Present fee structure in 3rd party management

1
have what want
you

• Present fee structure in 3rd party management
• Win-win or lose-lose?
• Geir Sekkesæter,
• President Barber Ship Management

2
I have lately been asking myself some questions

• Why are discussions too often centred on the
  management fee?
• Why is it so difficult to visualize the full
  value of 3rd party management services?
• Why are some customers not willing to pay for
  quality services?
• Why do we allow bad practices to ruin our
  reputations?

3
Ship management is a conservative industry

• Ship management is the same today as it was 20 -
  30 years ago
• Widely viewed by owners as a convenience
• Traditionally the fee covers cost plus a
  survival profit
• The fee is a lump sum within which the ship
  manager must deliver all services

4
Traditionally the management fee covers all
services

• Technical management, including repair and
  maintenance, stores and supply, regulatory
  compliance, insurance handling/compliance
• Crew management
• Technical consultancy
• Optionally Commercial Management or Ship
  Operation / Post Fixture, including Speed
  performance analysis, Demurrage and Dispatch
  calculations or Lay time calculations, Claims
  handling, Freight Statements, Agent and Bunker
  nominations Etc.

5
A fixed fee per vessel based on an industry
standard

• Common price model for all players, average price
  around 100.000 USD (incl crew management)
• Only small differences in fee between vessel
  types, age and size
• The standard contract is developed by BIMCO
  (owners association) is an all-inclusive
  service contract
• Crew services are normally included in the
  standard contract

6
This system has pros and cons

• Cons
• Promotes a good enough culture
• Minimal innovation
• Sub-optimization
• Focus on own cost
• Short term

• Pros
• Fixed price
• No surprises
• Easier budgeting
• Predictability

7
In future, the services will be delivered by
specialists
Present
Future

• Dependency upon single individuals
• Limited synergies in a global network
• Static/fixed fee structure
• Fee according to geographic location of the
  management company
• Industry lacks necessary transparency and openness

• Greater specialization
• A fee system that promotes improvement and value
  adding
• Clearly defined offer with individually priced
  services
• Global network efficiency
• Measurable performance criteria (InterManagers
  KPI initiative)
• Full transparency

8
have what want
you

Our operational experience allows us to offer
shipowners a broad range of services tailored to
their specific needs - Geir Sekkesæter,
President, Barber Ship Management

9
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