Should Ship Owners outsource their crewing requirements?
The crew is the heart of every vessel and it is important that owners are ensured that their vessels are manned with reliable, qualified and experienced crew. The crew is one of the most important elements of a ship and its cost is among the highest costs centers in the running of a vessel.
So the big question is: Should the crew be managed in-house or should it be outsourced?
I am sure that this question has been asked by many ship owners when being faced with the decision on how to man their vessels. Naturally one might argue that doing the job internally will enable better cost control and possibly end up with lower expenses then when the job is contracted to a third party, where in the latter case the owner has no control on the spending element.
I dedicate this article to outline the number of benefits which owners gain from outsourcing the crew through the appointment of a crew manager.
Saving on extra costs
When the crew is supplied in-house, the company incurs additional staffing costs and will also need to make sure that there is the right infrastructure in place together with going into the expense of investing in the necessary crewing software. Should a crew manager be involved, the owner will save on these costs.
Outsourcing crewing requirements ensures a hassle free operation for the owner/manager because all the logistics in crew management and personnel issues are handled by specialists from outside the firm who will relieve owners from the burden created through changes in planning of crew, caused through changes in the schedules of vessels, conflicts of crew on board, sickness and injury cases, planning and promotions on board, premedical and certification verification and visa arrangements. The crewing of a vessel is a delicate area and crew managers have to ensure that the person handling the crew acts cautiously and sensitively since factors such as nationality, culture and beliefs play a very important part in decision making.
When an owner outsources to a crew manager, he is normally presented with a fixed cost crew hiring contract. Therefore the owner knows upfront what his crew is going to cost as the price is fixed for the duration of the contract. This will be a valuable tool during vessel budgeting and bank negotiations. Owners also benefit as they will not be exposed to currency risk since crew hiring contracts are very often denominated in the same currency of the income of the owner.
Bigger pool of seafarers
Recruiting by means of crew managers automatically extends the size of the pool of seafarers. Furthermore, by means of the selection process which the crew manager uses,together with the added advantage of having more crew with previous employment contracts on record, owners are ensured that the person selected to work on board are those with good past performance records. Therefore the risk of employing the wrong person on board is much lower and ultimately this is also a cost saving factor.
Crew managers also benefit through offering crew contracts within a short time limit due to the availability on board made possible by the big number of the fleet being managed. Thus this results in a higher retention rate of good crew since crew will not be forced to find alternative vessels when an employment is not readily available.
Since the crew are being exposed to different types of vessels and thus gain a wider experience due to serving on different ships, the crew manager in turn has the possibility to shift seafarers from one type of vessel to another.
Lower costs due to economies of scale
The economies of scale which a crew manager achieves through its operations can be passed on to the owner by way of lower pricing. Airfares cost less due to better negotiation of rates with travel agencies due to the numerous bookings made with the agency. Port agencies, by means of frequent ports of call, may offer crew managers better agency packages through reduction in handling and local service provider fees, which in turn are passed on to the owner by means of more favourable crew hiring cost agreements.
During my twenty years in the Crew Management business I have seen numerous ship owners benefit from tailor-made solutions made available to them by appointing Crew Managers. Ship owners are constantly faced with numerous challenges because of regular updates and changes in regulations. Owners and managers are very often faced and need to handle different situations relating to their vessels. Therefore the appointment of a Crew Manager relieves ship owners from the workload connected to the manning of their vessels, crew administration and legal procedures and gives them the time to focus on other areas which are important to their business.
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