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The responsibility of a charterer
Behind each newbuilding there is an owner and behind each owner there is a story. It may be the story of an entrepreneur, who once started his business with a small secondhand vessel, and now is able to take delivery of a newbuilding. When looking at the newbuildings delivered during this year, it becomes obvious that there is a lot of creative thinking and many good business ideas among the owners in Northern Europe, resulting in a number of excellent new vessels.

Different trades employ different ships. The cargo vessels needed for global shipments of raw materials and energy are not particularly complicated and may be built for different owners as standard ships in long series. But with more sophisticated types of cargo vessels the situation is somewhat different. Such ships are mostly individuals with tailor-made solutions, increasing the newbuilding costs.

For a small or medium sized, privately owned shipping company it is mostly impossible to order a high-tech, specialised cargo vessel on pure speculation. With vessels becoming more and more complex, the only possibility for many owners to stay in business is to form an alliance with a strong partner. This strong partner may be an industrial enterprise, thus ensuring sufficient transport capacity for its products, and the alliance is usually a long-term time charter for the new vessel. Such a contract also opens the doors to the creditors as it guarantees stable earnings for the vessel for a number of years.

In today’s situation, with well-filled order books at the ship yards and a high price of steel, it is probably more expensive than ever to build a vessel. Ship owners always take a risk when investing in new tonnage with exceptionally long delivery times – what will the market look like after a couple of years when the investment starts paying itself back and earning a profit? In such conditions it feels a lot safer to have the vessel employed on a long contract after delivery.

On the other hand, large charterers are tough business partners and the margins offered are often the smallest possible from the owner’s point of view. For the large shipping companies this may not be crucial, but for the small, family owned company with a narrow capital base, it is like living on the edge. To ensure sustainable development, the large and mighty industry hopefully also understands the specific problems of these true entrepreneurs, who usually in return offer an unseen amount of flexibility.

It is popular to talk about quality shipping, but keeping it alive is unfortunately not always compatible with buying the cheapest possible transport solutions. We need all kinds of shipping companies – both large and small– as long as they are devoted to quality shipping. The industry is a great provider of transports and as such it is has a certain responsibility, not least concerning safety and environmental issues. With mutual understanding and respect, the industry is able to provide the owners with both cargo and the right tools – modern and efficient newbuildings, improving the overall quality of the merchant fleet. When this equation works we have a win-win situation.

//Pär-Henrik Sjöström