TITLE:
Strategies in “Shipping Business Management”
AUTHORS:
Alexandros M. Goulielmos
KEYWORDS:
Shipping Business Strategies, Tactics, Since 2010, History of Shipping Management, 3rd-Party Ship Management, Spot or Time Charter, “Paragon Co” as a Case Study
JOURNAL NAME:
Modern Economy,
Vol.8 No.10,
October
30,
2017
ABSTRACT: The paper deals with the tactics and strategies applied by global shipping companies. During current depression in the dry
cargo sector, shipowners adopted two tactics: 1) to “survive” and 2) “look after
opportunities”. Shipowners are mostly reactive-managers and apply Porter’s
strategy of “cost leadership” mainly through
economies of scale, cutting-down fleet’s average age as well total cost. This
has been applied in the 1986 depression and in 2016 one. A short history of “shipping business management” showed a heavy reliance of managers on larger ships (par excellence up to 1973; and till today in a lesser
degree). This needed 3 actions: 1) planning, 2) improved decision-making and 3) knowledge of… finance. Originally (1945s) there were no “shipping business management” theory and/or “shipping business strategy”. Planning, however, was the first urgent requirement, being, however,
small part of any strategy... After all, even
strategy—as we know it today—is a myth, as it does not guarantee efficiency, unless
a “business model” is also designed and implemented… The poverty of research and papers about shipping strategic issues, given
also that nowadays all management
functions are strategic, is worth
noting. It is lately (2013) that “maritime” economists showed an interest in strategies.
This, we believe, is due to the fact that many maritime companies are now
“listed” and “data” are now freely available. Responsible also we may hold the
traditional idea that managers are born, not made; there were no doubt and
political reasons as the Members of the Parliament are thought as the
privileged persons to take decisions
for the rest people they represent by voting various laws. This had as a result
for management courses to be introduced with a great delay, while the books of
Fayol and Taylor showed a different reality since 1911. Moreover, the need of
shipowners for someone-like them to take over their management functions—part or all— and for him/her to find crews, and especially officers—in proper numbers
and quality, and training—and look also after the technical side of their
ships, came true. The “third party ship
managers”, since 1957, (a questionnaire has been used, the results of which are
presented here), and par excellence after the establishment of the parallel
registries in Europe since 1986-1987, they emerged as world
“shipowners-managers” there to be hired for a fee. To hire a shipping firm as
an off-house manager introduced also a new strategy for first-owners. The need
of shipowners to find funds for the larger and more expensive ships mentioned
above, led them to “stock exchanges”. And this led into the creation of two separate classes of shipping
companies: 1) those that remain outside stock exchanges, which we called them “traditional” and 2) the “modern”—those inside. Certain economists argued that there is an antagonism between the two classes and
that the strategies of the second are unquestionably superior and more
profitable than first’s… Is this true or a
myth? We cleared this up. There is a further fundamental strategy/challenge for
shipping managers: “spot or time charter?” This issue has been worked-out here
from a number of inter