CORPORATE GOVERNANCE IN SHIPPING COMPANIES
Shipping companies in the context of this article can broadly be segregated into ship owning (asset based) and ship operating (non-asset) companies.
There need not always be a trigger for a call out to change the way things work. All regulations and processes in place today are reactive results to the accidents that have occurred prior to the change. Whilst the entry barrier for an asset-based company is the finance availability, the entry barrier for a non-asset-based company in shipping is just the funds needed to buy a computer! The structure of these shipping companies is generally given little thought.
The practicality of the cargo movement is that the perpetual ISM compliant ship managers are usually not the ones who place the commercial pressure on the ships. They are, in many cases, the victims (even if they are in-house) of a tight budget, difficult schedules, constant changes to the goal post and unreasonable expectations of all the stakeholders. In such a scenario and especially when there is an incident that affects the environment or safety of life at sea, the onus of the standards of management is always limited to the Managers. There is however no short term or long-term corrective action in ISM or ISPS against the commercial pressure or blame apportioned to the ship staff and managers by the Shipping companies that control the commercial and trading aspects of the Ships.
Corporate culture starts with a corporate structure. All Shipping companies should have a transparent decision matrix where you can see where and how the decisions are made. All the shipping companies should have a compulsory non-executive third party board member with voting rights. This helps with breaking the mould of a “boy’s club” attitude with working management. Since there are SPVs of a ship owning company and may be the ‘brand’ name of the Ship Operating company may be set in different tax favourable countries with local company law as the norm, the application of this corporate structure regulation needs to the standardized at an operational level.
Think about the change that can occur if we can vent the commercial pressure on the managers and the crew; by standardizing the Shipping Company responsibilities and ensuring professional approach from all stakeholders in a common maritime venture, called Shipping!
