are not asking you to
make judgments on how you spend your time. Do not cut 10 minutes off your
“getting up and out” time because you do not think it should take you as long as
it does. If that is how long it takes, write it down! Remember, the purpose is for
you to decide for yourself as a result of the information on your time log the best
time for you to do the work on this course.
1-057 Completing your time log brings us to the end of this chapter but, before we
finish, let us look at how the time log fits within the learning cycle.
DOING
The way I spend my time
is...
PLANNING REFLECTING
I can sort out my priorities Looking at the results
and complete the course to see how I currently
by... spend my time
THINKING
I only have control over
some of my time, but I can
double up some activities
to take less time
1-058 In the reflecting stage, your time log will help you analyse how you spend your
time by classifying it in different ways, including how you spend your time at
home, socially and in any other areas.
1-059 The thinking stage will help to draw conclusions from the previous stages about
how you will be able to spend your time differently but still meet your own needs
and the needs of others, e.g. your family.

1-060 The planning stage brings it all together. What you will be doing and when, how
to protect this time from being stolen and how to negotiate with the other people
involved.
1-061 Ways we have found to protect time are:
● Asking people how long a meeting will take and then keeping them to it.
● Stay standing if you don’t want someone to take a seat. They will take less
of your time stood up.
● Coach your staff so that they won’t come to you with their problems unless
they also have a range of options. They will soon decide for themselves
without taking your time.
● Do make sure, however, that they keep you informed of their decisions.
● Give yourself thinking and planning time when you won’t accept
interruptions.
1-062 Finally, in the doing stage – when you reach it for the second time, you will be
putting your ideas into practice.
1-063 Do make sure you have completed the time log at the end of this chapter for at
least a week before making any planning decisions on how you will use your
time to get you through the course.
Final Suggestions
1-064 Forty to sixty minutes is recognised as the time most people can concentrate on
any one topic. Therefore, either plan your study time around these units or allow
yourself a break if studying longer.
1-065 Studying for a whole day can lead to diminishing returns. We need intervals
between study periods to allow us to subconsciously absorb what we have
learnt. Shorter but more frequent study periods are, therefore, recommended.
For more ideas on how to study effectively we recommend a book which
explains current theories on learning. These are applicable to most situations
and the book is very easy to read:
● Colin Rose: Master it Faster (Accelerated Systems), ISBN 1844390942.
1-066 This study guide aims to give you an understanding of what you need to do in
order to achieve the Diploma. The items discussed are:
● the National Sea Training Centre concept of distance learning;
● ideas to help to prepare for your programme of study;
● a guide to what is expected of you;

● how your work will be assessed; and
● what you can achieve by studying this course.
1.12 THE CONCEPT OF DISTANCE LEARNING
1-067 The distance learning concept adopted for this course is designed for you to
study on your own, at your own pace, and to undertake a flexible approach to
learning. Because it is flexible it is essential for you to decide from the start
when, where and how fast you intend to study.
1-068 Successful distance learners do need to be disciplined in their approach. The

open learning modules contain assessment questions and invite you to use
what you have learned within your workplace. These activities may include
research into how work is carried out in your own environment and are intended
to give you the opportunity to relate what you have learnt to your own workplace.
You may need to take some time and investigate for yourself. You will find open
learning modules place some emphasis on self-reflection and encourage you to
think about the ways things are done. In some cases you are encouraged to pro-
duce an action plan to help to identify ways in which you can make changes in
your own work.
1.13 HELP TO PREPARE FOR YOUR PROGRAMME OF STUDY
1-069 Your work will be sent to you in the format found in this, your first module, so you
can first become familiar with the way the modules are structured.
1-070 First of all, look at the module’s contents pages. You will find there are a number
of chapters. Each chapter focuses on a topic or concept to discuss. You may be
invited to refer to one or more textbooks to support your study relating to the
topic itself. However, the modules are designed to give you sufficient material to
complete your assignments and the exam. Reference to other sources is to
broaden or deepen your understanding of the topic and enable you to obtain a
higher grade of merit or distinction.
1-071 The Internet may also offer information, but “surfing the net” can be a time
consuming and often fruitless exercise. However, you will have access to the
Course Website and you will find useful website address at the end of this and
other modules. You will also find a list of useful websites in the Course
Handbook.
1-072 Each chapter starts by pointing out the key learning outcomes for that particular
chapter. This is intended to act as a briefing so that you know what the objectives
are in studying this chapter. It is useful to refer back to the learning outcomes on
completion of the chapter and ask yourself “have I achieved this?”
1-073 Some chapters will contain a number of self-assessment questions or activities

in the text. You should complete these as you go along because they play an
important part in strengthening your learning process.

1-074 For example, in a chapter on finance from another diploma, there are the
following self-assessment questions:
Self-Assessment Questions
1. What is the criteria required to make budget objectives valid?
2. Why does a budget need phasing?
1-075 A self-assessment answer to this question would be:
1. The criteria objectives needed to be valid are:
Time based
End Result
Realistic
Measurable
Specific
2. A budget needs phasing because it is rare that an activity takes place in

equal 12-month instalments.
1-076 These self-assessment questions are not intended for you to send in to assess
your competence, but should help you to interact with the text so that you have
a good understanding of the content of each module. The assessment of your
learning will come at the end of a module with the Tutor Marked Assignment.
1-077 Again, referring back to the Contents pages, you will find where the Tutor Marked
Assignment (TMA) is placed in the module. Take a look at the TMA so that you
know what you will need to do to complete this module. However, before you do
the TMA, work through the entire module and enjoy the learning experience. All
the remaining modules will follow a similar pattern to this one.
1-078 On average, you should expect to complete this module in four to five weeks.
However, depending on your background and experience you may find it takes
a longer or shorter time to complete all the topics. Do not be concerned; this is
a flexible learning course and you should take it at your own pace.
1.14 A GUIDE TO WHAT IS EXPECTED OF YOU
1-079 We have already mentioned the self-assessment questions, and again stress
the importance of you taking these seriously and completing the questions. They
are an important part of the learning process.
The Tutor Marked Assignments
1-080 The Tutor Marked Assignments serve three purposes:
● They give you a record on how you are progressing with the course.

● They form an important part of the learning process.
● They form part of the marking process towards the assessment for your
diploma.
1-081 Normally your assignment should be about 1,000 words. You are not marked on
how many words you have written but the way you can demonstrate the
knowledge of the subject.
1-082 To give you some idea of what a Tutor Marked Assignment is, the following few
pages give an example of a good response to a question from the Diploma in
Marine Surveying. Do not worry about the detail, as this is not your subject, but
get a feel for the type of answer that will get you a B Grade. (A is rarely given
and is for exceptional work.)
TUTOR MARKED ASSIGNMENT QUESTION
You have been instructed to survey a 35,000 tonne deadweight general cargo
carrier following the unloading of a cargo of coal from the vessel by means of
shore grabs and other mechanical equipment. You know that during the loading
operation there was a certain amount of rainfall and that the hatches were not
closed during the period.
Given that coal is recognised as a highly corrosive cargo, write in about 1,000
words a description of what damages and defects you would expect to find in the
holds of the vessel.
TUTOR MARKED ASSIGNMENT ANSWER
Preparation for Survey
It is quite important to know the scope of the survey (i.e. insurance damage
claim, pre-purchase survey etc), and to whom it will be addressed.
For this survey I would take the following equipment and tools:
1. A boiler suit with numerous good sized pockets which will be comfortable,
a safety helmet (hard hat), safety shoes (toe-tector boots with non-
slip soles), hard working gloves (rubber/plastic for this occasion), a dust
mask.
2. Handy notebook with several pens and pencils, a 35mm camera with
zoom lens and flash (including adequate rolls of film), an intrinsically safe
torch with a lanyard, measuring tapes (a long one and a short one), a
hammer (IS kg), a scraper, safety goggles.
3. U/T thickness measurement machine, an alkalinity (FH) test kit.
4. Sampling containers for taking rust samples.
5. A packet of white chalks for marking damaged areas before photographing.

The following documents will be requested from the ship:
1. Any previous U/T gauging reports (enhanced survey programme file if

applicable).
2. Main structural plans of cargo holds. Midship section.
3. Previous repair history.
4. Cargo documents.
5. A pre-loading inspection report (if any).
6. Master’s hull structures record book.
I will be requesting the use of a cherry picker and be prepared to inspect the top-
side tank, hopper side plating and the top part of side shell and frames (close-up
survey).
The cargo hold vertical ladders will be inspected prior to descending to ensure
that they are in good condition and rungs are not missing or loose.
For the survey to be carried out, the cargo holds should be clean and free of
cargo residues.
Assumptions
1. The vessel is a single decker with top-side tanks and during the inspection
the hatch covers are opened and suitable weather conditions prevail and
the vessel is in a safe berth.
2. Since cargo has been already discharged, the cargo holds are considered to
be safe for inspection (at least 24 hours ventilation of holds prior to entering).
3. Crew co-operative and with good command of English language.
The Survey
The survey should be carried out in daylight and with the assistance of powerful
portable light source for examining shaded areas during close-up survey.
Thickness gauging should be taken in those areas affected by acidic corrosion

and/or any other corroded/pitted suspect areas. The extent of the survey will
depend on the initial findings.
High-sulphur coal is corrosive and this is particularly so when it is wet and warm.
Since during loading rainfall moisturised the coal and/or when sweating occurs
because the coal is warm and the sea on the other side of the shell plating is
cold, corrosion is encountered (sulphuric acid formation). In these
circumstances the corrosion can be highly localised, affecting those portions of
the frames and lower bracket connections that lie closest to the ship’s sides.
Depending on the moisture content, the cargo could have shifted during
passage resulting in corrosion damage by acid in the entire cargo hold.

Corrosion will weaken the ship’s structure, and may eventually seriously affect
the ship’s structural integrity. This problem occurs particularly when the hold
coating has broken down leaving the steelwork unprotected.
Trimming the ship for piling the cargo in the square, so that it can be removed
by grab, will result in the concentration of corrosion (by gravity) to the outboard
portion of the frame web as well as to the lower bracket connection to the hopper
side. This corrosion can cause serious structural problems such as the collapse
or detachment of hold frames resulting in cracks propagating in the side shell.
Corrosion and consequently cracks can be detected in way of hopper tank con-
nection to the transverse bulkhead. Particular attention is required for lower end
of transverse bulkheads in way of tank tops and bottom of bilge well areas.
Bilge pumps used for removing the water from the hold could have been affected
by the formation of sulphuric acid thus damaging the internal parts as well as the
associated valves and pipes and should be opened up for close inspection.
Pipes should be U/T gauged where possible for assessing damages suffered by
the acid.
The internal hold structure and protective coating in the cargo hold and the
adjacent double bottom are vulnerable to damage when cargo is discharged
using grabs. The weight of them can be quite high. Bulldozers, hydraulic ham-
mers on tractors can cause further damage to the hold in way of side shell and
associated beams and brackets.
Chipping (sharp indentations) and the local buckling or detachment of side

frames at their lower connection could lead to cracking of the side shell plating
which would allow water ingress in the cargo space.
Impact damages to the inner bottom plating or the hopper sloping plating will
result in the breakdown of the coating in the adjacent water ballast tanks,
thereby intensifying the rate of structural deterioration. Tell-tale rust streak marks
will reveal water leakages.
Hatch coamings in way of water drain channels and compression bar can be
found to be damaged by grab’s wire ropes rubbing against them while
stevedores are using the swinging method to reach the cargo in the hold.
Summarising, damages can be expected as follows:
● Corrosion of side shell, frames, lower brackets connected to the hopper

tank top plating, lower end of transverse bulkhead with lower stool, shed-
der plates and stools, webs, welds in way of connection to the steel plates,
bilge wells, bilge piping, bilge pumps, sounding pipes, ventilation trunks,
air pipes, ballast lines and their pipe-guards.
● Cracks at toe of side frames end brackets caused by bulldozers/tractor

arms.
● Cracks at tank top, hopper tank plating, top-side hopper tank plating
caused by bulldozers/tractor arms.

● Cracks in the boundaries of the vertically corrugated transverse bulkheads

with the upper stool, lower stool and top-side tanks due to bad corrosion.
● Indents in the tank top plating of the double bottom or lower hopper tanks
caused by grabs.
● Detachment of the lower frame brackets from the top of sloping tank
plating.
● Corrosion on undersides of hatch covers due to acidic condensation

formation.
From the records on board, it can be found whether vessel has encountered
adverse weather which could have further affected the structural condition of the
ship.
Investigation of hatch covers structure, sealing arrangements and closing

devices will reveal why the hatch covers were not closed quickly during rain at
load port.
The response to this Tutor Marked Assignment is shown on the following page.
Your reports will be in this format.

AZIMUTH MARINE LTD
TUTOR MARKED ASSIGNMENT RESULT
Course : NSTC/LMA/Diploma In Marine Surveying
Year : 1999
Module : 8
Student : Exy Zzz
Grade for this Paper : B
Comments
A good assignment – well done.
You have quite rightly focused on the cargo handling equipment and corrosion
as potential cause of damage, however there are two other important areas to
consider in a case such as this:
● incorrect distribution or too rapid loading; and
● the environmental stresses caused by heavy weather on vessels carrying

bulk.
So you should be particularly aware of this when surveying the DB tanks amid-
ships to show signs of bending. Shell plating at the quarter lengths may show
signs of damage caused by excessive shear. Beam/frame connections and bilge
brackets may show signs of transverse forces. Hatch coamings and the faces of
sloping plates in the upper wing tanks may show the effects of torsion.
Signed Initialled External Verifier

R M MacDonald
Course Director
Notes on Grading
A Excellent – You are showing above the expected level of knowl-

edge for this subject.
B Very Good – You have demonstrated a full knowledge of the subject.
C Pass – You have shown an understanding of the subject.
D Pass – Pass, but revision is recommended.
E Need to revise and resubmit your answer.

Note: Your papers are kept at the college during the course as external verifiers
may inspect them. (Normally verifiers sample 10% of all papers at random.) Your
papers will be returned to you at the end of the course.
Seminars
1-083 Seminars are an important part of the course as they enable you, the student,
to meet face-to-face with the authors and tutors. This gives you a great
opportunity to personally discuss points that you feel need addressing.
1-084 Seminars also enable you to meet fellow students and share the learning
experience with them. This is an excellent opportunity to network with people in
your profession.
1-085 However, attending seminars is not mandatory and non-attendance at seminars

does not directly affect your final assessment for the diploma.
The Examination
1-086 The examination is a three-hour “open book” type. By “open book” we mean that
you are permitted to take your modules and reference books into the exam with
you. The questions will be in a format that will try to place you in a situation that
you may be expected to face in the day-to-day activities. In that role you would
be able to make references to documents and guidelines, hence the open book
concept. The examinations will test your ability to carry out your duties and allow
you to demonstrate that you have gained the underpinning knowledge to be
competent in that role.
What You Can Achieve
1-087 To reward the effort that students put into their work there are a number of
qualifications based on achievement that are awarded:
● A Certificate in Ship Superintendency
If you successfully complete all your core modules with an average of

C throughout then you will be entitled to a Certificate in Ship
Superintendency.
● A Diploma in Ship Superintendency
Having successfully completed all core modules and passed the exami-
nation with an overall pass mark combining the Tutor Marked Assignments
then you will be awarded the Diploma in Ship Superintendency.
● A Diploma in Ship Superintendency with Merit
A Merit award is given when all core module Tutor Marked Assignments
have been successfully completed and the overall marks combining both
the examination and the TMA marks are at least 70%.

● A Diploma in Ship Superintendency with Distinction A Distinction is

awarded in the same way as a Merit but the overall marks must reach at
least 85%.
1.15 CONCLUSION
1-088 Successful distance learning depends on two main factors:
(a) Setting Realistic and Achievable Goals This requires a clear sense of
direction and purpose along with an understanding of your own capabilities.
(b) Planning to Achieve these Goals This requires organising yourself. We

cannot comment on your motivation but what we can do is to advise you
on setting practical goals. Make a schedule over the duration of your pro-
gramme. Take into account the amount of study you feel you will need for
each of the modules. What amount of time will that take? This means actu-
ally devoting regular time for learning. From this schedule you can write
your own individual action plan. It is important that you review your own
progress against your action plan on a regular basis. You may have to
adjust the schedule or adjust your pace if you feel it necessary.
1-089 However, it is important to keep a certain pace of activity in order to stay

motivated. In practice commitment of around ten hours studying during the week
works best for maintaining a momentum.
1-090 Finally, try to keep abreast of what is going on in the maritime industry as a
whole. Subscribing to Lloyd’s List is rather expensive for an individual, but most
agencies and shipping related companies get corporate copies. If you are not on
the circulation list try to borrow it somehow; it is worth reading. There are also
many excellent trade journals that give an insight to the industry. Some
discounts are available for students on the Diploma course. Please see your
Course Handbook for further information.
We hope you enjoy the course.



PART ONE
INTRODUCTION TO THE
SUPERINTENDENT’S ROLE
2. THE SHIPPING COMPANY
LEARNING OUTCOMES
After completing this chapter, you will be able to:
● identify the difference between the structure of the tradi-

tional shipping company and the changes that have been
made during recent years;
● state the typical job roles of the top managers within a ship-
ping company and give a brief outline of what is expected
of each person in that role;
● state two of the major influences on the shipowner that

have caused them to rethink the strategic operation of their
business over the past three decades;
● identify major examples of increased or new responsibilities

placed on owners or charterers in the last two decades; and
● identify examples of regulatory bodies, either mandatorily

imposed or voluntarily accepted, influencing the company
operation which have evolved over recent years.
2.1 INTRODUCTION
1-091 Changes in the marine industry have been driven largely by outside forces. The
sudden rise in the price of oil in 1973, for example, had a dramatic effect on the
common choice of power plant for cargo ships. This outside influence saw a big
shift away from steam propulsion toward large two-stroke diesel engines.
1-092 The changes in the operation of the industry have also brought associated changes
in management structures, containerisation brought major efficiency gains and the
automation of ships caused yet another change in company structures and those
structures are undoubtedly going to change within the industry again.
1-093 The success of the merchant marine industry depends upon the ability of the
industry to compete and show an adequate return on capital. It all depends upon
efficiency from improved management at all levels, improved and economic
manning combined with improved ship design, maintenance and cargo handling
techniques. Companies must look forward, always seeking a better, more
cost-effective way, to carry out their business.

Module 1 The Shipping Company
1-094 Management is a complex and abstract concept, it is the art and science of
directing human activity in accordance with a pre-arranged plan. To be effective
the successful manager must be able to provide, a clear vision, good working
conditions, effective control, leadership and motivation, and to identify and
satisfy evolving training needs and updating of knowledge. With respect to the
latter point, even though crewing agencies may be utilised, Section A 1.1.2 of
the ISM Code identifies who the owner and company is and Section 6.5 of the
Code stipulates that it is the responsibility of the company to identify training
needs both afloat and ashore.
1-095 Administration is the guidance, leadership and control of efforts of a group of

individuals towards some common goals and the main core of management is
involved in the taking of decisions to action or to change the course of action.
Motivating staff is difficult to achieve, however, and a leader can only expect sup-
port if his or her staff know what they are trying to achieve. Management is also
concerned with the collection of data for decisions, the taking of that decision
and bringing the decision to bear at the point of action.
1-096 As an effective “manager” the “ship’s superintendent” will find high profile
involvement in communication, planning, leadership, delegation, determination
of objectives, establishment of policies, survey programming, ship inspections,
keeping up-to-date with changing regulatory requirements and their implemen-
tation dates, operational procedures, budgets, anticipatory reaction, personnel
interfacing and forecasting within this complex role.
1-097 The nature of the superintendent’s employment may be influenced by the

shipping company’s operational area, its commercial exposure, the situation and
size of the shipping company. The variety of types of vessels making up the
company fleet may limit individual superintendents’ roles in specific and
specialised aspects.
1-098 Operating a modern shipping company is a team effort and individuals in that
team must know how they fit into the company and what is their role in the
contribution to the profitability of the company.
1-099 This first section gives a brief overview of the traditional roles within a company
that needed to be covered and to give a brief idea as to some of the pressures
that have caused changes to company structures over recent years.
1-100 The role of the wholly-owned shipping company established and expanded from
traditional family roots has radically changed in recent years. The industry has
responded to worldwide demands to increase the volume of sea-borne trade
resulting in diverse fleets of vessels in both the specialised and tramp trades. A
revitalised industry now benefits from significant regeneration following the
boom and decline of the last two decades.
1-101 The globalisation of trade and finance and the economic pressure to reduce costs
have resulted in the shipping companies contracting out some or all of their non-
core business. A direct result of this is for the company ethos and structure to be
replaced by contractual arrangements having varying degrees of effectiveness.
1-102 The conventional shipping company with its owner sitting on the board of
directors, presiding over the daily operations and having a direct influence upon
the running of the company, whilst still evident, is now a minority ship management

The Shipping Company Module 1
structure. This fact alone has changed the shape of the industry and its conduct
in the international arena. The fact that this system was the antecedent of the
shipping industry today permits some reflection on this style of ship management.
1-103 Changes in traditional national aspects of fleets and crewing, e.g. flagging out,
have introduced some benefits but also some disadvantages and difficulties
such as crew certification standards, crew communication – both aboard and to
and from shore – diminution in crew/company loyalty, more transient/short-term
crewing periods, more time spent on ship and company familiarisation as
personnel come and go, management tasks become more complicated.
2.2 THE OWNER
1-104 In the traditional shipping company the original owner would typically have
started from humble beginnings with the ownership of one or two tramping
vessels and may have initially enjoyed low financial exposure with no lien or
mortgage on the start-up tonnage. He would maintain a daily watching brief over
company dealings, being instrumental, through industrial and fiscal contacts, in
the procurement of funding required for company expansion.
1-105 It is difficult in the modern industry to state just who are the owners of ships. The
person or persons that appear on the registry document may be the nominal
candidates but they may in turn be financed by private or public share capital. A
company that appears to own a ship might in turn have its own shareholders
who will invariably include large investors such as pension funds.
1-106 A modern shipping company will be one that conforms to the Companies Act
within the country where it is registered. This will affect the registration, disclo-
sure of accounts, rules concerning nationality of crew and, in some cases, the
declaration of tax. Its main business will usually be in some part of the maritime
industry. Many companies now combine shipping with other forms of transport
and/or manufacturing or production, so that the ships become one part of a
supply chain. This, however, is not entirely a modern concept and examples can
be found in cement, sugar and fruit production and, at one time, extensively in
rail and ferry companies.
1-107 An “owner” is typically a person, a company or a state. For example, one of the
world’s largest shipowners is the Royal Bank of Scotland.
1-108 An “owner” can exercise operation of his fleet, or ship, in one of the following
ways:
● Use of a ship management group, e.g. Barber, Colombia, Denholm/

Anglo-Easter/Wah Kwong, Acomarit/V-Ships.
● Own company with own manning.
● Own company using a manning agency.
● Owner/skipper with individual management or participation in an “owner
group” such as Wagenborg.
(See comments with respect to ISM responsibilities in Section 4.4 touching on

the ISM Code.)

2.3 FINANCIERS
1-109 Ships are becoming more and more sophisticated and specialised, as a result
they are also becoming more costly. Some areas of the business are over-
subscribed and, therefore, the freight rates are depressed making it difficult for
the shipowner to make a reasonable return on his investment.
1-110 If shipowners can predict the rise and fall of time charter rates and second-hand
values then the usual market forces will apply. If the ship is purchased when the
market is low and it is successfully traded on a business of rising time charter
rates then the ship could be sold at a higher rate and finance the whole venture.
1-111 It can be seen that this strategy is risky and a more traditional way of raising a
mortgage with the banks, possibly with the ship as collateral, might not be so
risky.
1-112 As with house mortgages the owner might be putting some of his own funds into
the project. This may take the form of extra capital raised from the shareholders
in a rights issue. It may be that the owner has sufficient funds from his own
general reserves.
1-113 The banks will look at several criteria before lending sufficient funds. The first is
the need for a robust business plan for the project as a whole. This will, of
course, show a prediction of cashflow (see Module 2) and the ability for the bor-
rower to keep up the loan repayments. The lender will invariably have a policy
on the percentage of the total they are prepared to loan. This may well be the
ratio of the loan to the amount of equity that the borrower is able to put forward.
1-114 The reputation of the shipowning company and the ship management company
may well be a consideration of the lender. The insurance will definitely be taken
into consideration and the crewing policy might also be looked at carefully.
Financiers or mortgagors can make any stipulations they wish as a condition of
lending. In the case of a new-building vessel this could, for example, concern
flag or choice of classification society.
1-115 Both the owner and the lender will want to rrotect their investment and one of
the major operations to carry out before the ship is handed over to the new own-
ers will be the “subject inspdction” or hand-over survey. The new owners will
want to inspect the vessel’s classification records, status of statutory certification
and maintenance documents for a second-hand vessel. (In the case of a new
construction vessel, the owner will usually have had representation in the
builder’s yard at least during the final construction and commissioning phases.
It is usually the builder’s contractual responsibility to ensure that all certificates,
both classification and statutory, necessary for the vessel’s operation as detailed
in the contract are provided to the owner on delivery of the vessel. There are
certificates, however, which can only be dealt with by the owner or manager.)
1-116 Among the main objectives of the subject record inspection are:
● Any recurring faults such as problems with main bearings or main engine
mountings. Has the ship had any problems with the stern tube or shaft
bearings which might suggest alignment problems?

● Is there any evidence of serious damage to the hull, rudder or propeller,

which might suggest evidence of a collision or grounding of the vessel?
● History of repairs, renewals, modifications and replacements.
● Outstanding conditions of class.
1-117 The ship’s superintendent will probably be involved as the owner’s

representative for the eventual on-board surveys. The buyer and the seller will
each have their own representatives aboard. (Surveyors representing class or
flag authority may also be aboard at the same time during hand over/change of
owner/change of flag surveys, but their scope of interest will not be as
comprehensive as that of an owner.)
1-118 The new owner will want to ensure that the vessel is a sound investment. The gen-
eral condition of the machinery installation will be of particular interest. Unless any
specific detailed dismantling is in hand, or requested, this could involve looking at
a main diesel engine through crankcase doors and scavenge spaces. Auxiliary
machinery including, importantly, generators – diesel or steam – switchboards and
pumps would be examined for good operational state, with running tests wherever
possible or if condition dubious. Auxiliary (or main) boilers operation would be
examined and water treatment records seen. Cargo handling equipment and cargo
containment or control systems according to type of vessel would be inspected.
There are, of course, many other aspects to, and variations of, the foregoing.
1-119 Inventories of spares, stores, consumables, bunkers need to be agreed. Cargo

spaces condition would be checked as this may effect the immediate cargo
intentions upon delivery – for example, if holds are too dirty or contaminated to
carry the next cargo without delay and costs of cleaning.
1-120 General hull condition and standard of maintenance would also be ascertained.
A vessel may meet classification and statutory requirements at the time but
there may be significant future maintenance or repair aspects which would not
be subject to any condition of class at present. Condition of closing devices and
hatch seals are significant with respect to avoiding cargo damages and claims,
for example safety equipment, and navigational equipment condition would also
be assessed.
1-121 The foregoing is not by any means exhaustive, but would be part of the basis for
assessing any additional costs that may be necessary to bring the vessel to
operational readiness and could have a direct effect on its immediate earning
capacity on handover.
1-122 The lender will also want to protect his investment and to have the ability to
repossess the ship if the loan payments fall in arrears. This means that there is
a need for a system to be able to arrest the ship and for the courts to sell the
vessel and divide the proceeds between the mortgagee(s) and any holders of a
lien on the vessel.
2.4 MARKET POSITION
1-123 Some general ideas on the concept of marketing and about a company
determining its market position can be found later in this module.

1-124 However, it must be said of shipping, as with any other business, that it only
exists because of the customers. Companies are able to operate ships because
there are customers that wish to use them.
1-125 This kind of thinking has led to shipping companies recently concentrating on
their core business and as a consequence it has also led to the contracting out
of their non-core business activities.
2.5 A TRANSACTION FUNDAMENTAL TO THE DEMAND FOR SHIPPING
1-126 The shipping industry, like other industries involved in transportation, is not
immune to technological change. Initially in the ability to build larger and more
complex vessels and latterly in the area of communication and information tech-
nology, the industry has seen significant changes over the last three decades.
Nevertheless, certain aspects of the operation of ships are deeply conservative,
especially on the commercial side where shipping and international trade meet.
1-127 There is a shipping industry because, somewhere in the world, a producer

wishes to sell a product or a commodity, and somewhere else in the world, a
consumer or a manufacturer wishes to buy that product or commodity. Assuming
that the buyer and the seller can agree a price, they have two challenges to
overcome before their transaction can be successfully completed.
1-128 They need:
(i) to agree who will be responsible for transporting the goods from seller to
buyer; and
(ii) the buyer needs to finance the transaction.
Once this is agreed, they can produce the sales contract, which is the primary
document behind the movement of virtually all cargo at sea.
1-129 The linkage between these two transactions – a flow of (physical) goods in one
direction and a flow of money (probably electronically) in the other – is a docu-
ment called a bill of lading. This is the principal document against which the
buyer’s bank may be requested to release some millions of dollars against the
future delivery of goods that the buyer may not have seen, that are not in his
possession and are, or are about to be, exposed to “the perils of the sea” on
some unknown or little known vessel.
1-130 This piece of paper, the bill of lading, is also the document that the ship’s master
(or agent) signs on behalf of the shipowner establishing the safe receipt of the
goods on board, their quantity and quality and their eventual safe and timely
delivery. It also provides evidence of the contract of carriage.
1-131 Within this general concept there are a number of factors which may add
complexity and risk. These include:
● where does the journey commence and end?

● who arranges the transportation?
● who insures the cargo, and where is the risk?

● how many times does ownership change during the course of transportation,
i.e. is the cargo sold and resold, and who holds valid title to the goods?
● how complex is the financing and what security is required?
1-132 An increasing consideration, especially since the loss of the tanker Erika in
December 1999, is what is the quality of ship used and who will bear the liability
for selecting that ship? To put it another way, to what extent should flag state reg-
istration guarantee the suitability and seaworthiness of a vessel? Similarly, what
does classification society endorsement signify and should the shipping industry
need to rely on surveys by, for example, individual oil companies and the P&I
Clubs? Should, indeed, the industry have to rely on port state inspections carried
out at the receiving ports, in other words, after the voyage (and major risk)?
1-133 It must be borne in mind that all the foregoing entities and their activities are
ancillary only to the owner’s duty and sole responsibility to ensure the vessel is
maintained in accordance with the standards set by class and national or inter-
national regulations. The involvement or activities of other bodies do not absolve
the owner from this responsibility.
1-134 These concerns are the areas of more direct interest to the shipowner or
manager in so far as he has more influence over them:
● is the packaging or containment for the cargo correct?

● is the delivered quantity and quality correct?
● can the ship meet the necessary schedule?
● who is responsible for instructing the master, e.g. the owner or the shipper
or receiver?
● does the contract of carriage impose any unacceptable burdens on the
ship or its owner?
and, by no means least:
● does the proffered freight rate make a satisfactory contribution to the trad-
ing, operating and financing costs of the ship?
1-135 This introductory module is designed to give candidates an understanding of the

core activity that generates the demand for shipping service. In Part Two, the
principal elements of ship operation and management will be outlined and their
interdependence explored, prior to the detailed development of key subject
areas in the modules that follow.
1-136 Whether a vessel is carrying cargo or performing such other services as towing,
surveying, anchor handling or carrying passengers, candidates should remem-
ber, as they work through the modules, that the requirement for shipping serv-
ices is generated by customer-led demand.
2.6 A BRIEF HISTORY OF MARITIME COMMERCIAL DEVELOPMENTS
1-137 Many of the processes involved in the management of ships, and particularly
their commercial management, have a long history. Over the past three centuries,
this tradition has shaped English maritime law. This has a direct influence on
today’s operator, not least because English maritime law remains the dominant
law for international trade and other related ship transactions.

1-138 Evidence of maritime trade has been found in Egypt as far back as 5,000 BC by
which time there was evidence that seafarers have already harnessed the
propulsive power of the wind. One of the earliest recorded contracts of
affreightment is for 40 ships of cedar logs brought from Lebanon to Alexandria.
1-139 India traded by sea both to the east and the west, and around 300 BC Emperor
Chandragupta created a Board of Admiralty. By AD 45, the pilot Hippolus had
discovered the monsoons and the 30-odd vessels that traded from Arabia to
India increased in number so that they “soon could be numbered in hundreds”.
1-140 The Phoenicians were the first recognisable maritime nation, expanding from
the relatively benign waters of the Mediterranean through the Pillars of Hercules
(Strait of Gibraltar) and into the Atlantic. As the Greek civilisation took over from
the Phoenicians, Demosthenes, a maritime lawyer of his day, was already not-
ing that “neither ship nor shipowner nor merchant can put to sea without the
assistance of the lenders”, with the vessel frequently being pledged as security
– an early maritime mortgage.
1-141 Foremost amongst the ancient Greek shipping and trading communities of the
middle Greek period was the island of Rhodes. Firm believers in the freedom of
the seas for all, the seafarers and merchants of Rhodes were already
establishing the beginnings of maritime commercial practice in a way that is still
recognisable today. One of their greatest contributions was the concept of pro-
viding for a common contribution to be made if goods were jettisoned to lighten
the vessel for the common good – general average.
1-142 Rhodian and Roman laws in fact were precursors of safety legislation, for
example, in prohibiting sailing in winter. Under Roman law a vessel could only
leave port in a prohibited period without incurring an administrative penalty if it
held an officially issued permit or “dimissorium”. At the same time, these early
laws firmly laid the principles of the authority and responsibilities of the master
which have survived, albeit with much attempted erosion, to the present day and
the re-affirmation evident in the ISM Code.
1-143 Although still influencing the way in which we trade today, Rhodian law only
survives in written form through the digest prepared for the Roman Emperor
Justinian. An extract reads:
“Lege Rhodia Cavetur ut si levandae navis gratia jactus mercium factus est,
omnium contributione sarciatur quod pro omnibus datum est”
De Lege Rhodia de Jactu
“The Rhodian law decrees that if in order to lighten a ship merchandise has been
thrown overboard, that which has been given for all should be replaced by the
contribution of all.”
(General average is differentiated from particular average where the loss falls on
one person – usually the shipowner, who hopes to be able to recover under his
insurance.)

1-144 That the sea was free for all was an inherent principle that has stretched through
the centuries. Even in all-powerful Rome, Emperor Antonius would rule:
“Let it be judged by the Rhodian law which deals with nautical matters, so far as
it is not directly contrary to our own law.
For I am the lord of the whole world but the law is the lord of the sea.”
1-145 The Roman Empire saw a great expansion of maritime trade pushing up into
northern Europe. Part of the shipping activity was in the support of far-flung
legions but much was engaged in trade and then, as now, grain played a major
role. By AD 100, Rome was importing 150,000 tonnes of grain a year, mainly
from a then more fertile north Africa.
1-146 Surprisingly in such a well-ordered empire, Roman maritime law was not
codified and thus, like Rhodian law, it has not survived in detail. It is known that
it covered the five broad areas of:
● Mare
The public use of the sea as, in common with the Rhodian principle, free for
all. This is very different from the Roman approach to travel on land within
their area of dominance and it is an important principle which has been
defended, in concept if not entirely in practice, until the oceans as a source
of resources, rather than just a medium of travel, coloured national thinking.
● Navis
Covering the legal ownership and operation of the vessel.
● Merx
Cargo, its carriage, delivery and the payment of freight.
● Obligations
Responsibilities of the owner, merchant and shipmaster as well as those
making maritime loans.
● Actions
The settlement of disputes.
1-147 Roman law recognised the need for finance and saw the further formalisation of
the provision of maritime credit. Loans for trading ventures were made against
the security of the vessel and were only repaid if the voyage was successful. In
AD 554 Justinian I established standard, risk-related premiums of 8% and 12%.
Little is recorded of maritime trade during the Dark Ages (AD 450–1000),
although it is known that the Vikings both raided and traded as far south as the
Mediterranean and west to Iceland, Greenland and North America.
1-148 By the Middle Ages, the northern Italian city states, and principally Venice and
Genoa, had established well regulated ways of conducting maritime trade.
Vessels, owned by one or more dedicated shipowners, would advertise them for
trade (much as a common carrier), with the ship’s name and proposed destina-
tion carved on a board and carried round the town on a lance. Merchants would
appoint a supercargo to travel with their goods and vessels were inspected for
seaworthiness prior to sailing, with the inspector frequently carving a mark on

the planking to indicate how deep he thought it safe to load the vessel – some
500 years before Samuel Plimsoll regularised the practice.
1-149 Protectionist laws were promulgated to ensure cargoes were carried in locally
owned vessels. At its height, Venice boasted 3,000 vessels and 28,000 seamen
out of a total population of 200,000 while Amalfi, then a thriving seaport near
Naples, claimed to have invented the mariner’s compass.
1-150 A charterparty of 1263 for a voyage between Porto Pisano and Bugea shows inter-
esting similarities with modern commercial practice. It required the shipowner to:
“provide a vessel in good condition and furnished with tackle and equipment as
specified, together with a crew of 36 skilful seamen (including the master, clerk
and supercargo), and six servants”.
The master and mariners were to be properly armed, and together with the
stevedores were required to take an oath to observe the terms of the contract.
Lightering at his own expense against payment of the customary freight, the
owner undertook to sail within 10 days of contract and to deliver the cargo to the
receivers in Bugea in the same condition “as signed for”.
1-151 Outside the Mediterranean, to the north and east of a Thames/Rhine dividing
line, the Hanseatic League of more than 60 cities, including Lubeck, Hamburg
and Bremen, dominated maritime trade and transportation in a different way.
1-152 Here was a much closer relationship between cargo and vessel, merchant and
mariner. Vessels were generally smaller, voyages shorter and ownership, or part
ownership of several vessels in partnership, more common. Cargo also tended
to move in smaller parcels spread between more vessels.
1-153 One of the premier trading cities, whose name remains with us today, was Visby
on the island of Gotland. During the 12th century Visby was reported to have
12,000 active merchants and as many vessels – at least until the town was
sacked by the Danes in 1361. The basis of marine insurance, the principle of
spreading the risk, became interwoven into the very fabric of trade.
1-154 Laws and conventions were promulgated to control differing aspects of maritime
trade and transportation and generally took their name from an important trad-
ing city in that particular trading area. The wine trade from Bordeaux (then an
English province) was regulated by the Judgements (or Rolls) of Oleron, a small
island off La Rochelle where Richard I is reputed to have paused on his return
from the Crusades. Promulgated in the latter part of the 12th century, they
required, among other things, the master to consult his crew before sailing, a
recognition of the hazardous nature of the Bay of Biscay and the Western
Approaches to the English Channel. Some of the provisions of the Judgements
of Oleron were incorporated into the “Ancient Maritime Code of Visby”, produced
half a century before the Danes paid their courtesy call in 1361.
1-155 In the Mediterranean, Barcelona had become a powerful trading centre and, in
1258, published, in Catalan, the Consulate del Mare or Barcelona Ordinances.
Running to 300 chapters, and including the provision that the crew should be pro-
vided with salt meat, bread, vegetables, oil, wine and water, they were still influ-
encing maritime commercial practice nearly 500 years later; in 1705 they were

translated into Dutch. In England, Rhodian law and the Judgements of Oleron
were combined under the rule of Edward II in the Black Book of the Admiralty.
1-156 A measure of commercial activity during this period of global expansion (as
opposed to the current globalisation), can be seen in the Dutch fleet of 1610.
Although still under the control of Spain (enriched by their plunder of Central and
South America), the Dutch recorded a fleet of 16,000 vessels totalling one mil-
lion tonnes and manned by 160,000 seafarers. Little wonder that Sir Walter
Raleigh was moved to comment:
“Whosoever commands the sea commands trade. Whosoever commands the trade
of the world commands the riches of the world and, consequently, the world itself.”
1-157 In the middle of the 17th century, England’s growing strength reduced the mar-
itime influence of the Dutch and the role of Amsterdam as the leading financial
centre (remember the words of Demosthenes) moved to London. This heralded
another landmark in the development of maritime commercial practice. Out of the
exchange of shipping information in the coffee houses of the City of London grew
a maritime insurance industry that is generally known as Lloyd’s – the name of
one of the principal coffee houses and meeting places for shipowners, traders
and underwriters. Out of the underwriter’s need for quality standards grew Lloyd’s
Register of Shipping, the first of the classification societies, and out of the need
for information grew the international network of Lloyd’s agents and Lloyd’s List.
1-158 England, at that time, had a protectionist approach to world trade and in 1720,
in exchange for a little financial support (£300,000) the Crown granted a statu-
tory monopoly to Royal Exchange Assurance and London Assurance as the only
companies authorised to conduct maritime insurance business. The underwrit-
ers of Lloyd’s survived, since they were operating as individual “names”. The
monopoly was repealed in 1824 with a salutary effect on insurance terms and
premiums. However, the early Lloyd’s SG policy form survived from this time and
was not replaced until 1983.
1-159 The restrictive practices in maritime insurance gave rise to another maritime
institution that survives today, the mutual hull insurance clubs set up regionally
by groups of shipowners dissatisfied with the rates offered in London. After
1824, the mutual hull clubs became less necessary and went into decline
(although they are seeing a small resurgence today). But, by the middle of the
19th century, the expansion and diversification of trade, together with a more
philanthropic approach to seafarers’ welfare, gave the principle of mutual insur-
ance a new lease of life.
1-160 The first protection association was formed in 1855, the forerunner of the
shipowners’ mutual protection and indemnity association of today – the P&I Clubs.
1-161 During the 18th and 19th centuries, which started with the United Kingdom
growing in influence as the world’s major trading nation, a number of events took
place that directly affected the development of the shipping industry.
1-162 In 1807, the British Parliament passed an Act making trading in slaves unlawful.
This immediately meant that American slave ships needed to be able to outrun
British frigates. This gave rise to the development of the fast clipper and heralded
a new dimension in seasonal and long distance trade.

1-163 The end of the Napoleonic wars in 1815 released around 1,000 vessels on to a
changing market and within three years the Savannah made the first steam aux-
iliary crossing of the Atlantic. The age of King Coal and a worldwide network of
bunker ports and established agents was opening.
1-164 These developments, together with a peace time need to administer global
empires (England, France, Holland, Germany) that relied increasingly on a regu-
lar postal service, give impetus to a growing network of scheduled liner services.
This was enhanced by gold-rush fever in the middle of the 19th century, with the
resultant flood of people from the old world (Europe) to the new. Between 1850
and 1860 the population of Australia grew from 404,000 to 1,100,000 and by
1880 half a million immigrants a year were arriving in North America.
1-165 One other major technological and commercial development was to influence
world trade and maritime transportation.
1-166 Naft (naphtha) had been known in Arabia for thousands of years and accounted
for the eternal flames of Egypt, Persia, Greece and Rome. It was not until 1854,
when the Rock Oil Company drilled its first well in Titusville, Pennsylvania, that
commercial exploitation really commenced. The American well was followed by
drilling in southern Russia, in 1877 the first tankship sailed in the Caspian Sea,
and the first ocean tanker was delivered in 1886.
1-167 According to Lloyd’s Register, by 1911 there were 280 vessels carrying bulk oil
in the service of an industry which was to generate new commercial and legal
challenges. Nevertheless, even in this totally new demand for maritime trans-
portation, the bill of lading, the mate’s care and attention and the master’s sig-
nature and authority remained central factors in the trading transactions that
generate the fundamental demand for shipping.
1-168 Black Gold, in challenging King Coal, had another effect on shipping and life at
sea. When SS Mauritania was converted to oil and her many manually fired boiler
furnaces eliminated, so were the jobs of 270 of her 300 engine room firemen.
1-169 The next section looks at the constitution of the merchant fleet that grew out of
these developments.
2.7 THE MERCHANT FLEET AT THE BEGINNING OF THE 21ST CENTURY
1-170 Shipping has been described as the lynchpin of the global economy. More than
90% of global trade is carried by sea, and on some estimates the operation of
merchant ships contributes annually about US$380 billion in freight rates within
the global economy, equivalent to about 5% of world trade.*
1-171 In 2003, for example, the industry shipped around 6.1 thousand million tones
over about 4 million miles – an impressive 25 thousand billion tonne-miles of
trade or thereabouts. This represents an estimated increase of 300% over the
past four decades. Sixty per cent of the annual world oil consumption of 3.6 billion
tonnes is transported by sea (of which 99.9997% is delivered safely!).*
* Source: IMO News, March 2005.

1-172 As of January 2005, the world trading fleet was made up of 46,222 ships with a
total of 597,709,000 gross tons. Categories leading to this figure are: 18,150
general cargo, 11,356 tankers, 6,139 bulk carriers, 5,679 passenger ships,
3,165 containerships and 1,733 others.*
1-173 Section 2.6 gave clues towards the increasing growth in the volume and
complexity of world maritime trade, especially during the 19th century. This sec-
tion jumps ahead to around 1960 and takes a brief look at the main influences
on shipping during the last four decades of 20th century. This period is chosen
because many of the management styles of this period (and some of the ships)
still influence the way in which ships are owned, managed and traded.
1-174 Around 1960, a majority of ships, whether tramping or engaged in the liner
trades, were owned and operated by what may be described as vertically
integrated companies. In other words, the ownership and the commercial and
technical management including, crucially, the crewing of the ships, was under-
taken by a single entity, be it an independent shipowner or a division of a larger
organisation (such as the oil companies).
1-175 This vertical structure had important implications that still affect ship managers
today, and indeed, the vertically integrated model is still followed by a number of
highly successful ship operators and may possibly be experiencing a resurgence.
If one applies a SWOT (strengths, weaknesses, opportunities and threats)
analysis to a typical north European shipping company of the 1960s, some of
the key points that emerge are:
● Strengths
1. A strong company ethos and a well understood organisational structure.
2. Continuity of employment (especially for sea staff) and a strong training
programme that leads to professionalism and loyalty.
3. Strong trading links backed by the proximity of the major international traders.
4. Technical, legal, commercial, administrative support from internal sources.
5. Keeping expertise within the company.
● Weaknesses
1. A tendency to base future business in a changing world on traditional
approaches.
2. A poor commercial interface between sea staff and shore staff.
3. More inertia against changes affecting personnel, locations of activities
and familiarity with procedures and practices.
● Opportunities
1. The ability to foresee changes in technology and trading patterns.
2. Access to finance.
* Source: IMO News, March 2005.

● Threats
1. Changes in the balance of world trade and a growing nationalism in the
Third World.
2. An increasing availability of Third World labour.
3. A freeing of capital from national constraints.
4. With respect to this North European example, shift of shipping building,
management ownership and repair centres away from Europe.
1-176 A further key point contributed to the overall ethos of safety and this was the
relationship between the national flag state and the nationally based shipping
company. One benefit of this arrangement was that safety standards were well
understood and levels of training were relatively high. A weakness was a
reluctance of some national authorities to move in pace with the changing tech-
nological and commercial pressures that contributed to the increase in flags of
convenience and the proliferation of horizontally integrated shipping operations.
The effects of this on the management and operations of ships is explored on
the next few pages.
1-177 What, then, are some of the major influences that have changed the composition
of the merchant fleet over the past four decades?
1-178 Technology, both within and outside the industry, is central. One obvious external
factor is the 747 jumbo jet, heralding the age of long-haul, mass transport. This,
over a period of a few years removed the demand for major passenger liners. At
the same time, the first class, international mail service transferred from sea to
air and dealt a further blow to fixed schedule liner traffic.
1-179 This was compounded by the introduction of containerisation. Again within a few
years, containerships of up to 1,000 teu (20-foot equivalent units), were replacing
five or six conventional break-bulk cargo ships on the main liner routes. Since
then, capacity has increased towards 10,000 teu in ships with a speed of 25
knots (as opposed to the 16–18 knots of the liner vessels of 1960s–70s).
1-180 The economics of scale also affected the tramp or bulk traders. This was influenced
by a healthy world economy being driven on a plentiful supply of cheap crude oil.
Economists drew graphs of the predicted growth in world trade that disappeared
optimistically off the top right-hand corner of the graph. Shipbuilders and shipown-
ers responded during the late 1960s with the VLCC (very large crude carrier of
250,000 tonnes deadweight carrying capacity and more) and an increasing num-
ber of dry bulk panamax (circa 70,000 dwt) and capesize ships (circa 150,000 dwt).
1-181 The closure of the Suez Canal in 1967 gave a further fillip to the VLCC (and
ULCC) order book. Unfortunately, however, its reopening, coupled with the real-
isation of the oil producing nations that they could influence (upwards) the price
of oil resulted in a seismic shudder throughout the shipping industry. Fuelled by
shipyard overcapacity, the excess supply of ships is only now working itself out
of the system.
1-182 On the positive side, the industry responded strongly to the demand for ships
that could carry ever more specialised cargoes. Petroleum products in coated
tanks and chemicals in stainless steel tanks with closed loop venting systems

are obvious examples. The less than aesthetic pure car carrier is another. More
recently, the high-speed (catamaran) ferry and the dedicated cruise liner are other
examples. The “super yacht” industry with combined pleasure and commercial
use is growing and by necessity and law employing fully qualified seafarers.
1-183 While changes in trading patterns (or demand) were driving changes in ship
design (the hardware), other changes that had profound influences on the
shipping industry were also taking place.
1-184 Capital was escaping from national boundaries and becoming internationally
available. This in turn led to internationally based financing organisations pre-
pared to invest in shipping more for reasons of capital appreciation than for
trading. These organisations were not constrained by any allegiance to a
national flag and looked increasingly for tax havens in which to locate their
investment, increasing the tonnage registered under flags of convenience.
1-185 These organisations also needed to find companies with the skills necessary to
undertake the technical, and sometimes the commercial, operation of this tonnage.
This, in turn, led to an increase in the demand for professional ship managers.
1-186 Ship managers, some new and some the remains of the traditional liner and
tramp companies, competed for business by endeavouring to reduce the daily
cost of operating the ships under their management.
1-187 As part of this process, ship managers and shipowners, with a few exceptions,
looked for cheaper supplies of manpower, initially as ratings and later, for
cheaper officers, giving rise to the independent crew manager. Accountants, and
many ship managers too, found the immediate argument of cheaper wages and
no social costs much more persuasive than unproven arguments by “ traditionalists”
about maintenance and safety levels.
1-188 Against this background, the bare statistics for ships lost each year (based on
figures issued by the London Underwriters’ Association), indicate the combined
effect of all these influences on safety standards.
1950–59 Under 0.30%
1960–69 Rising to 0.40% by 1969
1970–79 Rising to 0.56% by 1979
1980–89 Falling slowly with a sharp decrease (to 0.20%) in 1989
1990–96 At 0.40% in 1991, but falling to 0.13% by 1996
Please note that these statistics are no longer produced.
According to Lloyd’s Register, and latterly LR-Fairplay, more than 300 ships
were lost annually between 1966 and 1985, the worst years being 1978 and
1979, when there were 938 losses, approximately 0.67% of the world fleet. In
1959, however, when the IMO began, the percentage loss was 0.5%. Since
1980 the percentage of losses has continued to diminish. In 1980 the figure was
0.24%. By 2000 it was 0.19%. In 2004 it was nearer 0.1%.

1-189 One result of the restructuring of the industry in this way is that the International
Maritime Organisation (IMO) has taken a much more prominent role in drafting
safety related conventions (which are then, or should be, translated by flag
states into national legislation). Two direct results of changing safety standards
and, arguably, horizontal integration, are the introduction of the International
Safety Management (ISM) Code and port state control (PSC) and these are
discussed later in this module.
1-190 The central task of the ship manager can be described as the management of
the hardware (the vessel) and the human resource (the crew). Frequently, this is
extended to incorporate various aspects of commercial management and the
operation of a ship under a charterparty of one type or another. Although not
usually directly involved with either the provision and financing of vessels or
strategic decisions about their trading, ship managers need to keep a weather
eye on supply and demand, trade cycles and changes in both technology and
customer requirements. The common currency for assessing supply and
demand is the tonne-mile, since marine transportation is both distance and
weight (and, in some cases, volume) sensitive.
1-191 In simple terms, an annual contract of affreightment for 5,000,000 tonnes of

crude oil produced in West Africa and delivered to Rotterdam, generates 22,000
million tonne-miles of demand, while the equivalent production in the Arabian
Gulf generates some 62,500 million tonne-miles of demand. On the supply side
of the equation, an aframax tanker (the largest that can trade to West African
ports) of 130,000 dwt, operating at an average speed of 14 knots and complet-
ing 4.5 voyages a year, provides a 6,721 million tonne-mile capability. A 286,000
dwt VLCC, trading both ways round Africa, can supply annually 16,875 million
tonne-miles of cargo carrying capacity in a single year.
1-192 To put it another way, 3.27 aframaxes are required to cover a 5 million tonne
annual COA (Contract of Affreightment) from West Africa. 3.70 VLCCs, of approx-
imately twice the carrying capacity, are to transport a similar quantity of crude oil
from the Arabian Gulf. Although the VLCC is much larger, its capital cost is not
twice that of an aframax and its crew size is not double; the economies of scale
show up clearly on main trade routes and this trend is now being reflected in the
increasing size of containerships that call at fewer nodal ports.
1-193 An ability to analyse changing trends in demand and to balance this assessment
against the ability of the world’s fleets to provide capacity in terms of tonne-miles
is central to the process of strategic planning. The table on page 1-113 of the
Appendix to this module shows the development of the main, internationally
traded commodities, in millions of tonnes, over the period 1980–2002. As well as
tonnage trades, a demand assessment also needs to take into account the dis-
tance the commodities are transported and changes in source location (of crude
oil or grain, for example shown in the tables on pages 1-118 and 1-119 in the
Appendix to this module) and consumers can radically affect demand, even if the
overall tonnage is little changed.
1-194 Grain is a particularly good example. Although it is not a large commodity in

tonnage terms (compared to coal or iron ore), it is affected not just by changes
in global economic patterns, but also by climate. Indeed, drought, hurricane or
flood can result in dramatic changes in demand patterns and these changes can
have significant effects on freight rates throughout the dry bulk sector.

1-195 The table on page 1-115 of the Appendix shows the world cargo carrying fleet
over a similar period. Note the growth of container trades and cellular vessels at
the expense of “other dry trade” and general cargo vessels. The slow growth in
reefer (refrigerated) tonnage can be partially explained by the increased avail-
ability of reefer containers. Note too, the increase of specialised vessels such as
pure car carriers and roll-on/roll-off (ro-ro) ferries and specialist tankers. Note
also how it is possible to get it wrong with an investment in combos (ore/oil and
ore/bulk/oil vessels). Again, before economic assessments can be made, further
information is needed, especially the age profile of the fleet and the newbuilding
orderbook.
1-196 Nevertheless, the tables in the Appendix to this module do provide a picture of
the world fleet and the demand for its services around the beginning of the
21st century.
2.8 COMPANY BUSINESS
2.8.1 Operational Issues
1-197 The ship’s superintendent faces two major issues over the next few years. The
first is the adoption of the latest IMO resolution, the International Ship and Port
Facility Security (ISPS) Code. Circular 1067 issued on the 28 February 2003
requested that contracting governments put into place all the necessary legisla-
tive, administrative and operational systems and infrastructure to ensure that the
ISPS Code be fully adopted by shipowners before the due date of 1 July 2004.
This Code should by now be complied with except for SSAS (Ship Security Alert
System) aspects for some “other” ships. (See Section 4.6 of this module.)
1-198 The circular went on to point out that the due date is a cut-off date and ships
found to be not in compliance after that date will be in breach of the SOLAS reg-
ulations because neither Chapter XI-2 (control and compliance measures) of the
Convention nor the ISPS Code provide for any extension of the implementation
dates.
1-199 The IMO promises “serious repercussions” for any ship and/or its owners that
are found not to be in compliance with the requirements after 1 July 2004. The
security of ships will be covered in more detail in Module 7 of this course.
1-200 The second major topical issue to occupy the mind of the ship’s superintendent
now and in the near future is the subject of ships and the environment. Although
these issues will primarily be the concern of the company engaged in building
new tonnage pressure will be placed on the operators of ships to ensure that
their tonnage is as environmentally friendly as possible. However, it will not only
be the new tonnage that will have to have environmentally friendly refrigeration
systems or have the correct TBT free antifouling coating, existing tonnage will
need to comply also.
1-201 The Institute of Marine Engineering, Science and Technology’s technical journal,
the Marine Engineers Review (MER) touched on the subject of new tonnage in
an article in the December/January 2002/2003 issue. The final decision for the
propulsion system chosen for the new trailer ship for Totem Ocean Trailer
Express (TOTE) was based on the lower emissions of the four-stroke diesel

electric plant. Naturally, the overall cost of the two-stroke verses the four-stroke
plant were similar and so the choice was not solely environmental.
1-202 The reduction of Nitrous Oxide (NOx) levels and particulate material from engine
exhaust will be of particular interest to the ship’s superintendent in the near
future. Questions such as “will shipowners be obliged to fit catalytic converters
to their ships”, will have to be answered and, if so, what will the additional cost
of this be to the bottom line? Wartsila have been working on producing a
“smokeless engine” using the common rail system of fuel injection.
1-203 Some cruise vessels are fitted with additional gas turbine prime movers to
reduce exhaust emissions when cruising in environmentally sensitive areas, e.g.
Alaskan waters. Annex VI of MARPOL (Air Pollution from Ships) entered into
force on 19 May 2005. Annex VI also prohibits deliberate emissions of ozone-
depleting substances, which include chlorofluorocarbons (CFCs). New installa-
tions such as firefighting and refrigeration systems containing ozone-depleting
substances are prohibited on all ships; however, new installations using
hydro-chlorofluorocarbons (HCFCs) are allowed until 1 January 2020. Annex VI
also requires collection, retention and storage of bunker fuel oil samples.
1-204 Ballast water management will be the subject of the same environmental
questions as the NOx levels. There are now systems on the market that will treat
the large amounts of ballast water that is changed each voyage. However, will
the shipowner be obliged to fit these systems and if so can he afford it? Will
onshore discharge of untreated ballast water be mandatory if approved ship-
board systems are not fitted? What costs will this raise in charges, delays, and
ship system modifications?
1-205 IMO MEPC 49 convened in mid-2003 has produced a finalised draft of the
proposed International Convention for the Control and Management of Ships’
Ballast Water and Sediments. It was adopted on 13 February 2004 to enact
entry into force in accordance with the agreed timetable, viz 12 months after
ratification by 30 states representing 35% of world merchant tonnage.
1-206 Revisions to the texts of MARPOL Annexes I and II were adopted at MEPC 52 in
October 2004. Revised Annex IV (Sewage) is entered into force on 1 August 2005.
Existing ships must comply with Annex IV by 27 September 2008, five years after
the entry into force of MARPOL Annex IV. The 53rd session of the IMO Marine
Environmental Protection Committee approved a new draft MARPOL Annex I reg-
ulation on fuel oil tank protection applicable to new ships and major conversions.
1-207 Apart from these broad issues there are many areas of proposed regulation of
which the superintendent should be aware. For example, the 80th IMO MSC
session in May 2005 covered:
● New ship construction standards;

● Revisions to SOLAS Chapter II-I concerning harmonisation of provisions
on subdivision and stability for passenger and cargo ships;
● Bulk Carrier construction standards – interpretations;
● Amendments to bulk carrier inspection guidelines and a new double-hull
tanker inspection guideline;
● Passenger ship survivability and evacuation;
● Rescue boat crew training.

And, with an expected date of entry into force of 1 January 2007, ship drawings
to be maintained on board and ashore; adequate towing, mooring arrangements,
fittings and equipment; water level detectors in the cargo hold of new single-hold
cargo ships other than bulk carriers; application of propulsion control automation
systems restricted to new ships only; and by 1 January 2009, amendments to
SOLAS XI-1/5, new regulation XI 1/3-1 and amendments to the ISM and ISPS
Codes concerning company and registered owner identification numbers.
1-208 From 1 July 2006 new regulations concerning maintenance of shipboard

lifesaving equipment come into force for SOLAS ships. Also from the same date
each crew member as specified on the ship’s safety certificate must be provided
with a survival suit.
1-209 Recent revisions to MARPOL 73/78 accelerated the phase-out schedule for
Category 1 tankers to April 2005 as opposed to 2007 as originally proposed. The
phase-out date for Category 2 and 3 tankers was brought forward from 2015 to
2010, meaning that by 2010 half the existing tanker fleet will have to be
replaced. The new regulation 1/37-4, coming into force on 1 January 2007, calls
for all tankers of more than 5,000 dwt to have access to shore-based comput-
erised damage-stability and residual structural-strength calculation programmes.
1-210 The foregoing discussion identifies only some current considerations at the time
of preparation of this material. Some will affect only design in the early stages;
some will have a bearing on ships already in service. Module 5 of this course will
expand on the environmental issues introduced here. Module 6 will expand on
statutory issues.
1-211 The foregoing discussion also illustrates the necessity of the superintendent
being up-to-date with changes applicable to the operation of fleet vessels. How
is this done? Does the company have a person or department ensuring this?
Does the superintendent have to do this by him/herself? What sources of infor-
mation are there? Do you rely on the classification society to keep you informed
of pending changes? Do you refer to IMO, MCA or other flag websites? Do you
rely on reading technical journals? Does your company subscribe to one of the
companies which provide an updating and information service?
2.9 COMMERCIAL CONSIDERATIONS
2.9.1 The Spot Market
1-212 This type of trading typically attracts higher rates than time charter rates to
compensate for the lack of long-term continual vessel employment.
1-213 Ballast operations between spot market charters are very common together with
many lay days whilst awaiting orders for new cargo fixtures.
2.9.2 The Charter Market
1-214 A charter is a contract of employment for the vessel and may take the form of a
“bareboat” charter in which case the charterers have to supply crew to utilise the
vessel within the terms of this contract. This form of leasing is often used by own-
ers, such as banks or finance houses, who do not want to operate the ship them-
selves. The bareboat charter might also be connected to a purchase option after
the lease has expired or during the hire period.

1-215 Voyage and time charters are the most commonly used type of trading contract.
A voyage charter agrees to make a vessel available to the charterer for a
specified voyage at an agreed rate (the freight rate). The freight rate should be
calculated to cover all vessel-operating expenses, including bunkers. The
charterer in effect hires the cargo capacity of the vessel not the vessel itself.
1-216 Time charters are fixed by the duration of the voyage, typically featuring clauses
relating to the vessel’s “delivery” to the charterer and “redelivery” to the owners
or managers. There are no penalties in way of laytime or demurrage payable
under the terms of a time charter, non-payment of hire fees will, however, give
the ship managers the right to withdraw the vessel from hire.
1-217 The voyage charter is essentially a contract of safe carriage of cargo. The ship’s
owners agree to deliver the goods in the same condition as when they were
loaded. The charterer might own the cargo or they might be shipping it on behalf
of a third party. Sometimes the cargo can be bought and sold several times
during the voyage.
1-218 The ship’s superintendent will, therefore, have the responsibility of maintaining
the vessel in a satisfactory, seaworthy and certified condition to fulfil the charter
obligations, without incurring penalties against the vessel owners or managers
for delays and breakdowns.
1-219 This is a very important aspect, as the owner will lose money if the ship is
unable to:
(a) complete the voyage in the time agreed; and

(b) load and discharge the cargo in the time stated in the charter agreement
(the laytime).
1-220 The voyage time finishes and the laytime begins when the ship is declared an
“arrived ship” at the port of discharge and after a Notice of Readiness (NOR) has
been tendered. This will have to be watched carefully and the ship might be
contracted to the port or it might be contracted to the berth.
1-221 In the past, ships might have waited for weeks at anchor outside the discharge
port. In this case the owner will have legitimate cause for complaint as the ship
should have been released and been on her way earning money on the next
charter. Under these circumstances the owner is entitled to claim for the loss of
earnings (demurrage).
1-222 For the purposes of chartering, the vessels may be wholly owned or chartered
to separate subsidiaries or associated companies within a group (pool) of
companies.
1-223 Extensive outsourcing of ship management may be required to satisfy the

trading requirements of individual or fleet vessels. Independent and sometimes
competitive ship management companies may provide both manning and
financial services. The ship management company is responsible for the com-
mercial management of the shipowning subsidiaries, including chartering and
insurance. Vessels may once again be registered under many different flags.

SELF-ASSESSMENT QUESTIONS
● Do you think the pendulum has swung too far in the

direction of “horizontal management”? Give three reasons
to support your answer.
● How do you keep informed of changes and new

requirements?

PART TWO
THE RESPONSIBILITIES OF MANAGEMENT
3. TRADITIONAL ORGANISATION AND

MANAGEMENT STRUCTURES
LEARNING OUTCOMES
● state the traditional job role of the superintendent;
● describe the superintendent’s position in the traditional

company management structure;
● identify how various roles, activities and responsibilities are

covered by your own, or a known, organisation;
● identify areas which could possibly benefit from grouping,

splitting, combining or reallocation of activities; and
● identify some of the principal regulations governing the

carriage of certain cargoes.
1-224 A traditional organisation management structure is shown below:
Chief Executive
Managing Technical Finance

Director Director Director
Operations Technical Personnel

Manager Manager Manager
Superintendents Training
Manager
3.1 CHIEF EXECUTIVE
1-225 Playing a decisive role in the corporate running and projection of the company
at national and international levels, maintaining a board position, often adopting
the position of board chairman.

Traditional Organisation and Management Structures Module 1
3.2 MANAGING DIRECTOR
1-226 Controlling management, comparing results with the initial strategic plan. His or
her appraisal of results against performance standards would enable advice to
be given and then effective measures can be used to take corrective action. The
overall company health and safety policy would be implemented from this level.
3.3 TECHNICAL DIRECTOR
1-227 Daily leader of the department, co-ordinator between senior management and
other technical departments, responsible for budgets and operation of the tech-
nical department. To prepare and effect a proper maintenance programme,
spare parts inventory, ordering and reporting system. Long-term planning for
improving the efficiency and reliability of the vessels. To prepare contracts with
suppliers, oil and repair companies. A key decision-maker in new building
projects, major vessel conversions, salvage or repairs.
3.4 FINANCIAL DIRECTOR
1-228 Directing the shipping organisation’s financial goals, objectives and budgets by
overseeing the investment of funds and management of associated risks,
supervise cash management activities, and execute capital-raising strategies.
With overall responsibility for bought and sold ledger settlements, procurement
of funds to expedite settlement with suppliers, to satisfy all company financial
obligations including mortgages, insurance and the payment of wages afloat and
ashore.
3.5 PERSONNEL MANAGER
1-229 Now commonly called “human resources manager” with recruiting responsibilities
for staff ashore and afloat often delegating the latter to a specialised crew man-
ning agency. This personnel role would also oversee the daily health and safety
screening of shore-based operations together with the implementation of corpo-
rate and national standards of personnel training and certification. A major
player in the worldwide distribution of crew mail to reach the vessels in foreign
ports without delay. Logistics of crew changes, including those arising in case of
accident or incident, must be dealt with directly or by delegation. It is pertinent
to consider the following in this context.
It is currently estimated that there are in the order of 400,000 officers and
825,000 ratings serving on internationally trading merchant ships. OECD
countries (North America, Western Europe, Japan, etc.) are the main source of
officers; however, more are now being recruited from other Far Eastern and
Eastern European countries.
The majority of ratings are recruited from developing countries, especially the
Far East. The Philippines provides about 20% of the world maritime workforce,
with China and India also being significant sources. Much of this workforce is
employed on foreign flag ships operated by international shipping companies.

Module 1 Traditional Organisation and Management Structures
3.6 OPERATIONS MANAGER
1-230 Daily leader of the department in charge of vessel operations, cargo and
passenger handling on and off the ships in liaison with shore-based control
departments. To operate the vessels in the most cost-effective way in choice of
route, manoeuvring time, trim and displacement, within the sailing schedules
and following established rules for safety and good seamanship.
3.7 TECHNICAL MANAGER
1-231 The technical manager oversees and is in charge of arrangements for surveys
to be carried out by national and international authorities or classification
societies. He maintains the vessel within class and keeps all certification and
documentation valid and within date to maintain the company’s operation. He is
responsible for the supervision, usually by delegation to the superintendents, of
the maintenance of the hull structure, cargo handling systems, radio and
communication equipment, machinery systems, navigational and mooring
equipment and safety equipment. He is responsible for maintaining records and
preparing insurance claims, preparation of repair and docking specifications.
1-232 The technical manager assists, and provides technical back-up to, the
superintendents when necessary, acts as project leader at dry-docking, conver-
sions and major repairs, and reports directly to the technical director.
3.8 TRAINING MANAGER
1-233 Companies would normally have had enough work to justify a dedicated training
manager who would assist the personnel manager and ensure that the training
needs of the company are met. Officer cadet training and initial training for ratings
were the two major preoccupations of the training manager. A lot of time would
have been taken to ensure that the cadets were in an environment conducive to
learning and that they were able to complete their studies during their sea time.
1-234 This position was one of the first to be dropped during the time of downsizing by
shipping companies. The duties were taken up by the personnel manager.
1-235 It may be a conception that training duties were to some extent relinquished
when crewing agencies were utilised. However, even though crewing agencies
may be utilised, Section A 1.1.2 of the ISM Code identifies who the owner and
company is and Section 6.5 of the Code stipulates that it is the responsibility of
the company to identify training needs both afloat and ashore and ensure that
these are met. Ensuring that crew are properly trained, qualified and certificated,
and that shore staff are also properly trained, is still the responsibility of the
shipowner/manager.
3.9 SUPERINTENDENTS
1-236 In the conventional ship company structure superintendence was divided into
two distinct areas of responsibility, that of:
● engineering superintendent; and

● marine superintendent.

1-237 The latter was often recruited as a highly qualified and experienced navigation
officer. Both position-holders report directly to the technical manager. Modern
philosophy now combines these two roles in most shipping companies.
1-238 Many companies are now operating Planned Maintenance Systems (PMS),
which may be computerised with IT links for transfer of status to and from the
vessels. Responsibility for management and supervision of these systems on
the shore side should be clearly identified – it may well be at superintendent
level. These systems may be split into “deck” and “machinery” identities or may
well be a combined system covering all of a vessel’s structure, fittings, equip-
ment, machinery, systems, safety, navigational and firefighting equipment. Such
computerised systems can be compatible advantageously with some survey
notations offered by some classification societies.
1-239 The ISM Code, Sections A 10.1 and 10.2.4, requires that a company should
establish procedures to ensure the ship is maintained in accordance with rele-
vant rules and regulations and with any additional requirements of the company
and, further, that records of associated activities are recorded. (The ISM Code
does not require that any part of this is computerised.) Refer also to Section 4.4.
1-240 Superintendents are frequently subject to a hectic working lifestyle with the
prospect of travel at very short notice, battling against deadlines, and spending
a large part of their lives “living out of a suitcase”. Usually their lives are not
conducive to any reliable long-term social planning!
3.9.1 Marine Superintendent
1-241 The marine superintendent has the oversight and charge for the care, mainte-
nance and upkeep of ships and manning of the deck department. He is also
responsible for the docking and undocking of the vessels and supervises the
loading and discharging of cargo and passengers, as well as arrangements for
survey of the safety and nautical equipment required for trading certificates and
cargo handling with class and statutory authorities, as appropriate.
1-242 He prepares running cost budgets with the assistance of the vessels’ key
personnel, effects the on-board maintenance programme, effects the spare
parts inventory, ordering and reporting systems. He also prepares a manning
schedule of deck/engine officers, prepares repair/docking specifications and
insurance claims for the deck department.
3.9.2 Engineering Superintendent
1-243 The engineering superintendent’s principal duties are the engagement, control
and discharge of all the engineering staff ashore and afloat. The maintenance,
survey inspections, reconditioning and repair of all ship’s machinery and the
supervision of reports sent by chief engineers. This includes arrangements for
classification society, national and international authority surveys of engines,
steam plant and ancillaries. He prepares repair and docking specifications,
attends all dry-docking, and approves and prepares all purchase orders for
spare parts and stores. He keeps all documentation up-to-date for classification
society and other authorities. He also asserts control over and correlates

records of bunker and lubricating oil consumption, the maintenance programme

spares consumption, and other running costs.
3.10 CARGO SUPERINTENDENT
3.10.1 Cargo Pre-loading Surveys
1-244 The shipowner is under an obligation to care for the cargo he is contracted to
carry. The shipowner is obliged to determine at the point of delivery of the cargo
that the cargo received is exactly as described in the shipping documentation. If
not, the owner will either refuse to ship the cargo or may, alternatively, document
the anomalies. With some exceptions, according to type, vessels must carry an
approved Cargo Securing Manual. Absence of this document can be a ground
for detention by Port State Control.
1-245 By extension of the objectives set out in the ISM Code, Sections A 1.2.1 and
1.2.2.1, the company has a duty to avoid damage to “property” and establish
safeguards against all identified risks. By implication, care of cargo entrusted to
a vessel is invoked.
1-246 In most contracts of carriage, the shipowner’s responsibilities begin at the time
of loading. It is, therefore, important to inspect the cargo at this stage.
1-247 Pre-shipment inspection of cargo is intended to determine and document the

condition of the cargo at this time. This inspection is commonly referred to as the
pre-loading survey.
1-248 The ship’s master and officers, owner’s representatives, cargo superintendents
or surveyors instructed by the owners, depending on the trade and nature of the
cargo, can carry out this survey and decisions will be made at this time if
the cargo is not as described in the shipping documentation.
1-249 The decision will reflect a rejection or acceptance of the cargo and adequately
describe any differences on the chief officer’s receipts and bills of lading.
Deficiencies will be notified to the shippers together with owner’s intentions on
rejection of the cargo or by “clausing” the mate’s receipts and bills of lading.
1-250 This notification may be given direct to the shippers but is more commonly given
to the agents, stevedores or charterers, depending on the owner’s contractual
relations with these parties.
1-251 It is often the tramp operator who encounters such problems when a ship is
chartered to carry steel products, paper products or a break-bulk cargo when
the master and the ship’s officers have little or no experience of these products.
1-252 In many instances, loading operations commence immediately upon the ship’s
arrival and there is little time for the ship’s personnel to inspect the cargo.
1-253 In these cases, the ship’s personnel may be unfamiliar with the port and the
system of loading. They may not know the local agents, who will probably be the
charterer’s agents.

1-254 They may also be put under pressure by the charterers and possibly a cargo
superintendent employed by the charterers to load their ship as quickly as
possible.
1-255 It is in these circumstances that the employment of a competent independent

local surveyor or use of the company’s cargo superintendent can be most useful
and cost effective.
1-256 Masters and deck officers employed by owners who trade their ships in the liner
services are usually trained to take care of pre-shipment inspections. However,
this type of company usually employs “cargo superintendents” so if there is a
problem the cargo superintendent can be called upon to assist.
1-257 They may also have their own network of contracted surveyors who can be
called upon quickly if an unusual cargo is to be loaded. Most shipowners are
aware that the appointment of a competent surveyor for a pre-loading survey
can help to eliminate or reduce problems and claims.
1-258 Ships employed on the main bulk trades, such as oil, ore, or grain and
specialised ships such as gas carriers and ro-ros (roll-on/roll-off) usually have
sufficient and adequately trained masters and officers on board to take care of
any pre-shipment inspections that are necessary.
1-259 Vessels loading grain usually carry an approved Grain Loading Manual or, in its
absence, a Letter of Authorisation to Load Grain for the carriage of a specific cargo
must be obtained from a recognised body (usually the ship’s classification society).
Stability and shifting characteristics are covered by these documents, and arrange-
ments necessary to avoid the effects of shifting are stipulated as necessary.
1-260 If an owner decides he requires a surveyor or the cargo superintendent to attend

his ship to carry out a pre-loading survey the instructions are given as early as
possible, allowing sufficient time for the surveyor to conduct an efficient survey.
1-261 This avoids confusion and disagreement at a later date when the surveyor
presents his report and invoice.
1-262 An instruction that the surveyor should “carry out a pre-loading survey” is
inadequate and leaves the surveyor in doubt as to how far his duties extend.
1-263 In these circumstances, the surveyor would simply inspect the cargo on the
quay, possibly prior to the ship’s arrival if all the cargo had been delivered, and
report to the master on its condition and present his written report.
1-264 Most surveyors would advise the master on the “clausing” of the chief officer’s
receipts and give advice on loading and stowage, if requested by the master.
3.10.2 Precise Cargo Survey Instructions
1-265 The cargo superintendent would give these very precise instructions to third
party cargo surveyors appointed in the shipowner’s interest. They include where
the cargo should be inspected, either on the quay just before loading or in the
transit shed or elsewhere prior to the ship’s arrival.

1-266 The nature of the cargo and time factor may determine where this survey is
undertaken. In many cases the owner, charterers or ship’s agent will not know
where the cargo is stored in the port or when it is to be delivered.
1-267 In this case, the surveyor should be instructed to survey all cargo to be loaded
as near to the time of shipment as possible.
1-268 Information to be given to the master before the signing of the chief officer’s
receipts and whether the surveyor should formulate suitable clauses relating to
any damage.
1-269 Usually the surveyor would be instructed to be present when the master signs
the shipping documents. At this time the surveyor would assist with any
language problems and any disputes with shippers, agents or charterers in the
“clausing” of receipts and bills of lading.
3.10.3 Vessel Loading Inspections / Some Regulatory Considerations
1-270 The cargo superintendent would either conduct these inspections personally or
delegate them to an approved cargo surveyor to act in the owner’s interests.
● Inspection of the ship’s hatch covers and the ship’s cargo ventilation
system. The findings of this inspection would be reported separately.
● Advising the master on loading, stowage and securing of the cargo.
● Monitoring the loading, stowage and the securing of the cargo.
● Advising, obtaining evidence and reporting on handling damage caused
by stevedores.
● Advising on the tallying of the cargo and the issue of cargo documentation.
Monitoring prevailing weather conditions and advising if the cargo can be
loaded in the rain.
1-271 If early instructions are received, the surveyor or cargo superintendent will have
time to contact the agents and stevedores to find out the exact nature of the
cargo, when it is arriving at the loading berth in addition to the proposed stowage
on the ship.
1-272 The Protection & Indemnity Club (P&I Club) correspondents will assist and
advise owners in arrangements for cargo surveys and in some exceptional
circumstances will also pay for the survey.
1-273 This will generally be the case with finished or semi-finished steel products when
the P&I Club will always pay for a pre-loading survey if notified by the owners but
will not include any associated services.
1-274 Certain dry bulk cargo vessels have exemptions from the fitting of fixed firefight-
ing arrangements in the cargo spaces. In such case, an Exemption Certificate
related to the Cargo Ship Safety Construction Certificate will be issued with an
annex listing cargoes which may be carried under this arrangement.
1-275 The IMDG Code (International Maritime Dangerous Goods Code) stipulates
specific provisions for the carriage of certain cargoes as does SOLAS ’74 as
amended.

1-276 Other principal regulations on environmental protection and the carriage of

dangerous goods are:
● IGC The International Code for the Construction and Equipment of Ships
carrying Liquefied Gases in Bulk for vessels built after 1 July 1986 (the
earlier GC Code for older vessels)
● IBC
The International Code for the Construction and Equipment of Ships
carrying Dangerous Chemicals in Bulk for vessels built on or after 12 July
1986 (the earlier BCH Code for older vessels), the MARPOL Convention
and its annexes and Protocol.
1-277 Port safety rules must be ascertained beforehand. IMO Resolution A.289 of 20
November 1973 gave a model to port authorities for the safe storage and han-
dling of dangerous cargoes. Amendments were made in 1979 and 1995 to this
resolution.
1-278 Medical First Aid Guide (MFAG) for use in accidents involving dangerous
goods – drawn up jointly by IMO, ILO and the WHO. In accordance with the 1978
STCW Convention, masters and crew of a ship that carries chemicals must be
informed of the general risks to which they are exposed and the precautions to
be taken.
1-279 The SOLAS Convention ’74 as amended now states two basic principles:
● the shipmaster remains responsible for the safety of the ship, its crew and
cargo; and
● the shipper must provide him with written confirmation before loading and
full particulars of the cargo, far enough in advance to allow any precautions
to be taken for the proper stowage and safe transport of the cargo by the
responsible officer.
1-280 Safety aspects of cargoes to be carried must be dealt with by the owner,
manager and/or master, the latter receiving all information necessary.
3.11 INSURANCE MANAGER
1-281 The insurance manager is responsible for the insurance cover required by the
vessel, protection and indemnity cover, the hull and machinery, provisions, cargo
and crew, reporting directly to the financial director.
3.12 PROCUREMENT MANAGER
1-282 Without the procurement manager, the vessels would never go to sea. He has a
main responsibility to provide the vessels with stores (victuals) and provisions for
the forthcoming voyage, together with spares and consumables to effect the
maintenance plan.
1-283 He also provides for additional victualling supplies in foreign ports using a
network of worldwide agencies that may direct the vessel to make local contact

with specific suppliers to attract best local price and quality in line with the
management budgets.
3.13 ADMINISTRATION
1-284 Administrative staff are assigned at all levels of shipping company management
to assist with the daily operations from telephony, filing, record keeping,
organisation and control of the giant paper chase.
1-285 In cases where internal crew agencies are operated, administrators may be
engaged with flight bookings and repatriation of crew members as they leave
and join fleet vessels in foreign ports.
3.14 QUALITY MANAGER
1-286 A company may have elected to comply with the BS5750 or ISO 9000 Quality
standards, in which case a Quality Management System will be in force with
someone assigned to fulfil the above role, with respect to organisation, correla-
tion and management of compliance with the standard. (See also Section 4.4 of
the ISM Code, which is not to be confused with, nor is it dependent upon
implementation of, the above standards.)
● Can you identify how the preceding roles and activities are
covered in your own, or in a known, organisation/company?
● How is knowledge and information updated with respect to

regulations and technical matters?
● How are individual Port State and Port Authority

requirements, procedures and regulations ascertained
before vessel’s arrival?
● Who is responsible in your company for obtaining and

distributing this information and how is this controlled?
● What is your knowledge of salvage law and recommended

procedures?
● Who in your company would deal with a salvage scenario

arising?

4. MODERN SHIPPING COMPANY
STRUCTURES
LEARNING OUTCOMES
● identify the two major influences which led to reduced

manning of ships;
● state the advantage of the tonnage taxation system; and
● have a basic knowledge of the ISM and ISPS Codes and

identify their influences on company management and
resources.
1-287 The industry has also changed its philosophy to management. For many, the
traditional understanding of a shipping company is one that owns and manages
their own ships with staff employed directly by the company. Today, many of the
traditional functions have been contracted out.
4.1 REASONS FOR CHANGING PRACTICES
1-288 During the 1960s, and stretching into the 1970s, typical shipping companies had
the integrated structures described in the previous chapter but since then things
have changed dramatically. Some of the problems that this caused centred on
communications.
1-289 The ship’s staff were isolated from a lot of the commercial activities of the parent
company. The sending of information was restricted to precise telex or radio
messages backed up by mail. Which meant that the ship was fairly isolated when
it was at sea.
1-290 Today, ship to shore communication is improving, we have e-mail and telephone
on-board that has transformed the amount of information that can be sent
instantly to the ship.
1-291 With the ship’s staff having their own e-mail the payback is reduced cost for
postage of mail and in the agent’s fees.
1-292 One of the early threats, or challenges, confronting the traditional industry during
the 1960s and 1970s was containerisation. This was such an efficient system
compared to the general cargo ships carrying break-bulk cargos. Out went the
era of weeks on the New Zealand coast, and instead in came ships that could
do the same job in days. There was, not surprisingly, considerable initial reaction
against this from dockers unions and organisations in many parts of the world.

Module 1 Modern Shipping Company Structures
1-293 During this period, the availability of cheap oil was driving up the size of crude
oil carriers and the closure of the Suez Canal gave another boost to the ULCC
order book. The oil price rise of 1973 hit the shipping world hard and a lot of
companies had to look carefully about how they went about their business.
1-294 High-powered steam propulsion ships suddenly became expensive and

shipping companies started to look more closely at ways of reducing their costs.
Not only was fuel efficiency an issue but so were staff costs. If you are in an inter-
national business then it is much easier to take advantage of an international
labour market.
1-295 In the 1960s–70s, money to finance the shipping industry was becoming unre-
stricted by national boundaries and the companies investing in shipping started
looking for offshore tax havens, where they also found administrations that were
less onerous and, therefore, less costly than had been experienced in the past.
1-296 The economies of scale still come into play and we now see larger container
ships being built. Today, ships such as Maersk Sealand’s modern container ves-
sels can carry 10 times as much or more cargo as the old freighter. They can
also be loaded and unloaded using less labour, and in much less time.
Previously, it took a crew of 20 stevedores to load 20 tonnes per hour into a
ship’s hold. Now with containers and gantry cranes, a crew of just 10 can load
twice as much in a matter of minutes.
1-297 The large ships are stopping at the “hub” container terminals and the cargo is
carried to its final destination by smaller “feeder” ships. Salalah is just such a
port. As you can see from the map and pictures in the Appendix it is well placed
as a hub container port because the large ships do not have to break their jour-
ney too much to deliver their cargoes to the Middle East area. The ships en-route
from Europe to the Far East will discharge in Salalah and the smaller feeder
ships will carry the goods from there to other Middle Eastern ports. There are
many examples of such “hub” ports, Rotterdam and Singapore being but two of
them. There are proposals to build a new container terminal from London on the
north coast of the Thames in Essex.
1-298 The outsourcing of the ships crew and technical services brings with it other
problems. To avoid any confusion the ship’s staff must know the management
structure of the management company and the company that owns the ship.
Traditionally, the reporting structure would have been through the company that
owned the ship and the commercial operation and the technical and strategic
direction would have been with the same company.
1-299 The modern situation is different. Manning agencies might be responsible for the
crew arrangements and the ship’s superintendent will need to know that the
training procedures meet not only statutory requirements but also the
requirements of the ISM Code.
4.2 TAXATION SYSTEMS
1-300 During the year 2000, the UK government introduced the “tonnage tax” for UK
registered ships. This was an effort to revive the British registered fleet by
allowing the companies a simpler means of calculating their tax liability.

Modern Shipping Company Structures Module 1
1-301 Several other European countries, have already or, are planning to adopt a similar
system. The Spanish tonnage tax system was approved in 2002. The system
allows the tax due from a shipping company to be calculated on the basis of the
company’s ships’ capacities rather than on the profit that the company makes.
1-302 The UK has adopted a slightly different approach because part of the require-
ments of the tonnage tax is for the British shipowner to train more seafarers. The
requirement is for a company to train one new officer for every 15 that they
already employ and companies must also undertake to train and recruit ratings.
1-303 One of the requirements of the tonnage tax is for the company to be operators
of ships and to have their strategic and commercial management in the UK.
Special rules apply to the capital allowances for companies owning ships and
then leasing them to tonnage tax companies.
1-304 Further information about the tonnage tax is on the Chamber of Shipping’s
website at:
● www.british-shipping.org/british/delivering.htm
4.3 SHIP MANAGEMENT
1-305 The ship management company is responsible for the commercial management
of the shipowning subsidiaries, including chartering and insurance. Vessels may
also be registered under many different flags of convenience. Some companies
and flag states are also unable or unwilling to follow a safety objective despite
an outward display of good intentions.
1-306 Operations of these vessels under independent ship management agreements

provides for the operation, ship maintenance, manning, technical support, ship-
yard supervision and related trading services whilst maintaining operational cost
and operational performance within contracted parameters.
1-307 Co-operation agreements with other shipowning companies now exist to

co-ordinate marketing of the companies and improve employment of the ves-
sels, further increasing service to clients by “pooling” the combined fleets thus
formed.
1-308 This methodology provides the clients with a flexible and reliable transportation
service. They use this flexibility to develop unique industrial relations that give
material benefits to customers as well as to the company, shareholders and
employees.
1-309 An emphasis is placed on operational safety and quality maintenance of all

vessels in these pooled fleets. This includes compliance with all current and
proposed environmental and nautical legislation or regulations.
1-310 Ship management companies are charged with the responsibility of supplying
competent technical operation and manning for the owners’ vessels in addition
to achieving low operational costs. Superintendents feature as a vital link within
this management ethos, providing hands-on vessel inspection relationships with
the operating crew and feedback to the senior technical management within the
management structure.

1-311 The ship management company has a major responsibility for achieving high
utilisation of a vessel’s deployment, using competitive financing arrangements
and developing long-term relationships with main charterparties.
1-312 The question of loyalty must be considered and managed carefully. If ship’s
staff are serving on-board for their tour of duty, but they are employed by a
management company then where is their sense of loyalty?
1-313 Possible advantages to owners of using ship management agencies are

lump-sum fees, use of adequately staffed and competent bodies, shared costs
and overheads, and an enlarged pool of expertise.
1-314 Possible disadvantages are loss of company loyalty and loss of familiarity
among staff, management and vessel.
4.4 INTRODUCTION TO THE INTERNATIONAL SAFETY

MANAGEMENT CODE (ISM)
1-315 A major contributor to the ever-changing ship management structure has been
the introduction of a unilateral and internationally governed safety management
code, mandatory as ISM phase 1 since July 1998, covering all passenger
vessels including high-speed craft and, for tonnages of 500gt and over:
● oil tankers;
● chemical tankers;
● gas carriers;
● bulk carriers; and
● high-speed cargo vessels.
1-316 The second and final phase became mandatory on 1 July 2002 and covered, in
effect, all other vessels of 500gt and over trading internationally, including Mobile
Offshore Drilling Units (MODUs). The Code applies to the “company”, as well as
to the vessel, each having separate certification:
● the company having to maintain a Document of Compliance (DOC); and

● the vessel a Safety Management Certificate (SMC).
1-317 The company is subject to a regime of annual and renewal audits, the vessel to
a regime of intermediate and renewal audits by an organisation recognised by
the flag. A company operating vessels under more than one flag would have
multiple certification with respect to the DOC.
1-318 Companies have developed procedures that are more representative of the
company assisting in the implementation of those procedures evolving a safety
culture in shore-and ship-based management.
1-319 Shipowners and ship management companies operating ships within countries
that are signatories to the IMO protocol (International Maritime Organisation)
are obliged to comply with that protocol and enforce a Safety Management
System (SMS).
1-320 The safety management system should ensure compliance with mandatory
rules and that applicable codes, guidelines and standards recommended by the
organisation, administrations, classification societies and maritime industry
organisations be taken into account and enforced.

1-321 The company should ensure that all personnel involved in the company’s SMS
have an adequate understanding of relevant rules, regulations, codes and
guidelines. The company has to appoint a “Designated Person” ashore as
defined in the Code.
1-322 Ship safety management under the ISM Code has been enforced in recent years
to address the rising number of losses involving the human factor. Human fac-
tors are becoming an increasingly recognised significant issue. IMO MSC
Circular 1014 of June 2001 gives guidance on “Fatigue Mitigation and
Management”. Australia has issued a report on the “Survey of the Health, Stress
and Fatigue of Australian Seafarers”.
1-323 This has resulted in management of ships with reduced risk, maintenance of at
least a recognised minimum safety standard, improved preparation against
emergencies, safer practices, and enhanced safety management skills. It has
reinforced the responsibility of owners/managers to know and manage the con-
dition of their vessels and to plan maintenance and repair actions accordingly. It
has reinforced the authority and responsibility of the master.
1-324 Contributing factors resulting in a positive industry attitude change have been:
management commitment, improved crew morale, elevated standards of ship
condition and the monitoring of ship condition together with their management.
1-325 Most companies have a genuine desire to improve safety whilst at the same time
improving their corporate image.
1-326 It can, of course, be said that “good”, or efficient, companies complied even
before the implementation of the Code.
1-327 Non-compliance with aspects of the ISM Code is becoming more frequent in
cases of detentions resulting from Port State Control (PSC). In fact, it is hard to
divorce any aspect of ships’ detention from the ISM Code in a general sense.
1-328 There are two principal certificates issued under this Code. One is the
Document of Compliance (DOC), which is issued to the company responsible for
the technical, not other, management of the vessel, whether this is the owner or
a management agency for example. There must be a “ designated person” in
that company who is the direct route/point of contact from anyone on a fleet ves-
sel to top management. (In the case of an “owner/skipper” situation the
owner/skipper can be the also the “designated person”; where “owner group”
operation exists such a group could have a single designated person for several
such owners.) The flag authority must be informed who holds the DOC.
The other document is the Ship Management Certificate (SMC), which is issued
to an individual vessel.
1-329 The ISM Code is covered in a later module of this course.
4.5 INTRODUCTION TO THE INTERNATIONAL SHIP AND PORT FACILITY

SECURITY CODE (ISPS)
1-330 Within the framework of SOLAS ’74 as amended (Chapter 11-2 – Special
measures to enhance maritime safety), Phase 1 of this Code came into force on

1 July 2004. This Code places requirements and duties on both shipowners and
managers and on port operators. Regulation 6 of the Code requires installation
of a Ship Security Alert System (MSC Circ 136(76) refers). IMO has recently
confirmed that the ship’s master can be designated as the “Shipboard Security
Officer” under this Code.
1-331 In general, all vessels constructed on or after 1 July 2004 must comply, and:
● All passenger vessels, including high-speed vessels, constructed before 1

July 2004, must have complied not later than first radio installation survey
after 1 July 2004.
● Oil tankers, chemical carriers, gas carriers, bulk carriers and high-speed
cargo ships of 500gt and above, constructed before 1 July 2004, must
have complied not later than first radio installation survey after 1 July 2004.
● Phase 2 will cover all other vessels of 500gt and above, and MODUs
constructed before 1 July 2004, the final compliance date being the time
of the first radio installation survey after 1 July 2006 for installation of the
SSAS (Ship Security Alert System).
This refers, of course, to vessels operating internationally. As can be seen, the

pattern of implementation mirrors that of the earlier ISM Code.
4.6 “SMALL SHIP” COMPANIES
1-332 A superintendent may not be serving only a company operating “convention

size” vessels. There are many companies which may operate commercial ves-
sels on non-international voyages (regardless of size), or below 24m Load Line
Length (ILLC), or below 300gt (Radio, SOLAS), or below 500gt (SOLAS), or
below 100gt (MARPOL, Tankers), or below 400gt (MARPOL, other vessels), or
carrying not more than 12 passengers (Passenger Vessel Regulations, SOLAS).
1-333 However, although technical and practical management and the commercial
aspects of superintendency will mirror, to a certain extent, those pertaining to
companies operating “large” vessels, the scope of formal certification required
will not be as extensive.
1-334 Some aspects of certification which could differ are:

● vessels may or may not be “classed”;
● vessel operations may be subject to specific local (flag, port authority,
regional government, civic authority) requirements, specifications or
regulations;
● depending on service, vessels may have to carry “national” versions of
Convention certificates, e.g. national instead of international load line or
safety certificates, and/or exemption certificates; and
● depending on flag or area of operation, vessels may have to comply with
equivalent or alternative standards and certification.
1-335 An example of this is the UK Harmonised Code of Practice for Small Commercial
Vessels and Pilot Boats. This Code has been recognised by various other flags and
certificates of compliance may be issued for non-UK vessels by delegated bodies.

1-336 Examples of “small commercial vessels” which could well be operated on a fleet
basis are:
● survey vessels;
● charter yachts (motor or sail);
● workboats;
● maintenance vessels;
● guard duty vessels;
● sea angling party vessels;
● small tugs;
● dive vessels;
● fish farm tenders;
● safety boats;
● pilot vessels;
● ferries;*
● passenger vessels;*
● sightseeing or “tourist” vessels.
* Depending on national legislation, passenger numbers can be in excess of 12

on commercial vessels operating non-internationally. These then are not treated
as passenger vessels under “SOLAS”, but are usually compliant with national
“passenger vessel” regulations.
In the EU, the Directive on Domestic Passenger Vessels applies.
1-337 Fishing vessels can also be found operating on a fleet management basis. There
are specific and separate regulations covering fishing vessels.
SELF-ASSESSMENT QUESTIONS AND CONSIDERATIONS
● Can you identify two examples of inter-company agree-

ments? What types of vessels or specific trades do these
agreements cover? What aspects are covered by these
agreements? What advantages are there to the companies
as opposed to the clients?
● What effect do you think the UK “tonnage tax” training

requirement will have on the use of manning agencies?
How could a company combine the training requirement
with continued use of manning agencies?
● Outline your conception of the advantages of the ship/

company loyalty aspect.
● Outline any negative or positive factors of the ISM Code

implementation, if possible from experience in your own
company. Is the balance of this summary a result of the Code
or the manner of its implementation and can it be improved?

5. EXPECTATIONS OF THE SHIP’S
SUPERINTENDENT FROM THE SHIP’S
AGENTS
LEARNING OUTCOMES
After completion of Chapters 5 to 10, you will be able to:
● describe at least five different organisations or people that

the ship’ s superintendent will be expected to interact with
outside of his or her own organisation.
5.1 THE FREIGHT FORWARDER
1-338 In simple terms, a freight forwarder is a company involved in the international

movement of goods on behalf of another company or person. This definition,
however, cannot stand alone as a freight forwarder’s business is difficult to
define accurately without further expansion.
1-339 The freight forwarder provides services in two main fields:
● Moving goods out of a country on behalf of exporters or shippers. In such

cases, a forwarder may also be referred to as an export freight agent.
● Bringing goods into a country on behalf of importers. Forwarders may then

be referred to as import freight agents, customs clearance agents or
customs brokers.
1-340 A freight forwarder, therefore, may be employed by an importer or exporter to act

on his behalf to move goods into or out of the country, and he will receive pay-
ments for this service.
1-341 Freight forwarders were previously known as shipping and forwarding agents.
This resulted from the fact that some were originally ships’ agents who in
addition provided a forwarding service.
1-342 The freight forwarder also provides a consultative service, and the importance
of this role in the transport chain is increasing. There is a tendency for trading
companies to concentrate their efforts on their core business function whilst
subcontracting ancillary services to others.
1-343 Whenever goods move there is a need for transport expertise. This has hitherto
been fragmented with different companies providing various elements of an
international movement.

Expectations of the Ship’s Superintendent from the Ship’s Agents Module 1
1-344 This can create weaknesses in the supply chain undermining the overall quality
of the system. Many freight forwarders have been able to identify this on behalf
of their customers and most offer a total logistics or distribution facility from pro-
duction line to consumer, including “just-in-time” techniques, packaging, ware-
housing, stock control, delivery and re-ordering on behalf of vessel operators.
1-345 Freight forwarding is a service industry and all services have to be paid for. A
large part of the forwarder’s income derives from the provision of services, this
may be in the form of an agency fee, plus specific charges for individual tasks,
such as the preparation of documentation.
1-346 In some cases, a commission may be earned from a carrier as a result of

benefits carriers enjoy from the forwarder’s business.
1-347 Add to this the savings to be gained through the use of consolidation services and
better utilisation of a trader’s own resources and it can be seen that very often the
overall cost of using a forwarder is less than the cost of doing it independently.
1-348 In some countries, it is not compulsory for importers and exporters to utilise a
forwarder. It is possible to deal direct with carriers and local customs.
1-349 That a vast number of experienced forwarders exist is indicative of the high value
placed on their role in international trade.
1-350 The other benefits include the medium of a single contact, a complete choice of
transport modes and ancillary services with up-to-date information on the best
rates, routes and services swiftly enable the transfer of cargo from one mode of
transport to another. Knowledge of local conditions in different countries is
invaluable in such cases and can result in substantial savings for the operators.
1-351 The forwarder, through his network of contacts, has this information available at
all times.
1-352 For the superintendent, goods in transit arriving, sometimes unannounced or

improperly documented, can be a nightmare, and potentially involve substantial
financial obligations for customs duty, taxes, and storage charges. The superin-
tendent, therefore, requires a close co-operation with the ships’ agents to main-
tain economic and timely turnaround of vessels in port. This can be particularly
essential with respect to large container ports where time alongside is severely
limited, and delays and costs of having to go to an anchorage could result oth-
erwise.
1-353 Cargo and spares movement does not respect the office hours of individual
companies, so the freight forwarder and ships’ agents place staff on hand at the
port of entry or other location to ensure that any errors are corrected with the
minimum of delay. This often involves personal contact between individual cus-
toms officers and forwarders, as well as detailed local knowledge not available
to the superintendent. The ability to act quickly and to pay out monies due on
behalf of a vessel can save many hours and avoid unnecessary additional costs.
1-354 Customs services also derive some advantage from the intervention of the
freight forwarder, developing a mutual trust and understanding which can be to
the advantage of the superintendent in cases of urgent clearance requirement.

Module 1 Expectations of the Ship’s Superintendent from the Ship’s Agents
It has been identified that there exists a wide range of freight forwarders in terms
of size, services offered and geographical territories covered. Most are affiliated
to organisations that lay down operational criteria and a code of conduct by
which they are expected to operate.
1-355 The priorities for the superintendent to consider when appointing a freight
forwarder in connection with his role are: reliability, financial stability and
professionalism with adequate liability insurance cover, to employ an appropri-
ate number of professionally qualified staff, to adopt the code of conduct and to
comply with the local legal requirements.
5.2 THE SHIP’S AGENT
1-356 The ship’s agent acts on behalf of a shipping company obtaining freight for a
particular ship or voyage.
1-357 Some forwarders still provide this service. In addition, some companies
operating principally as ships’ agents provide a forwarding service.
1-358 The word “agent” has also become outmoded because many freight forwarders
now offer their own international road and container “groupage” (assemblage)
services to overseas destinations.
1-359 When the vessel is in a port an agent is retained to provide logistic support and
will receive and hold mail for the shipowners or managers.
1-360 The agent’s services encompass port formalities, arranging for fuel, stores,
spares and provisions, arranging local repair or maintenance services, handling
official shipments to and from the ship, and assisting persons joining and leav-
ing the ship, including procurement of tickets and reservations when required.
1-361 All communications with the ship’s agent are co-ordinated by the captain or
superintendent who may customarily make arrangements and acquire services
required to complete the timely turnaround of the vessel.
1-362 At the end of each port stopover the shipowner or management company is
invoiced for the agent’s services.
1-363 While agents are normally very friendly and helpful, every action by the agent
results in a charge. A prerequisite for dealing with agents should be a request
for receipts duly identified with the name and affiliation of the person authorising
the services or purchases, supported by an identifying order number or name.
1-364 The superintendent’s interface with this element of ship operations can be best
described as one of client, demanding immediate services, professionalism and
support in one package from one agency source.
1-365 The occasions when the superintendent may require the direct services of the
ship’s agent/freight forwarder are summarised as:
● The requirement to despatch or receive urgent ship spares in transit,

together with ship’s mail or documents.

Expectations of the Ship’s Superintendent from the Ship’s Agents Module 1
● Arrangements for crew exchange, repatriation and transit arrangements

for crew changes.
● National or international inspection authority attendance:
– airport collection/delivery;
– local hotel accommodation; and
– local knowledge, particularly of sub-contractors.
● The despatch of vessel components for repair (forwarding) all fall into the
agent’s remit and may be prioritised and directed by the superintendent’s
on-site requirements.

6. PORT STATE CONTROL (PSC), FLAG STATE
CONTROL
1-366 A maritime administration, while representing the interest of a sovereign state by

regulating its shipping, is bound by those international agreements to which it is
signatory as a flag state.
1-367 When vessels of another flag state enter its territorial waters, that country,
having an interest in upholding safety and pollution standards for all vessels both
foreign and domestic trading in its waters, assumes a role as a port state.
1-368 Hence, foreign vessels entering those territorial waters may be subject to
intervention (inspection) by the latter as a port state.
1-369 Flag states may, under the provisions of IMO Conventions (SOLAS and
MARPOL) board a vessel and conduct such inspections. A number of flag states
have entered into administrative agreements to co-operate regionally in matters
of port state control. This reaffirms the right of those flag states to board and
inspect vessels (of member states) when entering their ports.
1-370 Such agreements also provide a mechanism to effectively communicate among

themselves during port state interventions and to pool and disseminate their
findings to other member states participating in the regional agreements.
1-371 However, in some instances, this is not always the case. The modern cruise ship
can have big problems when it is only a short distance and time from one flag
state to the next. The ship’s staff and possibly the ship’s superintendent might
have to show the same documentation or conduct the same audit on two differ-
ent occasions very close together. One flag state may not accept the work done
just days before. In principle, a vessel which has had a clear PSC inspection in
another port within the area of one of the Memorandum of Understandings (see
below) should not be subject to another PSC inspection within the same area
within six months, although this principle varies regionally.
1-372 IMO Regulations common to all member states are used as the basis for port
state inspections (IMO Resolution A787 refers). This resolution also
incorporates aspects of other instruments such as ILO Convention 147 con-
cerning definition of complaints which could give rise to a PSC intervention.
1-373 A port state may elect to detain a foreign vessel should deficiencies be found
during a port state inspection until such time as the deficiencies have been
corrected.
1-374 Examples of such administrative agreements as indicated in para 1-371 above

are:
● the “Paris Memorandum of Understanding on Port State Control”;

● the “Asia–Pacific Memorandum of Understanding” (also known as the
Tokyo MOU);

Port State Control (PSC), Flag State Control Module 1
● the “Vina Del Mar Memorandum of Understanding” (covering Latin America);

● the Caribbean MOU (this also covers small non-international vessels);
● the Mediterranean MOU (eight non-EU members, including Cyprus, Malta,
Egypt and Turkey);
● the Indian Ocean MOU (15 members, including South Africa and India);
and
● the US, i.e. the US Coast Guard (USCG) has a unilateral approach.
Each sets its own targets, criteria, assessment of results and even “scoring”
systems.
6.1 THE ROLE OF PORT STATE
1-375 The maritime administration, while acting in its capacity as a port state, may
board and inspect foreign vessels to confirm their compliance with applicable
regulations, or following damage, an incident, or reported deficiency.
1-376 Normally, such regulations are applied from the relevant IMO Conventions
such as:
● SOLAS (including ISM, GMDSS and ISPS);

● MARPOL;
● COLREG;
● Standards of Training, Certification and Watchkeeping for Seafarers
Convention (STCW);
● Load Line; or
● Tonnage.
1-377 In some cases, a flag state may additionally enforce specific national regulations
that it applies to all applicable foreign vessels visiting its ports.
1-378 Any maritime authority has the right to regulate foreign vessels entering its juris-
diction; the practice of adopting and applying unique requirements is, however,
discouraged by the IMO.
1-379 Despite this general policy, there are some flag states that have passed national
legislation requiring foreign vessel compliance.
1-380 IMO has formally encouraged the creation of “regional” agreements among
neighbouring states, the objective being to standardise the port state inspections.
1-381 These agreements will allow for a common database of deficiencies or deten-
tions reported.
1-382 While acting as a port state, the administration may inspect a foreign vessel
using is own government inspectors or other inspectors to whom it has
delegated authority to act on its behalf.
1-383 Usually, government inspectors conduct port state inspections.
1-384 The flag state with whom the vessel is registered may be notified of such
inspections, as may the class society with whom the vessel is classed.

Module 1 Port State Control (PSC), Flag State Control
1-385 Port state control inspections are carried out under the authority of international
conventions to ensure that foreign flag ships have current valid documents and
certificates showing a vessel’s compliance with relevant conventions.
1-386 It is, therefore, within the ship’s superintendent’s remit to maintain the ship’s hull
and machinery fit for their intended service. In addition the vessel must not
represent a pollution risk.
1-387 A healthy and safe working environment must also exist for the crew, and
compliance with recognised inter-governmental standards would fall within the
scope of PSC.
1-388 The initial visit also gives the inspector an opportunity to judge the general
appearance and condition of the vessel.
1-389 When certificates are overdue or expired, or when suspicions are aroused that
the ship and its equipment may not be in compliance with the relevant conven-
tion standards, a more detailed inspection is undertaken to determine whether
the ship is sub-standard and fit or unfit for service.
1-390 Grounds for carrying out a detailed inspection may be instigated by:
● a report or notification from another authority;

● a report or complaint from the master, a crew member (or any person
or organisation with a legitimate interest in the safe operation of the ship
or in the prevention of pollution); or
● the finding of serious deficiencies during the inspection.
1-391 During any such inspection, differences of opinion as to the interpretation of

international regulations may develop. In such instances, the flag state with
whom the vessel is registered should be consulted for their interpretation of any
applicable requirement. In many cases, this will be by the intermediary of the
body delegated by the flag for the issuance of the certificates concerned, usu-
ally the classification society. It is advisable to ensure that the classification soci-
ety is notified if aspects of classification or of statutory certificates issued by
them are involved or questioned in the inspection or a resulting detention. Their
attendance, or even communication with the Port Security Control Officer
(PSCO), may assist in solution of a problem which may otherwise give rise to an
unjustified delay or detention. In any case, if a defect is found it may well be a
requirement of the conditions of classification of the vessel that class is
informed. (Do not confuse this last point with a Recommendation or Condition of
Class attached to the classification certificates.)
1-392 Where national criteria is applied by a port state, the interpretation obviously
rests with the issuing authority.
1-393 If deficiencies are found that might affect safety, health, or the environment, the
port authorities will ensure that the deficiencies are rectified before the ship is
allowed to proceed to sea.
1-394 If necessary, the authority can detain the ship for that purpose, notifying the flag
state of the action taken.

1-395 Resolution A787, 19-1.6, sets out various definitions for detailed inspections and
grounds for detention. Examples of clear grounds for detention include:
● absence of principal equipment or arrangements required by conventions;*

● evidence from review of ship’s certification that a certificate or certificates
are clearly invalid;
● evidence that ship’s logs, manuals or other required documentation are
not on board, not maintained or falsely maintained;**
● evidence from the PSCO’s general impression and observation that serious
hull or structural deterioration or deficiencies exist that may place at risk
the structural, watertight or weathertight integrity of the ship;
● evidence from the PSCO’ general impressions or observations that serious
deficiencies exist in safety, pollution prevention or navigational equipment;
● information or evidence that the master or crew is not familiar with essen-
tial shipboard operations relating to the safety of the ship or prevention of
pollution, or that such operations have not been carried out;
● indications that key crew members may not be able to communicate with
each other or with other persons on board;
● absence of up-to-date muster list, fire control plan and, for passenger
ships, a damage control plan;
● emission of false distress alerts not followed by proper cancellation proce-
dures; and
● receipt of a report or complaint containing information that a ship appears
to be sub-standard.
1-396 Where deficiencies cannot be rectified in the port of inspection, the authority
may permit the vessel to proceed to another designated port for repairs.
1-397 The inspecting authority has to be satisfied that in doing so the ship can proceed
without endangering the crew, their health or the environment.
1-398 In such cases, the port authority will notify the appropriate inspectors at the next
port of call together with the flag state to encourage a follow-up inspection and
confirmation of compliance following repairs.
1-399 If a ship leaves a port of a member state without complying with the conditions
imposed, or does not call into a repair yard, the ship will not be permitted to enter
any port of a member state until it fully complies with the applicable require-
ments of the conventions.
1-400 As an example, access to a UK port may be permitted by the Secretary of State

in the event of force majeure or overriding safety considerations. This may be
permitted to reduce the risk of pollution or to have deficiencies rectified, provided
adequate measures have been implemented by the owner or master to ensure
safe entry to that port.
* This category can, of course, include maintenance and operational availability of any system required by
regulations, e.g. firefighting, propulsion, steering, guard-rails. Dirty engine rooms are a frequent item in
detention lists (i.e. constituting a fire hazard).
** Earlier, the Cargo Securing Manual has been mentioned. A further example of a document which must be
aboard and maintained with current shoreside contact details is the Shipboard Oil Pollution Emergency
Plan (SOPEP). The Oil Record Book is a document which often features in PSC findings due to its absence
or not being kept correctly.

1-401 In cases of detention, information is passed to IMO, the flag state, IACS and in
many cases the classification society (if the classification society is not already
involved or in attendance).
1-402 Today, there is great transparency with respect to detentions, and accidents and
casualties. There are various websites which correlate information with details of
individual ships or fleets. This can be of assistance to any interested party, e.g.
a charterer.
1-403 The European Quality Shipping Information Service (EQUASIS) lists PSC
inspections, detentions and numbers of deficiencies. Seaways and Seasearcher,
Lloyd’s and Fairplay are examples of other such information services. The Paris
MOU website lists PSC results, as well as identifying the “heap of the month”!
1-404 Already there have been examples of individual vessels being banned from EU
ports due to bad detention records.
6.2 SHIPS CONSIDERED FOR PRIORITY INSPECTION
1-405 Tonnage that would be considered a priority for inspection would be ships that:
● are visiting a port in a qualifying “Memorandum of Understanding” region

for the first time or after an absence of 12 months or more from a port in
the authority’s region;
● are flying the flag of a state appearing in the three-year rolling average
table of above-average detentions and delays published in an annual
report;
● have been permitted to leave the port of a member state on condition that
the deficiencies noted, must be rectified within a specified period, upon the
expiry of such a period;
● have been reported by pilots or port authorities as having deficiencies,
which may prejudice their safe navigation;
● have their statutory certificates on the ship’s construction and equipment,
in accordance with the Conventions, and the classification certificates,
issued by an organisation, which is not recognised under the terms of the
International Association of Classification Societies (IACS) council for the
various maritime administrations;
● are in a category for which an expanded inspection is required by
regulation 7 of the Port State Control Regulations (i.e. where in effect the
more detailed inspections mentioned are justified);
● have been suspended from their classification society for safety reasons in
the course of the preceding six months;
● have been subject to repetitive detentions within a given period; and
● fall into a category of targeted ships announced by a regional MOU. This
could be on the basis of type, age, class, flag singly or in any combination.
Such criteria can be changed from time to time or exist for a given period
as decided by the MOU states. Aspects of certification can also be
“targeted”, such as ISM Code compliance.

6.3 FLAG STATE CONTROLS
1-406 As part of the exercise of their responsibilities and activities as flag states, certain
statutory delegations are often made to other recognised bodies, principally
classification societies, for the surveys and issuance of certificates in the scope
of SOLAS – Loadline, Tonnage and MARPOL Conventions as main examples.
1-407 Some flags retain more under their own direct control than others. It is important
that the superintendent knows “Who deals with what” with respect to the
extensive statutory certification of the vessels making up the company fleet.
1-408 Flag states are responsible for carrying out casualty and accident investigations.
Some flags which may not have adequate resources may request the assistance
of another flag in conducting an investigation or enquiry. In some cases, parallel
enquiries may be initiated for the same casualty, e.g. one by the vessel’s flag
state and one by the coastal state where the incident occurred if different.
1-409 Some flag states have their own vessel inspection programmes. These
inspections are in addition to, and do not substitute for, any PSC inspections to
which the vessel may be subject. Cyprus and Malta, for example, carry out such
flag state inspections using their own appointed inspectors.
6.4 THE SUPERINTENDENT’S ROLE
1-410 The ship’s superintendent has to be completely familiar with both national and
international legislation, and ensure trouble free inspections by maintaining the
vessel in a satisfactory condition at all times utilising the crew skills on-board.
His responsibilities would extend to ensuring the timely supply of spare parts
and consumables to allow the crew to carry out essential maintenance.
1-411 He inspects and monitors maintenance whilst ensuring the hull and machinery
is fit for the purpose intended as part of an ongoing inspection audit (as
required by the ISM Code). He also makes recommendations to the master and
chief engineer for improvement and/or inclusion within a scheduled planning
system.
1-412 The ship’s superintendent is responsible for the promotion of the regular testing
of all safety equipment together with dedicated on-board crew training
programmes to encourage efficient operation combined with familiarity with
safety systems and equipment.
1-413 He must ensure that crew accommodation, bathrooms, pantries, galleys and
fridges are well maintained, ventilated and illuminated at all times in accordance
with a good health and safety regime.
1-414 The ship’s superintendent ensures crew cabins are fit for habitation with carpets
and curtains, hot and cold water supplies are in working order, and the bunk and
bed linen is fit for use. He should have a knowledge of the ILO conventions
(or alternatively the relevant flag regulations which pertain) covering
accommodation requirements.

1-415 He is responsible for the monitoring of ship and office based records of
shipboard certification to maintain the vessel in “class”, and that the ship is cer-
tified and adequately manned with competent personnel in accord with national
and/or international legislation. He should have a knowledge of specific port
authority requirements and procedures which may apply to the vessel’s intended
destination.
1-416 The ship’s superintendent carries out extensive ship audits and control surveys
to maintain the vessel in satisfactory overall condition, to guarantee a swift port
turnaround without port state control inspection delays or deficiencies. He
should also have a good knowledge of the vessel, to enable a guided and
authoritative tour with port state control inspectors should the superintendent be
on-board during their visit.
1-417 In case of accident, damage or other incident concerning the vessel, the
superintendent may also have to deal “front-line” with lawyers, media, local
unions, for example, drawing on the company’s competent sources of advice in
order to protect the company’s position.
● Do you think that the role of the class surveyor is

duplicating the work carried out by shipping companies
themselves?
● Could economies be made by organisations working more

closely?
● How do you ensure you are up-to-date with national and

international legislation and regulations concerning vessels
under your responsibility?

7. CLASSIFICATION SOCIETIES, IACS, IMO,
INTER-GOVERNMENTAL ORGANISATIONS
7.1 INTERNATIONAL ASSOCIATION OF CLASSIFICATION SOCIETIES
1-418 The construction, design and safety of ships is regulated and affected by three
major types of organisations and their requirements:
● classification societies;
● governmental authorities (national flags); and
● international authorities.
1-419 Classification societies started to co-operate after the 1930 Conference on Load
Lines, which showed a need for the different societies to achieve uniformity of
freeboard computation. Eventually, on 11 September 1969, seven societies
formed “IACS”, which was granted consultative status by IMCO, now IMO, in
October 1969. IACS sets common standards between member societies, and
IACS members have above 90% of the world fleet by tonnage and about 50% in
number of vessels.
1-420 A long history and established standards of construction have enabled the
classification societies to produce rules that have done much to ensure the
safety of ships. Whilst a shipowner is not compelled to construct a vessel under
class society rules it is found that most prudent owners will comply in order to
reap later trading and insurance underwriting benefits of an “approved” vessel.
1-421 The origin of classification, associated with the oldest society “Lloyd’s Register
of Shipping” originally benefited the shipowner, cargo owner and underwriters to
determine a ship as an acceptable risk. Lloyd’s evolved into its “present” form in
1832, whereas Bureau Veritas was formed in a similar format in 1828.
1-422 Originating in 1702, Mr Edward Lloyd produced the popular publication Lloyd’s
List providing a “List” or “Bulletin” about ships and the risk that they may represent
for underwriters.
1-423 This information was eventually formalised into a “Ships Register” in 1760 when
classifying and insuring vessels was managed as one activity. The registry was
later separated from the insurance business to become “Lloyd’s Register of
British and Foreign Shipping”, now known as “Lloyd’s Register of Shipping”.
Published annually the Register gives details of ships above 100 gross tons
irrespective of registered class, thus representing a comprehensive industrial
index. Ships constructed under survey gained the familiar 100A1, which was
usually accompanied with the Maltese Cross to indicate that the ship had been
constructed under survey.
1-424 All classification societies have their own system of “class marks, symbols and
notations”. Understanding these and/or their equivalence is essential when

Module 1 Classification Societies, IACS, IMO, Inter-governmental Organisations
considering suitability of unfamiliar vessels for types of service, navigation, and

special attributes, e.g. automation, heavy cargo, ice strengthening and cargo
flash point limitations.
1-425 Governmental authorities have also been active in securing safety at sea to
protect the seafarer and the environment. The rules that are produced from
these sources are mandatory within the boundaries of their own coastlines.
1-426 Governmental authorities look to the classification societies to uphold their

standards of construction and the strength of ship’s structures, with authority
delegated to the class society to approve designs and drawings and to oversee
construction. Additionally, since the late 1800s, governments have delegated
issuance of statutory certification to “recognised” classification societies.
1-427 Classification societies from their inception were concerned with the
seaworthiness of the ship’s hull and associated equipment, later, with the intro-
duction of main propulsion machinery, becoming additionally involved with
mechanical certification.
1-428 In addition to the machinery packages, the classification societies became

involved in the certification, in all specific technical aspects, of special ship
types, pumping, piping, fire protection, pressure vessels, electrical installations,
cargo containment equipment and construction materials.
1-429 The verification of vessel structural strength by traditional empirical methods has
now been superseded to a significant degree by direct calculation, computer
modelling, trend analysis, data studies and industry development input.
1-430 During construction of a vessel, a classification society (albeit chosen or agreed

by the owner) will usually be contracted by a builder and, inter alia, the builder’s
suppliers and sub-contractors, to carry out plan and design reviews and
approvals, conduct surveys at various stages of construction, inspect materials
and equipment, with a view to issuing classification certificates and statutory
certificates (as far as delegated), before delivery of the vessel.
1-431 Liaison will contractually be between the yard and the classification society.
However, in practice, a working understanding usually exists to enable fruitful
co-operation between yard, class and the owner’s representative during build-
ing. This arrangement may also include flag authority surveyors for matters
which are not delegated to class.
1-432 The involvement of the superintendent during building can be onerous with
many evolving matters to resolve with builders (which may or may not necessi-
tate class agreement), but can be very interesting and, sensibly, essential if the
superintendent is to have a thorough knowledge of the vessel before delivery.
There are many aspects of the specification of a vessel which do not fall into the
scope of class or statutory regulation and it is only the owner’s representative
who can look after the owner’s interests in these aspects.
1-433 Attending surveys, tests and inspections of hull, machinery and equipment with
the surveyor can be informative and economical on time and effort. Useful
co-operation can usually be established.

Classification Societies, IACS, IMO, Inter-governmental Organisations Module 1
1-434 It is usually upon delivery, when the vessel and its certification is handed to the
owner, that officially the direct relationship between owner and class
commences. Often the first contact in this context is when the first periodical
survey becomes due.
1-435 The superintendent should well understand the conditions for the maintenance
of classification of the vessel. This not only covers foreseen periodical surveys,
but requirements to keep the society informed of damages, groundings, failures
and to request and arrange additional surveys as may be required.
1-436 If a damage is not reported, for example, and an attestation of confirmation that
the vessel has been “class maintained” is required later to progress an insurance
claim, then the society will not be able to issue an unreserved statement for the
period between the damage occurrence and the eventual associated survey.
Similarly, if a periodical survey is overdue, class will not have been maintained
for the overdue period, unless some exceptional provision is made beforehand
with the society. It is best always to play safe and liaise with the society in cases
of doubt. You may save on the costs of a survey but lose out on an insurance
claim.
1-437 In case of damage, the superintendent should ensure that an on-board assess-
ment by the ship’s crew is carried out as far as it is safely possible, as soon as
possible, to ascertain the extent of direct or indirect damage, and its implica-
tions. For example, after a grounding, are the double bottom tank boundaries still
intact in the contact area, have internal piping systems been damaged etc?
1-438 The classification of a vessel is usually based on a five-year term subject to a

series of periodical surveys, consisting of annual surveys within six-month
“windows”, intermediate survey at mid-term within an 18-month “window”, dry-
docking or equivalent underwater survey at mid-term, dry-docking and renewal
or special survey at the end of the term. In addition, other periodical surveys
must be covered at specified intervals, e.g. tail shaft and boiler surveys.
1-439 Machinery and classed cargo installations are usually surveyed at the same
time as the hull periodical surveys. Machinery and some cargo and automation
installations may be covered under a “continuous” survey system, or approved
planned maintenance system.
1-440 Usually, periodical surveys required for the maintenance of statutory certification,
e.g. Load Line and Safety Equipment, are harmonised with class surveys. (Note:
periodicity and extent of surveys can alter according to type of vessel.)
1-441 Class can be automatically suspended in the case of overdue periodical surveys,
e.g. annual surveys, or suspended in the case of overdue recommendations or
conditions of class. Continued suspension can lead to withdrawal of class. Class
suspension and withdrawal for vessels classed with IACS members leads to
such events being published from an IACS database and, in most cases, it is
incumbent on the class society to inform the flag authority as the validity of many
statutory certificates relies on the basis of continued classification.
1-442 The superintendent must ensure that systems are in place so that the record
keeping, for each ship in the fleet, is completely up to date.

1-443 During recent years, the classification societies have moved into other areas of
work, from their traditional administrative base of classing ships and floating pro-
duction systems to providing a service to the industry. Examples are providing
an audit service for the ISM and ISPS Codes on behalf of some flag states.
1-444 As already mentioned, some flag administrations contract whole areas of work
to classification societies and recently the International Association of
Classification Societies (IACS) has provided help and advice to former Eastern
Bloc countries to help them develop classification societies that are compatible
with the methods employed by Western societies.
1-445 Some classification societies offer consultancy services within their overall
organisational structure. This is kept as a distinct and strictly separate entity from
the classification activities.
1-446 The major aspect of classification for the maritime world is that classification
demonstrates compliance with an acceptable and internationally recognised
standard and one on which compliance with other regulations can be based.
Recently, classification societies have come under more pressure because the
politicians and the public have increasingly turned to class to remove the
sub-standard ships from the sea.
1-447 However, class is only one link in the chain and available port state control
detention statistics seem to show that non-IACS societies have a greater
proportion of sub-standard ships.
1-448 More than 90% of the world’s cargo carrying tonnage is covered by the classifi-
cation and compliance rules and standards set by the 10 member societies and
one associate of IACS. These members are listed below, together with the rele-
vant website addresses for further information.
MEMBERS
Class E-mail Website

(for more specific details)
ABS abs-worldhq@eagle.org http://www.eagle.org/
BV veristarinfo@bureauveritas.com http://www.veristar.com/
CCS ccs@ccs.org.cn http://www.ccs.org.cn/
DNV iacs@dnv.com http://www.dnv.com/

GL headoffice@gl-group.com http://www.gl-group.com
KR krsiacs@krs.co.kr http://www.krs.co.kr/
LR lloyd’sreg@lr.org http://www.lr.org/
NK mpd@classnk.or.jp http://www.classnk.or.jp/
RINA info@rina.org http://www.rina.org/
RS 004@rs-head.spb.ru http://www.rs head.spb.ru/
ASSOCIATE
IRS ho@irclass.org http://www.irclass.org/
7.2 INTERNATIONAL MARITIME ORGANISATION (IMO)
1-449 The International Maritime Organisation (IMO), whose motto is “Safer Ships and
Cleaner Oceans”, has been concerned with maritime affairs since its inception
as an agency of the UN on 17 March 1958 under its original name of the
International Maritime Consultative Organisation (IMCO). It was renamed as
now in 1982. Its resolution states, as principal technical goals, that IMO exists:
● “to provide machinery for co-operation among governments in the field of

governmental regulation and practices relating to technical matters of all
kinds affecting shipping engaged in international trade;
● to encourage and facilitate the general adoption of the highest practicable
standards in matters concerning maritime safety, efficiency of navigation
and prevention and control of marine pollution from ships”.
1-450 IMO has its headquarters in London, it has 162 member and associate member
states, and an annual budget in excess of £18 million. Its structure consists of
deliberative, technical and administrative bodies, these principally being:
● The Assembly;
● The Council;
● Maritime Safety Committee (MSC);
● Legal Committee;
● Marine Environment Protection Committee (MEPC);
● Technical Co-operation Committee; and
● The Secretariat.

1-451 Since it first met in 1959, IMO has facilitated the adoption of 40 conventions and
protocols nearly all of which are in force today. Several hundred codes, sets of
rules, guidelines, recommendations and resolutions have been adopted.
1-452 These conventions and their subsequent amendments when ratified by a

minimum number of the 162 signatory countries then become maritime law
invoked in the member states. A system of “tacit acceptance” exists for many
proposed amendments. This speeds up the regulatory process, proposals going
into force by an implementation date unless objections are raised beforehand.
1-453 IMO convention requirements and certification are usually covered by individual
flag delegation to classification societies but not always, and often only to cer-
tain societies. The superintendent should know “who is responsible for what” with
respect to the certification requirements of the different vessels for which he has
responsibility.
1-454 It is, however, always the owner’s/manager’s responsibility to ensure compliance.

It is not the responsibility of the certification issuing bodies which will only issue
certification in accordance with survey results and findings at the time. It is a
frequent error that class or other certifying bodies are regarded as technical
managers or technical superintendents. (Usually, of course, they will discuss,
co-operate and give any requested guidance on such matters arising. Good prac-
tical relationships with these bodies should be an aim of the superintendent.)
1-455 In practice, most classification societies endeavour to keep their clients informed
in due time of impending changes to class and statutory rules and regulations
as far as these are in the scope of the certification delegated to them.
7.3 INTER-GOVERNMENTAL ORGANISATIONS
1-456 IMO is not the only regulatory body concerned with shipping (which, incidentally,
is the most regulated form of transport). Many other organisations are engaged
in setting standards with respect to safety, personnel well-being and environ-
mental protection. Some are active on a worldwide basis, some more regionally.
Amongst these are:
● International Labour Organisation (ILO)
More than 170 member states – plays a leading role in regulating working
conditions and accommodation standards of seafarers.
● International Telecommunications Union (ITU)
Achieves co-operation among national administrations and private com-

panies that regulate, install and operate telecommunications services – a
specialised UN agency – concerned primarily with technical issues.
● International Maritime Satellite Telecommunications Organisation

(INMARSAT)
Responsible for managing the satellite communication network globally.

● World Meteorological Organisation (WMO)
181 member states – a specialised UN agency – promotes, amongst other

aims, rapid exchange of meteorological information.
● International Hydrographic Organisation (IHO)
Not a UN agency but works closely with IMO – 60 member states – aim,
amongst others, greatest possible uniformity in nautical charts and
publications.
1-457 Regionally, a prime example is the EU – beginning to set standards additional to

IMO, e.g. accelerated phasing out of single skin tankers – creation of European
Marine Safety Agency (EMSA). EMSA at present has three primary objectives:
● monitoring legislation;
● technical co-operation and development;
● operational duties, particularly with respect to pollution.
It will also analyse the results of flag accident and casualty investigations, and
is now moving into direct inspection and auditing activities.
1-458 The owners’ or superintendents’ contact with these bodies will invariably be
indirect through compliance with flag certification requirements.

8. P&I CLUBS, INSURERS, SALVAGE
ASSOCIATION
8.1 P&I CLUBS
1-459 P&I clubs cover third party liability and contractual liabilities of owners or
charterers on the basis of arrangement of collective insurance and reinsurance
for their members. Premiums are based on casualty history attributable to the
owner and deductibles set accordingly.
1-460 The largest P&I clubs exercise their own inspection programmes to assess
condition of ships using their own inspectors. Increasingly, clubs are inserting a
“classification clause” into policies allowing them direct access to class society
records for the vessels covered. In most cases only “IACS member” classed
vessels are accepted. Club rules include requirements relating to ISM Code
compliance. Any non-conformity may constitute a break in cover in the event of
a claim. The majority of clubs compile their own accident statistics.
1-461 Approximately 90% of world tonnage is covered by P&I clubs (approximately the
same proportion as is classed by “IACS members”). See Module 4 for more and
fuller details.
8.2 INSURERS AND UNDERWRITERS
1-462 At this stage of the course, it is necessary only to recognise that these entities
exist as a usually essential part of the vessel operation. See Modules 3 and 4
for more and fuller information.
8.3 SALVAGE ASSOCIATION
1-463 This is the usual body to which underwriters/insurers entrust surveys in

connection with claims or the condition of a vessel or its equipment.

9. THE SHIPBROKER
1-464 In previous times ships were built, sold and purchased in very few geographical
areas of the world. The community of shipowners was small, often with owners
being masters of their own ships and fully responsible for the commercial as well
as operational management of their trading vessels.
1-465 It was not until the early 1900s that shipbroking became a universally recog-
nised service created by the expansion of the shipping industry from London.
1-466 London was at that time the centre of the market, with smaller but equally
important maritime centres located in Oslo, Paris, Tokyo, New York, Hamburg,
Madrid, and Hong Kong.
1-467 The advent of modem, satellite, telex and automatic communication services
worldwide has allowed for an improved flow of information about vessels
available for sale and charter. This, together with the establishment of a code of
ethics by a group of highly competent ship-broking firms located within the
maritime centres has established the basis of the industry today.
1-468 “Word of mouth” negotiating established the mode of business between brokers
who endeavoured to establish an ethical affinity to keep the motto “his word is
his bond”.
1-469 A shipbroker’s principle is one of knowledge, integrity, experience and trust.
1-470 Brokers specialise in one or more categories of the business, the most common
of which are:
● Owner’s Broker
The owner’s brokers are appointed by owners to secure vessel or cargo
charters for their tonnage. Their main interest is to favour and protect the
owner by negotiating the best terms and revenue.
● Charterer’s Broker
The charterer’s broker works under instruction from the charterer. The
broker would be expected to widely circulate his order for tonnage (or part
of a vessel) in an effort to secure a most favourable fixture (lowest cost) for
the cargo interests.
● Cable Broker
The cable broker will have neither an owner’s tonnage to represent or an
order direct from a charterer. These brokers would offer to insert
themselves as “middlemen” or facilitators into a shipping transaction.
● Sale and Purchase Broker

The sale and purchase broker (S&P), owner’s, charterers and cable
brokers need to be well versed in the complexities of chartering.
The S&P broker requires a wide technical knowledge of ships and

classification matters as well as a broader base of ship’s valuation ranging

Module 1 The Shipbroker
from newbuilding costs, second-hand market values and demolition prices

worldwide. The S&P broker usually works to represent one party, either the
buyer or the seller in a deal.
1-471 Other categories of shipbrokers are specialists whose interests are within one or
more specific areas of the business such as:
● tanker broker;
● newbuilding broker;
● speciality broker (container and ro-ro);
● grain broker;
● bunkers broker.
9.1 WHY USE A BROKER?
1-472 Market information is catalogued by the exchange of reported fixtures or ship

sales between brokers on a daily basis with such information made available
through specialised networks.
1-473 The knowledge brokers acquire through direct and third party reports of
transactions entertained daily allows them to be well informed.
1-474 The experience and knowledge brokers have about the background of
principals, cargo particulars as well as charterparties and memoranda of
agreement make them most valuable to a shipping transaction.
1-475 As a rule, the major shipping companies who are either owners, charterers or
both usually have experienced staff to keep abreast with data and market
particulars of interest to their specific needs.
1-476 Some of this information comes from one or more brokers delegated by their
company. Smaller owners and charterers attempt to become familiar with the
market by their own direct contact.
1-477 The danger here is that decisions relating to market levels may not be accurate
leaving the least informed principal involved in the transaction at a distinct
disadvantage.
9.2 WHAT IS SHIPBROKING?
1-478 That shipping is an extremely important part of our global trade and the world
economy is self-evident, and whilst it is also obvious that large volumes of vari-
ous commodities are transported every day from country to country, few people
understand what happens to enable these cargoes to be moved.
1-479 How do you find a ship to carry the cargo you have just sold to an overseas
buyer or how do you buy a vessel if you want to be a shipowner?
● You engage the services of a “shipbroker”.

The Shipbroker Module 1
1-480 The role of a shipbroker is to act as an intermediary between the two parties to
a contract, whether they are shipowners and charterers in the chartering market,
or buyers and sellers in the sale and purchase market.
1-481 The broker may be acting for one principal or maybe the sole broker between
the two contracting parties. He or she will be involved in many stages of the deal:
presenting the business to potential clients, negotiating the main terms of the fix-
ture or sale, completing the details of the contract and following the deal through
to its conclusion.
1-482 The type of vessel involved can range from coasters carrying a few hundred tons
to tankers able to lift several hundred thousand tons, or cruise ships, oil-rigs or
ferries – even floating prisons!
1-483 Cargoes carried range from raw bulk commodities such as coal, sugar, grain or iron
ore through to finished products carried in the container trade, or fluids in way of
oils, additives, petroleum products, molasses and palm oil for domestic refinement.
9.3 VALUATIONS
1-484 Unrivalled commercial databases and all round market coverage permit
knowledgeable and wholly independent valuations to be offered by brokers in
this specialist sector.
1-485 A combination of historical data, current sales or replacement costs will be

available to a team of ship-broking experts to consider potential charter earnings
and demolition possibilities when considering asset values.
1-486 Today, there is great transparency with respect to vessel, fleet and company
details and history. There are various websites which correlate information with
details of individual ships or fleets. This can be of assistance to any interested
party, e.g. a charterer or a broker.
1-487 EQUASIS lists PSC inspections, detentions and numbers of deficiencies.

Seaways and Seasearcher, Lloyd’s and Fairplay are examples of other such
information services. The Paris MOU website lists PSC results, as well as
identifying the “heap of the month”!
9.4 PROJECTS
9.4.1 Sale and Purchase
1-488 This brokerage department combines the expertise of its brokers to operate in
the chartering market and the sale and purchase markets.
1-489 This team would have a vast experience of home and overseas markets. It would
concentrate on the sale and purchase of dry cargo vessels, newbuilding
contracting and long-term chartering for all types of vessels.
1-490 Clients would also benefit from close industrial links with banks, maritime
lawyers, surveyors and other specialists within the shipping industry.

Module 1 The Shipbroker
9.4.2 Newbuilding
1-491 The newbuilding department employs specialist brokers maintaining close

contacts with shipyards throughout the world.
1-492 This not only allows the best designs and prices to be agreed, but also enables
clients to monitor newbuilding berth availability on an ongoing basis to assist
with their forward planning.
1-493 The ship’s superintendent will develop an intimate industrial interface with the
owner’s broker and may be used frequently to conduct complete vessel surveys
on their behalf. The nature of these surveys may herald the potential sale of
existing fleet tonnage, to establish a true market value with respect to the current
condition of hull and machinery. Alternatively, an intimate survey of potential new
acquisition tonnage when the superintendent would survey the hull and
machinery from records obtained through classification files and owners records
concluding with a physical vessel survey and condition report. This would assist
the broker in obtaining a reasonable valuation against which to make an offer to
purchase or charter the vessel on behalf of owners.

10. THE SERVICE PROVIDERS
10.1 MANNING AGENCIES
1-494 Manning agents providing a service to supply ships’ crews started to appear
during the 1970s when the need to cut costs and the outsourcing of non-core
services began to gain favour.
1-495 In the UK, the Isle of Man and Channel Islands agencies were able to employ
British seafarers, without having to pay welfare and income tax. This gave them
a price advantage over the shipping companies who employed British staff
directly.
1-496 During times of hardship the shipowner might look to cut costs by reducing the
number or changing the size or age of the tonnage he operates. This would
mean adjusting the number of operating staff required. By contracting out the
company’s staffing responsibility to the manning agent, the shipowner was also
relieved of the burden of any redundancy costs for surplus crews.
1-497 The maritime industry traditionally recruits its staff from seagoing personnel;
however, if the shipping companies are reducing the number of trainees then the
number of staff who move to the rest of the marine industry is also reduced.
1-498 A few shipping companies still maintain a training function as part of their
operation and others have formed separate companies to handle all the human
resource needs of their ships. The smaller companies look to the manning and
training agencies to provide a complete service. Some agencies are also
offering technical services in order to make themselves more cost effective.
Manning agencies, according to contract details between agency and owner,

can provide qualified personnel only or provide personnel and deal with all pay,
tax, social security aspects, travel, logistics, and so on.
1-499 The major advantages that the agencies have to offer are that:
● good personnel can gain secure positions, and at the same time the
agency satisfies its customers’ needs;
● if one company fails, it should not affect the best seafarers; and
● structured training systems can be set up.
1-500 One disadvantage to the industry is the lack of incentive, for the shipowner, to
pay the manning agency for training.
1-501 Another problem arises where a manning agent has supplied 80% or 90% of
the crew for a particular ship and then cannot supply the final 10%. Who will
supply the final 10% and who will keep a record of the correct number of qual-
ifications needed to satisfy the requirements of port state control? The ship’s

Module 1 The Service Providers
superintendent might have work to ensure that the ship is covered in this
area.
10.1.1 Services Provided by Manning Agencies
1-502 The manning agency’s normal core business is to provide suitably qualified staff
to operate all types of ships. To be able to do this an agency needs to reach two
important markets:
● Potential or serving seafarers;

● Ship managers or owners.
1-503 Websites, networking events and seminars are especially important to manning
agencies for two major reasons:
● Maritime careers advice has been given to youngsters in the past by a

nation’s Merchant Navy careers service, which, in the UK, was part of the
operation of the General Council of British Shipping, but now this informa-
tion has to be provided by the shipping industry. This means that shipping
companies and manning or training agents might need to attend careers
conventions, visit schools and work with the nation’s careers service (now
called Connections in the UK).
● In an international market, use of the Internet is effective in reaching
potential customers. The shipping company or manning agent will need to
spend time looking for the relevant training providers or looking at the pos-
sibility of sponsorship from European funding or national funding. If this is
not available then the agency must still offer the most cost-effective serv-
ice to its customers and ensure the lowest possible cost to them. All these
functions can be achieved much more efficiently with the aid of the
Internet.
1-504 Some agencies have set up their own training centres to ensure that all their
crew will have the opportunity to gain the basic qualifications required by STCW
95. Having this service means that they can guarantee the training at short
notice and be confident about the quality of that training.
1-505 One of the major problems with this is the expense of the physical and human
resources needed to gain accreditation to offer the approved training required by
STCW 95.
1-506 Therefore, just to offer the basic training courses required by STCW 95 a
provider must have a good throughput of students to make a reasonable return
on his investment.
1-507 To set up their own centre for basic training, for example, a manning agent would
have to provide an area to provide sea survival training as well as an area to
provide fire fighting training as shown below.
1-508 The modern training of officers to full OOW certificates is much more
complicated. The shore-based phase will be straightforward but the sea phase
of a seafarer’s education will be more difficult to track due to the difficulty with
communication.

The Service Providers Module 1
1-509 The increased use of the Internet to track the on-board training element is a skill
that the staff employed by manning agents will need to master. The student
tracking of on-board training could be carried out by the education provider but
the cost of this would have to be passed on to the manning agent and it is the
trend in the UK for the agent to carry out this function, usually in partnership with
the education provider.
1-510 Tracking certificate requirements for each ship to ensure that there will be no
non-compliance issues is another service offered by manning agents and some
agents are developing sophisticated electronic methods of carrying out this
service. There are also large databases available over the Internet after the
payment of the correct fee.
1-511 Other agencies have developed CD-ROM based information for the customer to
keep an electronic record of training.
1-512 Manning agency staff must know the differences in national education systems
and be able to explain them at the recruitment stage.
1-513 An additional complication is, for example, that the education system in Scotland
is slightly different, but the Merchant Navy education is the same for all British
students and this problem is compounded by the use of international crews.
1-514 The UK adopted National Vocational Qualifications (NVQs), a competency-

based system of qualifications where levels are set from 2 to 5 (with 2 being the
lowest). On completion of the level 3 qualification, the student becomes eligible
for the appropriate STCW 95 Officer of the Watch Certificate of Competency.
1-515 On completion of the level 4 qualification a seafarer would be eligible to under-

take an STCW 95 II/2 or III/2 Certificate of Competency issued by the Maritime
Coastguard Agency (MCA).
1-516 To complete an NVQ qualification a student must produce auditable evidence

proving that they are competent to carry out the tasks detailed in the national
standards. The evidence will cover performance ability and underpinning
knowledge and will be assessed by an assessor approved by the qualification
awarding body and by the government agency, the MCA. The MNTB is
responsible for writing the NVQ standards.
1-517 The system is now being changed to include a full university degree or a
foundation degree, depending upon the candidate’s entry qualification. This will
raise the UK ship’s officer training system to the international standard, which is
generally based around a university degree.
1-518 In providing qualified personnel, the agency has the responsibility to gather/
provide proof of valid training, qualifications, fitness and so on. But it must be
remembered that final responsibility under section 6.5 of the ISM Code lies with
the “company” holding the DOC.
1-519 The UK Conduct of Employment Agencies and Employment Business

Regulations 2003 require that full details (including possible risk assessment) of
the “job” to be fulfilled are supplied by the “hirer” to the agency.

Module 1 The Service Providers
1-520 The training of seafarers to STCW 95 standards is covered more fully in Module 5.
10.2 CONSULTANCY
1-521 Some agencies have expanded their business and are offering consultancy in
areas such as:
● Annual safety inspections and surveys;

● Vessel registrations;
● Technical consultancy and services;
● ISM audit and consultancy;
● Requirements for STCW 95, MARPOL and SOLAS.
10.3 EMPLOYMENT SERVICE
1-522 Modern employment agreements are a specialist area of work that need to be
comprehensive and in the correct language. The ship’s superintendent will be
involved in working with the agency to ensure good living and working
conditions for seafarers. Companies will also have to adopt measures to
ensure that as far as practicable, seafarers are protected from being stranded
in a foreign port.
1-523 The International Labour Organisation recommends minimum standards for

seafarers’ working and living conditions, which the manning agent will have to be
fully conversant with.
1-524 Manning agents will also have to keep a register of all seafarers recruited and
make sure that they can examine their contracts of employment “before and after
they are signed”, “With due regard to privacy and the need for confidentiality”.
1-525 National laws or regulations could well change the way that the manning agent
processes this data.
1-526 Seafarers’ travel, immigration, visas and medical requirements are all additional
services that can be purchased from the manning agent.
1-527 Although STCW 95 is an internationally accepted standard, there is limited

recognition by the maritime authorities of each others’ certificate and so the
manning agent needs to be aware of the acceptable certification for the vessel
and for the flag state under which the ship is travelling.
1-528 Networking is one of the main activities of the manning agent because they
need to know where to go for information about how they are to conduct their
business.
1-529 Networking is achieved by attending regular forum and planning meetings that
are held to formulate policy advice. In the UK some meetings are co-ordinated
by the Chamber of Shipping and involve a large proportion of the UK maritime
industry. On the training side the MNTB bring together industry, education and
training, as well as other interested parties to ensure that training, administration

The Service Providers Module 1
structures and policy reflect the changing needs of the industry and that all
conform to international regulations.
1-530 Reduction in the high cost of satellite communication might facilitate further
developments for providers in the future. This will involve much more use of the
Internet and the manning agent will then be able to increase the level of on-line
support, by offering, for example:
● technical back-up at short notice;

● short course training programmes that could be downloaded;
● employment information for the master; or
● transfer more responsibility for the ship’s management to the crew.
1-531 If European agencies were developed then the manning agencies would need
to look closely at the European education systems and the differences in
employment law as well as the language differences. However, as the European
markets come together so does the employment legislation.
1-532 In the UK, for example, officer cadets are sponsored after compulsory
education, but currently they do not generally rise to degree standard before
qualifying for Officer of the Watch. This is not currently the case in most
European countries: seafarers study towards a degree and only a proportion
progress to a seagoing career.
● Do you think that shipping companies should keep the

employment of seafarers “in-house”?
● State four reasons for your answer.

PART THREE
COMMUNICATIONS AND CUSTOMER FOCUS
11. THE CONCEPT OF STRATEGIC

MANAGEMENT AND MARKETING
LEARNING OUTCOMES
After completion of this chapter, you will be able to:
● describe the impact of strategic planning on the marketing

process;
● state the procedure for carrying out a SWOT analysis; and
● describe, in general terms what high and low risk marketing

strategies companies in the shipping industry might adopt.
11.1 STRATEGIC MANAGEMENT
1-533 The use of the term “strategy” conjures up visions of generals looking at the
large-scale model of a battlefield, or players agonising over a chessboard. This is
in its way useful in conceptualising a meaning of the word strategy. Formulating
a strategy is a long-term planning process. It is about leaving the short-term
battles to others, while the strategists concentrate on winning the war.
1-534 It is important also that the short-term objectives are not so difficult that
everybody gives up. Cole (1994) chose the following definition as his preferred
“concise” working definition of strategic management:
“Strategic management is a process, directed by top management, to determine

the fundamental aims or goals of the organisation, and ensure a range of
decisions, which will allow for the achievement of those aims or goals in the
long-term, whilst providing for adaptive responses in the shorter term.”
1-535 Drucker maintains, for example, that, in a non-profit-making organisation,

formulation of the correct mission statement is essential in the process of deter-
mining an organisation’s future guidance and direction. However, a mission
statement can also help profit-making organisations to focus on their core
market and therefore give strategic direction.
1-536 The final strategic statements have to be the product of deep consideration, if
strategic pl`nning it is not to become another management fashion or fad.
1-537 Strategic or corporate planning must be carried out by senior management and
should be about seeking a consensus among the people of an organisation about

The Concept of Strategic Management and Marketing Module 1
the overall direction of that organisation over the medium to long-term future.
I would add that consultation with the staff and inclusion of their ideas wherever
possible is also a task of senior managers.
1-538 The product of this planning process should then be general statements about
the direction of the organisation. However, if the top management puts too much
detail into these statements there is a tendency to reduce flexibility and the
scope for opportunism and initiative which are vital factors when dealing with
future problems and opportunities.
1-539 Policy statements will also reflect the organisation’s culture and have a major
influence over activities and the decision-making process.
1-540 Following on from general statements, the next stage is the formulation of a
strategic plan which should give individual departments within an organisation
sufficient information about the future direction of that organisation and about
the integration of the future direction with the organisation’s current situation.
1-541 The departments can then formulate their operational plans, budgets and
short-term goals, in line with the strategic plan.
1-542 To formulate the strategic plan information is required by management to form a

view on the:
● position of the organisation in the market place;

● performance of the organisation in the market place;
● spare capacity to grow and respond to the market;
● internal skills mix and whether this is correct; and
● flexibility in the organisational structure to respond to any new changes.
1-543 Cole (1994) argues that an understanding of the external environment in which
an organisation operates is a crucial part of strategic management and this
understanding must be accompanied by an assessment of the organisation’s
internal environment and their capacity to respond to outside influences.
11.1.1 BPEST and SWOT Analysis
1-544 Cole (1994) goes on to suggest that a BPEST analysis is required. This is the
study of the external environoent under the headings of:
● Business;
● Political;
● Economkc;
● Social; and
● Technological.
1-545 These will have different areas to study under each heading; some examples are
given here:
● Business
– The state of the industry – the Merchant Navy, for example, moved
from being a direct employer, paying for ivs own unemployment pool

Module 1 The Concept of Strategic Management and Marketing
of labour, to the use of agency staff in approximately six years. This

had a dramatic effect on recruitment, training and the employment of
staff. Currently unskilled and semi skilled labour is recruited from
the cheapest source world wide. Where will be the next recruitment
hot spot?
– The price of oil and the current freight rates are always areas to
watch closely.
– The market – current and projected demand, market segments and
potential niche markets.
– Competitors – market share.
– Suppliers.
● Political
– Legislation – the legislator for the marine industry in the UK is the

Marhne Safety Agency, and there is also the International Maritime
Organisation, which has produced the Standards of Training,
Certification and Watchkeeping for Seafarers (STCW) 95
Convention, which is now set for the possibility of a revision.
– The International Ship and Port Safety (ISPS) code of practice has
had a profound effect on the operation of ships.
– Taxation.
– Political changes in the market.
● Economic
– Interest rates.
– Employment levels.
– Inflation.
– Exchange rates.
– Third world economies.
– Terms of trade.
● Social
– Skill levels.
– Population changes.
– Attitudes to work/leisure.
● Technological
– Developments in IT.
– Industrial advancements (automation).
– New energy sources.
1-546 Once these influences have been assessed and the likely impact understood then
an organisation can evaluate its own position against each of these headings.
1-547 Information gained from this exercise will go toward the SWOT (strengths,
weaknesses, opportunities and threats) analysis, which may well influence
future policies and plans.

1-548 The SWOT analysis is an acronym for the activity where an organisation
identifies the strengths and weaknesses within itself. This could be approached
from different angles but should examine the following:
● organisational structure;
● organisational ethos;
● decision making;
● management chain;
● management style;
● management information;
● profitability;
● growth in assets;
● cash flow;
● research and development;
● product output;
● market share; and
● personnel and physical resources.
1-549 The strategic planning process will assist the company to form a marketing
strategy which is discussed below.
11.2 MARKETING
1-550 During the past 25 years, international shipping has become much more
efficient. The containerisation of cargoes and the automation of ships being the
two most important reasons.
1-551 These efficiency gains have combined with the shipping company’s choice from
an international labour market to drastically reduce the need for flag state
registered crews, which in turn has reduced maritime-related businesses such
as education and training.
1-552 The shipping industry has had to compete in difficult markets, and the marine
superintendent will become increasingly involved in this process. Supply chains,
for stores and spare gear are now very different from what they were, and again
this will have an effect on the work of the superintendent. Communication
between the ship and the “office” has improved dramatically, which has also
changed the way the superintendent carries out his/her work.
1-553 Tom Peters (1989) points out, that organisations should not be striving to take
market share from competitors but should be researching and discovering new
niche markets for existing products/services. Smith (1994) states that Ansoff’s
matrix describes this strategy as less of a risk to the organisation than compet-
ing with other organisations in their established market, especially as it might
also require a company to develop new products.
1-554 Providing the industry with the services or products that it needs when it needs
them might put considerable strain on a company’s limited resources. Therefore, a
shipping company must review its physical resources and, if necessary, consider
working with other industry partners to expand its business and look for new oppor-
tunities. Smith (1994) states that the Ansoff matrix (shown below) serves as a
useful tool in determining the direction that an organisation may choose to expand.

Module 1 The Concept of Strategic Management and Marketing
M Low Risk Medium Risk

A Existing Market Product
R extension development
K
E
T Medium Risk High Risk
S New Market penetration Diversification
Existing New
PRODUCTS
1-555 The matrix suggests four potential strategies and the risks involved:
● The low risk strategy is for an organisation to extend its market by finding
new segments for existing products.
● A medium risk strategy is to expand the current market by selling more of
your service or product to existing customers or by selling to your
competitor’s customers.
● A second medium risk strategy is to market new or modified products or
services to existing customers.
● The high risk option is to develop new products or services for a new
market which Ansoff calls diversification.
1-556 The concept of marketing is much misunderstood and there is a school of thought
that would have us believe that marketing is a modern term for advertising and sell-
ing where as nothing could be further from the truth. Peter Drucker is on record as
saying that the aim of marketing is to make selling unnecessary (Drucker 1990).
1-557 The explanation of this apparently conflicting statement is that if the needs of
customers are worked out by an organisation, on the basis of its research, then
customers will be provided with a product or service that they want and the
provider is running a successful business without the need to sell its product.
This does not mean that they do not have to tell everyone where they are and
the products that are on offer. In a modern setting with established customers
and products, this may also mean changing the service that is on offer to the
customer to provide something that your competitors are not offering.
1-558 Cole (1994) describes the essence of modern marketing developed by Phillip
Kotler as, studying the market, segmenting it, targeting the groups that you want
to service, positioning yourself in the market, and creating a service that meets
the needs of your target group.
1-559 Kotler calls this the STP (Segmenting, Targeting, Positioning) method of market-
ing. Drucker (1990) points out marketing is about understanding why customers
CHOOSE the products or services with a company rather than with a competitor.
Providing for this customer choice is, of course, the key point of marketing.
1-560 Many companies have found to their cost that trying to sell products the market
does not want is the road to ruin; the British motorcycle industry is held up as
the classic example of this fact. They thought that they knew what the public

wanted but they did not actually ask them and the product was not changed to
suit. Therefore when the Japanese came along and provided what the customer
wanted, such as electric start and engines free from oil leaks, so then they stole
the custom from the British manufacturers.
1-561 Hannagan (1992) suggests that, before reaching the point of making a decision
about its market direction, an organisation would need to consider the
product/service, price, place in the market and the promotion of its products
(the four Ps):
● Product/service
● Price
● Place
● Promotion
1-562 It will also have to study its markets, customers, and competitors as well as the
overall economic, political, cultural and technical environment. These factors exter-
nal to the organisation are sometimes referred to as the STEP factors, they are:
● Social factors
● Technical factors
● Economic factors
● Political factors
1-563 Equally as important as knowing the STEP environment is carrying out a SWOT
analysis. SWOT, as previously mentioned, is the acronym for:
● Strengths
● Weaknesses
● Opportunities
● Threats
1-564 The SWOT analysis helps the organisation to remain focused on its objectives by,
as Hannagan (1992) states, building on its strengths, redressing or allowing for its
weaknesses, taking full advantage of the opportunities and meeting the threats.
1-565 An organisation must at all cost protect its core business by looking after the
needs of its existing customers. It must also avoid the temptation to expand too
quickly, thereby overextending itself, and it must strive to become very good at
the area or areas that it chooses to service.
SELF-ASSESSMENT QUESTION
One aspect of marketing is knowing who your customers are and

assessing their needs.
● Identify two groups or areas of the market in which your

company sells its products.
● Write down your company’s best three customers.

12. QUALITY AND QUALITY SYSTEMS
LEARNING OUTCOMES
● identify the difference between at least two different quality

systems;
● state the assessment philosophy for at least two different

quality standards; and
● know the difference between the quality standards and the

total quality management approach.
1-566 The dictionary offers two definitions for the word quality:
● One definition is value and judgmental free.

● The other, however, is value related.
1-567 The definitions are explained by the following:
● The first definition refers to the description of an object’s qualities (e.g.

a quality of an apple tree is that it bears fruit).
● The second definition refers to the value that an item might have (e.g. there
is a view that some makes of furniture are of better quality than others).
1-568 The first definition would involve a statement of the physical dimensions of an
object while the second introduces notions of grades of appreciation or worth.
1-569 The manufacturing industries use another definition of quality that relates to fit-
ness of purpose. This is arrived at through a product conforming to a prescribed
specification.
1-570 The specification could also be drawn up by the producer or supplier of a service
and systems are devised to ensure that the product consistently meets that
specification.
1-571 The problem here is the perception of the product. This could differ from
producer to customer and as all good businesses know the “customer is king”
because without customers there is no business (Sallis & Hingley 1991).
1-572 Sallis & Hingley describe these as:
● “quality in fact”; and

● “quality in perception”.

Quality and Quality Systems Module 1
1-573 The “quality in fact” definition refers to industry’s requirement of a product

conforming to its specification.
1-574 The BS 5750 standard used to centre on this notion. The “quality in perception”
definition on the other hand centres on the customer’s perception of a “quality”
product.
1-575 Some quality assurance systems have been developed from these different
descriptions of the word quality, which are outlined over the next pages.
1-576 There are a number of systems in existence that claim to put quality into an
organisation, systems such as:
● Investors In People (IIP);

● BS 5750;
● European Quality Management Format (EQMF); and
● Total Quality Management (TQM).
1-577 These systems are regarded as the next step on from crude performance
indicators (P&Is) and thus have become known as quality assurance systems.
12.1 QUALITY CONTROL (QC)
1-578 This is a traditional method of quality checking, designed by industry, to ensure

that a product conforms to a pre-determined specification. The use of such a
system would involve the checking of a sample of the product, either at the end,
or at pre-determined stages during the production of that product. If the product
was not up to specification, i.e. it was not “fit for purpose” then that item would
be rejected, or modified to meet the specification, and another item checked. It
is unusual for a simple system to check all products and thus it is possible for
sub-standard products to slip through the control process.
12.2 QUALITY ASSURANCE (QA)
1-579 This refers to the mechanisms that are in place for monitoring the quality control
system. An assurance would be given by the company, or institution, that it was
indeed checking itself, or having its quality system audited by an outside body.
12.3 INVESTORS IN PEOPLE (IIP)
1-580 The Investors In People standard is a national quality assurance system, which
aims to improve an organisation’s quality through the development of its staff.
1-581 The system was designed by the Department for Employment in the UK after
research revealed that employees needed clear goals and direction in order to
work at peak efficiency. With this at its centre IIP has essentially four principles:
● Commitment
An IIP makes a public commitment from the top to develop all employees
to achieve its business objectives.

Module 1 Quality and Quality Systems
● Planning
An IIP regularly reviews the training and development needs of all
employees.
● Action
An IIP takes action to train and develop individuals on recruitment and
throughout their employment.
● Evaluation
An IIP evaluates the investment in training and development to assess
achievement and improve future effectiveness.
1-582 The first indicator, for example, is the cornerstone of the standard. The indicator
is stated as follows:
● There is a public commitment from the most senior level within the
organisation to develop people.
1-583 The assessment criteria are as follows:
● Written evidence of commitment, e.g. in training policy statement,

company handbook etc.
● Oral questioning of senior manager and management about the method of
delivery for the written commitment.
● Interview with employees to check that the commitment is working and if
the employees understand and believe it.
1-584 The company should then follow a clear path under the broad headings of:
● Relate – training and development to business objectives.

● Find – out the skills of the current work force.
● Team – leaders’ responsibilities.
● Evaluate – training (both past and future).
● Checking – the action plan against the indicators making sure that nothing
has been left out, i.e. all the indicators are required to be assessed before
the award is issued.
1-585 In summation, the fourth booklet states that to become an Investor In People the
organisation must:
● Develop clear objectives and explain them to every employee. The

employees will then understand what the organisation is trying to achieve
and what is expected of them.
● Plan the staff development to give the employees the knowledge and skills
to achieve the organisation’s objectives.
● Continually monitor, evaluate and update staff development making sure
that future training is in line with changing business objectives.
1-586 From this summary come the four key tasks at the centre of the IIP philosophy:
● Planning for the skill needs of the business; communicating the business
objectives.
● Developing the role of the line manager.
● Developing all employees to meet the business objectives.
● Managing the training process.

12.4 BS 5750 / ISO 9000 / EN 29000
1-587 BS 5750 is an old general-purpose standard assurance system developed

initially for the manufacturing industry. It consists of a set of written procedures
to which management must ensure the working practices conform.
1-588 There is a system of external registration and subsequent audit by a third party
for which a registering college/company would pay a fee. Examples of bodies
approved to audit colleges or companies for BS 5750/ISO 9000 are BSI Quality
Assurance, Lloyd’s Register Quality Assurance, BVQI and Yardsley Quality
Assurance (Sallis & Hingley 1991).
1-589 All the time a company keeps its practices up to the required standard, and has
this confirmed by the external auditors, then that company may use the quality
systems logo for marketing and publicity purposes. If the company, however, fails
to meet the required standard at an interim audit then it would lose its award.
1-590 The main aim of these standards is to prove to the outside world that a product
produced by a given company is consistently up to the standard and specifica-
tion that the company has publicly stated that it would be before that item had
been produced.
Example
1-591 A company, with or without potential customers, devises methods and procedures
to produce certain goods. If the company then decide to register for BS 5750 they
have to track, describe and document each step in the process. These steps would
form the procedural manual for the goods produced by that company. The proce-
dures set in the manual would then have to be applied rigorously to ensure that all
subsequent goods are identical and produced to the specification published.
1-592 The procedural manual is specific to the goods defined and only relates to the
company stated. The quality definition that this system refers to is the
manufacturing definition of goods being “fit for service”. They are, as the com-
pany states they should be, charged for the given price. If the company then
wishes to improve the quality of the goods and charge a different price then the
specification would have to be rewritten.
1-593 This means that the goods produced may not be of high quality but they will
consistently have the qualities publicly stated by the company.
1-594 It follows then that BS 5750/ISO 9000 does not ensure that a given product is
produced to a given standard, or that the product is produced to the same stan-
dard from company to company. It is a quality system, not a guarantee that the
product is a quality product. There are drawbacks to taking the BS 5750 and ISO
9000 approach to quality due to four main reasons:
● The considerable costs involved in implementation.

● The control of the specification being with the producer/service provider,
which may not reflect the level of quality required by other customers.
● That the quality standards for manufacturing may not be applicable to the
service industry.
● The whole standard is not adequate for continuous quality improvement.

Module 1 Quality and Quality Systems
12.5 TOTAL QUALITY MANAGEMENT (TQM)
1-595 The TQM approach, developed from the Japanese and some American styles of
management, has at its heart the notion of quality as an all-embracing holistic
concept with a strong customer focus (Sallis & Hingley 1991). It has been
described by one chief executive as a journey without a destination (Sallis 1990).
1-596 The outside recognition of this is the ISM system:
● Leadership and commitment to quality must come from the top.

● The commitment to quality must be organisation-wide.
● A total quality culture needs to be created.
● The definition of quality is meeting customer requirements.
● The standard is “right first time”.
● Prevention not detection assures quality.
● The organisation’s focus is the customer.
● Customers are both internal and external.
● Quality systems must be the vehicles for the empowerment of staff, not for
controlling them.
● All employees need considerable training in quality issues.
● All staff are responsible for quality within their operational sphere.
● Teamwork is an essential ingredient of the process of assuring quality.
● Quality improvements should be rewarded (incentives, bonuses etc).
● Quality improvements must be measurable and measured.
● Customer needs and wants must be solicited.
1-597 The requirements detailed suggest that the TQM approach is essentially a
management philosophy, the aim being to produce a continuous improvement
culture within the establishment or company as a whole. It is based on the com-
mitment to customers and its success depends upon three essential features
according to Sallis & Hingley, which are:
● Senior management support for other members of staff, and ensuring that
monitoring systems work effectively and that staff are trained in the use of
these systems.
● Teamwork which, in some cases, will transgress traditional lines of
demarcation, and in others will require the support of senior management
to ensure that time is given for these teams to meet.
● The customer–supplier link, which essentially applies to all members of
staff as well as the institution as a whole.
1-598 The customer–supplier link is far reaching in that each member of staff would
see themselves as having customers to which they themselves supply a service.
Any one person’s customers could be inside the institution or outside. An
example of the customer–supplier link as applied to each staff member is given
by Sallis & Hingley.
1-599 A manager may expect error free typing in a reasonable time scale and the
secretary can expect to read the handwriting of the document he or she is
expected to type. Both the manager and the secretary have customers to which
they supply a service. If the service is poor from either quarter then there is a
need for a mechanism to solve the problem.

1-600 When the TQM system is fully implemented all potential problems should have
been thought through and met before they occur so the service is “right first
time”, this is more efficient than putting the time and energy into checking and
correcting mistakes. Monitoring, therefore, has to be an ongoing process.
Investors In People is regarded as a quality standard based

around the development of a company’s staff.
● Identify four staff development activities that you think

would be accepted by senior management as being a
benefit to your company’s business.
● Give well reasoned arguments to support your answers.

13. QUALITY CIRCLES AND QUALITY GURUS
LEARNING OUTCOMES
● state the composition of a quality improvement team; and
● name at least four of the important quality gurus.
1-601 The origins of the systematic study of a business with a view to improving the
product came from Japan at the end of the 1940s. Total Quality Management is
concerned with controlling the activities of the company to ensure that the end
product is correct for the customer’s needs. The nature and role of quality circles
will, of course, vary between companies. In Japan a quality circle is typically a
voluntary group of some five to ten workers from the same working group. The
group meets regularly and has an agreed chairperson, who could be the fore-
man or assistant foreman. If the group decided, the work leader or one of the
workers could also be the chair.
1-602 The aims of the quality circle activities are to:
● contribute to the improvement and development of the enterprise;

● respect human relations and build a happy workshop offering job
satisfaction; and
● deploy human capabilities fully and draw out infinite potential.
1-603 Members of the circle are committed to self-development, and the circles imple-
ment solutions themselves. Otherwise they put strong pressure on management
to introduce solutions to their considered quality problems. Since management
are already committed to the circles, it is ready to listen or act but the circle
members receive little or no direct financial reward for their improvements.
1-604 Thus, the adoption of quality circles (quality improvement team) has a social
focus as well as a direct practical one. There must be commitment from senior
management, unit management and supervision, other staff and, of course, the
circle members. A team of six to nine people need to participate freely together,
to challenge assumptions and existing methods, examine data and explore
possibilities. They need to be able to call in expertise and ask for training. The
quality circle needs a budget so that members can be responsible for tests and
possible pilots. They need a skilled team leader who works as a facilitator of
team efforts not a dominator.

Quality Circles and Quality Gurus Module 1
1-605 The circle needs to have a very good approach to:
● analysing the context of the problem and its situation;

● defining just exactly what the problem is and the relationship between its
component parts;
● how it identifies and verifies that the causes are indeed the causes. These
must be understood, otherwise solutions as developed may fail to address
the real problem;
● problem definition requires quantitative measurement and often a consen-
sus of qualitative judgement. The impact of the “problem” – if it continues
– must be comprehended. Where is it affecting other parts of the “problem
system”?
● we need to understand the quality objectives to be achieved and evaluate
the resources that can be brought to bear on the problem and possible
solutions. Objectives relate to both what must be done and what we would
like to do – if only everything else will fit into place;
● the classical “functional, problem analysis” cycle/solution generation
involves conceiving what might be done.
1-606 Quality circles are not the “holy grail” of quality matters but what is important is
that the staff are involved in the process and are probably in the best position to
make judgements because they are doing the job. If the senior management
gives them the power and tools then the business as a whole will benefit.
1-607 The issue of quality has grown up since the 1940s when the Americans saw
directly how the Japanese were working and ideas started to flow between
different cultures. The excepted gurus of quality are:
● The early Americans:

W E Deming;
Joseph Juran; and
Armand Feigenbaum.
● The Japanese:
Dr Kaoru Ishikawa;
Dr Genichi Taguchi; and
Shigeo Shingo.
● The New Americans:
Philip Crosby;
Tom Peters; and
Claus Moller.
1-608 Further information about their work can be found at:

● www.dti.gov.uk/mbp/m9ja00001/m9ja000011.htm
1-609 So what are the implications for the ship’s superintendent? The lesson that has
been hard for traditional companies is that to continue to keep customers happy
and the business profitable, an organisation cannot stand back and do nothing.
1-610 You must continually seek feedback from your customers. Match their comments
to the actions and services of your company and be prepared to change in the
light of the requirements of your customers.

Module 1 Quality Circles and Quality Gurus
1-611 It may be necessary to empower employees at different levels within the organ-
isation to take responsibility for their area of the business. Then the idea of the
“internal customer” could be introduced.
1-612 Where an organisation operates a system based around internal customers it

means that individual departments or sections of the business concentrate on
the needs of the other departments that rely on them for a service.
1-613 By paying attention to the needs of others, any reduction in time wasted through
duplication of effort or savings due to a reduction in the use of resources will
mean that the organisation as a whole will become more efficient and therefore
more profitable.
1-614 The superintendent should continually look at his/her area of responsibility and
ask how the service or activities that are currently undertaken can be improved.
This could be a small idea such as a change in procedures or it might be the
introduction of new technology that affects a substantial part of the business.
1-615 Whatever the action, the superintendent has a duty to improve the product or
service under his/her responsibility. One of the most important sources of infor-
mation will be the staff. It is important that they have the opportunity to be
included in the decision-making process and are part of the continued quality
improvement of the company or department.
● Do you think that the ship management team on-board

could be regarded as a quality improvement team?

BIBLIOGRAPHY
● G A Cole: Strategic Management (DP Publications, London, 1994)

● P F Drucker: Managing the Non-profit Organisation (Butterworths, Oxford,
1990)
● T J Hannagan: Marketing for the Non-profit Sector (Macmillan Press,
Basingstoke, 1992)
● T Peters: Thriving on Chaos (Pan, London, 1989)
● Ian Smith: Meeting Customer Needs (Butterworths, Oxford, 1994)
Supplementary reading is necessary to gain the depth of learning required in

this module. The following list of publications has been referred to in the prepa-
ration of this module and is recommended for supporting your study. However,
the list is not exhaustive.
● Guidelines on the application of the ISM (code), International Shipping

Federation.
● STCW ’95 Company Checklist, International Shipping Federation.
● Robert L Tallack, Commercial Management for Shipmasters, The Nautical
Institute (ISBN 1 870077 33 4).
● UCP 500 Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce, January 1994.
● Analysis of Major Claims, UK P&I Club.
● Achieving Quality Standards, The Institute of Management / Pitman (ISBN
0 293 60411 2).
● A M Chauvel, Managing Safety and Quality in Shipping, The Nautical
Institute (ISBN 1 870077 40 7).
● Managing Risk in Shipping: A Practical Guide, The Nautical Institute (ISBN
1 870077 48 2).
● Procedures for Port State Control 1997, IMO (ISBN 92 801 1431 X).
● Port State Control at Work 1996, Secretariat of the Paris MOU.
● Annual Report and Hull Casualty Statistics, Institute of London
Underwriters.
● Ph Boisson, Safety at Sea – Policies, Regulations and International Law,
Editions Bureau Veritas (ISBN 2 86413 020 3, English version).
PERIODICALS
● IMO News, IMO, London (free on request to any body with a marine
connection).
● Ballast Water News, IMO, London (Global Ballast Water Management
Programme, free as above).
● ALERT! The International Maritime Human Element Bulletin, Nautical
Institute London.
● Safety Digest, Marine Accident Investigation Branch (MAIB), UK
Department of Transport (free on request at maib@dft.gov.uk).
● CHIRP Feedback (Confidential Hazardous Incident Reporting Programme),
www.chirp.co.uk

Module 1 Bibliography
USEFUL WEBSITES
International Maritime Organisation: www.imo.org
Maritime and Coastguard Agency: www.mca.org
International Association of Classification Societies: www.iacs.org.uk
The Nautical Institute: www.nautinst.org
Port State Control: www.parismou.org
International Underwriters Association: www.iua.org
Grain and Feed Trade Association: www.gafta.com
International Shipping Federation International Chamber of Shipping:

www.marisec.org
International Association of Dry Cargo Shipowners: www.intercargo.org
International Cargo Handling Co-ordinating Association: www.ichca.org.uk
International Transport Federation: www.itf.org.uk
Federation of Oils, Seeds and Fats Associations: www.fosfa.org
International Ship Managers Association: www.isma-london.org
International Federation of Ship Masters’ Associations: www.ifsma.org

TUTOR MARKED ASSIGNMENT
One of your company’s dry cargo vessels, fully loaded with a mixed cargo of
packaged goods, steel coils and large machinery components (approximately
10,000 tonnes of cargo), has grounded on leaving port. It appears that bottom
deformation aft has probably resulted in major main engine crankshaft damage.
The vessel was towed back to safe port anchorage, where she now is. As sole
company marine superintendent you have just been informed of this. You are at
home, about 5,000 miles away, and just about to go on annual leave.
In not more than 1,000 words state, with reasons:
1. What immediate plans you would make.

2. What instructions you would give, and to whom.
3. Whom you would inform, or consult with, (a) in your own company, (b)
externally.
4. What communications (topics) you would have with the vessel.
5. What resources you would expect to be calling upon.
6. What contingency plans you would make.
7. What situations you would expect to evolve before (a) the cargo is
delivered, (b) your vessel was back in service.
MARKING GUIDE POINTERS
1. Personal priorities.
2. Clear technical information from vessel.
3. Divers survey.
4. Engine makers representatives, local repairers.
5. Local facilities and competence.
6. Local or distant repair facilities.
7. Dock availability.
8. Class, P&I, salvage association, port agents.
9. Company chartering department,
10. Cargo transfer or eventual delivery after repair or under tow.
11. Towing contractors.
12. Personal travel and possible visa delays.
For candidates taking the Diploma option, a Tutor Marked Assignment must
be completed for each core module. There is a minimum pass mark for each

Module 1 Tutor Marked Assignment
assignment and candidates will be expected to reach this minimum standard.

Collectively, the assignments represent a possible 40% of the candidate’s
final mark.
On the cover page of your assignment, could you please include

the following information:
● Your Name
● Course Name – Ship Superintendency
● Course Code – LM1928
● Order Number (the six digit number quoted on your

enrolment confirmation letter)
To speed the processing of assignments, please return your typed assignment

by post, fax or email directly to the TMA Administrator:
Post: Mrs Parmjit Gill

TMA Administrator
National Sea Training Centre
Dering Way
Gravesend
Kent
DA12 2JJ
United Kingdom
Tel: +44 (0)1322 629684
Fax: +44 (0)1322 629684
Email: mol@nwkcollege.ac.uk
Emailed assignments are the preferred method of receipt. Please ensure that in
the subject of your email you include the following information:
● Your Name
● Your course name
● The module name
Emailed assignments will only be accepted if they are sent as attachments to

the email message. Remember to keep a copy of your completed assignment in
case of loss. Please also state if you would like confirmation of receipt of your
assignment. If so, you must include your email address, as confirmation by post
or fax is not possible.
There are no penalty points for late submission of assignments. You should
attempt to complete each assignment within four weeks of receipt of the mod-
ule. However, you can submit assignments at any time during the course, but
they must be received before the exam.

APPENDIX – TABLES

Module 1 Appendix – Tables

Appendix – Tables Module 1

Tanker Average Spot Earnings
70 $ ,0 0 0 /d
60
50
40
30
20
10
0
Ja n-9 0
Jan-9 1
Ja n-9 2
Jan -9 3
Ja n-9 4
Jan -9 5
Ja n-9 6
Ja n-9 8
Ja n-0 0
Ja n-0 2
Jan-97
Jan-99
Jan-01
Source: Clarkson Resea rch Studies
Crude Tankers
Product Tankers

Bulker Average Spot Earnings

15 $,000/d
14
13
12
11
10
4
Jan-90
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Source: Clarkson Research Studies



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DIPLOMA IN

1. A STUDY GUIDE FOR THIS DIPLOMA 5

PART ONE Introduction to the Superintendent’s Role

2. THE SHIPPING COMPANY 36

2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36

Diploma in Ship Superintendency 2007 / 2008 (LM1928) 1-1

PART TWO The Responsibilities of Management

3. TRADITIONAL ORGANISATION AND MANAGEMENT STRUCTURES 57

3.1 Chief Executive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57

4. MODERN SHIPPING COMPANY STRUCTURES 66

4.1 Reasons for Changing Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66

5. EXPECTATIONS OF THE SHIP’S SUPERINTENDENT FROM THE

5.1 The Freight Forwarder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

6. PORT STATE CONTROL (PSC), FLAG STATE CONTROL 77

6.1 The Role of Port State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78

1-2 Diploma in Ship Superintendency 2007 / 2008 (LM1928)

6.3 Flag State Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82

7. CLASSIFICATION SOCIETIES, IACS, IMO, INTER-GOVERNMENTAL

7.1 International Association of Classification Societies . . . . . . . . . . . . . . . . . .84

8. P&I CLUBS, INSURERS, SALVAGE ASSOCIATION 91

8.1 P&I Clubs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91

9.1 Why Use a Broker? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93

10. THE SERVICE PROVIDERS 96

10.1 Manning Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96

PART THREE Communications and Customer Focus

11. THE CONCEPT OF STRATEGIC MANAGEMENT AND MARKETING 101

11.1 Strategic Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101

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12. QUALITY AND QUALITY SYSTEMS 107

12.1 Quality Control (QC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108

13. QUALITY CIRCLES AND QUALITY GURUS 113

TUTOR MARKED ASSIGNMENT 118

APPENDIX – TABLES 120

● Self-Assessment Questions have been provided

● For candidates taking the Diploma option, your Tutor

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1-4 Diploma in Ship Superintendency 2007 / 2008 (LM1928)

After reading this chapter, you will:

● have an understanding of open learning;

● know how to plan your study routine;

● know what is expected of you; and

● know what help and assistance you can receive.

1-005 So what exactly are we going to cover?

● Learning and How to Use the Material

We will begin by explaining some of our basic beliefs concerning distance

● The Organisation of the Course

We will work through your probable causes for concern in beginning a

Diploma in Ship Superintendency 2007 / 2008 (LM1928) 1-5

1.2 LEARNING AND HOW TO USE THE MATERIAL

1-006 On completion of this section, you will be able to explain:

● the characteristics of distance learning;

● the distinguishing features of adult learning; and

● how the course is delivered.

– You don’t have to be at a particular place to learn.

– You can study when you like.

– You can decide what you want to concentrate on most of the

– Most of the time you will be working alone.

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1.3 ASSUMPTIONS ABOUT ADULT LEARNING

1-009 These are as follows:

● We only want to learn what we see as being important to us and we want

● We prefer to learn from real life problems.