MARKETING PROFESSIONAL

SHIP MANAGEMENT
SERVICES
 HISTORY OF SHIP MANAGEMENT

• Ship management includes primarily three activities :- trading goods, owning

ships and managing the ships.
• Sea transport is used for moving a large variety of cargo, from packaged goods
and cars to bulk commodities such as grains, cement, mineral ore, oil and natural
gas.
• The advent of professional ship management services is of began in the late
1960s.
• As the ship management industry is becoming increasingly professionalized and
globalized, the traditional ship management centers such as Greece and the UK in
the 1960s began to lose their leadership to new centers such as Hong Kong,
Singapore and other Asian countries.
 SHIPPING INDUSTRY

• The commercial aspect of international shipping has been relatively free from
national regulations, but according to operational aspects, flag state and port state
regulations apply to the maintenance of ships plying in international waters.
• Lately, there has been a growing trend towards sailing under “Flags of
Convenience” (FOC).
• “Flag of convenience” is a country that allows registration of ships under its flag
without imposing any restriction on the nationality of the ship's owner, or the
financial aspects of the business.
• Sailing under a flag of convenience offers the ship owner the opportunity to reduce
the ship’s operating costs through lower taxes and employment of cheaper crews
from other countries.
 SHIP MANAGEMENT INDUSTRY

• Ship management involves both commercial and technical management.

• Commercial management involves the revenue-generating aspects of the
ship such as chartering, was either handled directly by the ship owner, or
through third party commercial managers.
• Technical management of ships comprises of two components –
operations and manning.
• The focus of this case is on marketing professional ship management
services that include the operational as well as the crewing aspects of ship
management.
• Most large and well-known ship management companies owed their origin to their parent
company that at one time or another owned and managed a fleet of ships.
• To leverage their ship management expertise, these companies started offering their services
to ship owners outside the firm.
• Thus, a number of pure ship management companies came up that were solely in the business
of ship management and did not own any ships.
• There was a growing trend towards outsourcing ship management to professional managers.
• This allowed ship owners to freely engage in the commercial activities of the business,
without worrying about the day-to-day operational aspects of managing the ship.
• The growth in professional ship management services was also due to the increasing number
of ship owners having small fleets of between 5-10 ships and lacking the scale and/or the
expertise in ship management.
 CUSTOMERS

• Ship owners could be broadly classified into five categories:

 Traditional ship owners whose core business was shipping,
 Owners of other core business who run a ‘shipping division’ as a
subsidiary,
 Investors who had acquired ownership by intent or default,
 Government or national shipping,
 Asset-players.
 SHIP MANAGEMENT COMPANY

• An important factor in the choice of a ship management company was the degree of
fit between the owners’ and manager’s values, beliefs and corporate culture.
• Just as the technical ability of the ship manager is of primary concern to the ship
owner, the financial capability and viability of the ship owner is an important
consideration for the ship manager before it accepted ships for management.
• Ship managers offered a range of shipping related services such as maintenance,
manning, IT, insurance, door to door transportation and logistics, and by providing
these services on a global basis, a diversified ship manager could enhance the
quality and variety of offerings to the ship owner.
 MARKETING MANAGEMENT

• It is vital for professional ship managers to develop a customer centric marketing

orientation in order to enhance customer loyalty, retain existing customers and
make new customers.
• The tasks of marketing includes market research; segmentation, targeting and
positioning; and the 4Ps of product, price, place and promotion.
• For professional service firms, the role of people and processes was becoming
critical for gaining and sustaining competitive advantage.
• The extended marketing mix comprised the 8Ps of probe, positioning (including
segmentation and targeting), product, price, place, promotion, people and
processes.
 PROBE

• Probe involves marketing research for effective decision-making.

• To improve managerial decisions, it is important to collect and collate
information that is timely, correct and relevant.
• In the ship management industry, the key sources of information included
trade journals and formal and informal communications with industry experts
both within and outside the firm.
• Many ship managers also collected important customer and market-related
data through continuous surveys of existing and potential customers using
both formal mail questionnaires and informal personal meetings.
 SEGMENTATION, TARGETING
AND POSITIONING

• The ship management market can be segmented on a number of criteria such as

ship owner’s profile, nationality of the ship owner, the size of fleet per owner,
and the age, type, size and flag of the vessel.
• The segments can be evaluated on various criteria such as market size and
growth rate, degree of competition, and fit between the corporate values and
service expectations of the ship owner and the manager.
 PRODUCT/SERVICE

• The key features desired by the ship owners were high technical capability
combined with high quality of delivery at the lowest cost.
• Trustworthiness, responsiveness, reliability and problem solving ability were
some of the other attributes that potential clients seek in the ship managers.
• Low accident rates, good safety culture etc. were strengths through which a
ship manager could offer some advantage to the ship owner in the insurance
market, as well as favorable dealings with authorities.
 PRICE

There are broadly two types of contracts in ship management :-

the lump sum contract and the cost plus fixed fee contract.
• In a lump sum contract, the ship manager charged a fixed fee on an annual basis, to
cover both ship management and operations costs.
• Under the cost plus management fee contract, all expenses, including wages and
salaries, and ship insurance, repair and maintenance costs were billed directly to and
paid by the ship owner.
• The major items of expenditure for ship management included the payroll and crew
travel (about fifty per cent), ship repair, maintenance, registration and insurance
(about forty five per cent) and management fees (about five per cent).
 PLACE

• Ship management business is a global industry. Most ship managers were located in
or near the traditional maritime countries that were home to some of the world’s
largest ship owners.
• In recent times, however, with increasing flexibility in ship crewing, many ship
management companies have moved to the major crew supplying countries such as
India, China, Philippines and other Asian countries.
• To choose a location, a ship manager would also consider the local infrastructure in
terms of communications, global connectivity by air, ease of financial transactions
and of-course political stability.
 PROMOTION

• Most ship management companies advertised in domestic and international trade

journals related to shipping.
• A large part of advertising was also directed at the seafarers in order to build up
staff pools of diverse competencies.
• Word of mouth referrals from satisfied customers were another powerful
promotion tool.
• Being an industrial service, however, the conversion of a potential to a client
depended on personal selling, one-to-one marketing and relationship marketing.
 PEOPLE

• The two broad categories of personnel in a ship management firm were the on-
shore technical, marketing and administrative staff; and the offshore crew on
board the ship.
• On-shore staff included the manager, technical superintendents, and purchasing,
accounting and administrative support services personnel.
• The ship crew consisted of officers and ratings.
• In a typical ship, about 25 people were required to manage the three functions in
a ship, i.e., deck (navigation, cargo and admin), engine (machinery and
equipment) and saloon (catering and housekeeping).
 PROCESSES

• The final P refers to the organizational structure, systems, policies and practices
used by the ship managers for efficient and effective delivery of services to the
ship owners.
• Firms operating in this business varied considerably in size.
• It mandatory for all ship operators to comply with the International Safety
Management (ISM) code.
• The code focuses on management systems for safety and environment protection,
and puts the responsibility squarely on the operator.
 QUESTIONS FOR DISCUSSION

What should Mr. Shipman do? Is there an opportunity in ship management services?
Yes/No? Why?
• Yes, as he is having an experience of 20 years in shipping line he could gainfully
apply his knowledge in ship management services which will very much helpful to
Mr. Shipman in small ship management company.
Design a suitable marketing strategy to tap the opportunities identified by you.

The marketing strategy for shipping companies, is the science of Business to

Business Marketing (B2B marketing), which deals with the satisfaction of
charterer’s – shipper’s needs for the carriage of goods by sea, with main aim the
profit of the enterprise.
• All shipping enterprises have limited capabilities concerning the means, the resources
and the management abilities for their ships.
• The planning of marketing programs consists of the basic decisions concerning the
distribution of marketing resources, marketing expenses and marketing budget among
the various tools of marketing mix.
• Marketing of shipping companies is the provision of appropriate sea transport
services by the right people (personnel and crew), to right people (charterers -
shippers), at the proper place (ports) and time, at a fair price (freight or hire), with a
suitable promotion.
• Matching the needs of the shipping enterprise's capabilities with the needs and the
desires of its clients is fundamental for the provision of the desired transport services,
the satisfaction and retention of charterers and thus the commercial success of the
enterprise.