The shipping industry, primarily its main sectors, is a globalized industry. A key characteristic of shipping companies operating in the global shipping market is that they source their factors of production on a global basis and, as a rule, offer their services across the entire planet.
These companies are not subject to geographical restrictions, both for the main factors of production (capital-labor) and for the supply of their services.
The diverse geographical origin of the organizations from which resources or services are sourced and which are likely to collaborate and communicate on a daily basis, for the management of a commercial vessel, can be described as follows:
1. Ship-owning company in Piraeus, listed on the New York Stock Exchange.
2. Management company in Piraeus with representative offices in London and Singapore.
3. Shipbuilding in Korea.
4. Sourcing financing for the shipbuilding from New York and Hamburg.
5. Naval architect responsible for the shipbuilding and classification of the vessel from Japan.
6. Registration of the vessel in Greece.
7. Insurance of the vessel for hull and machinery in London and P&I insurance in Oslo.
8. Crew from Greece, Ukraine, and the Philippines.
9. Crewing agent from Greece with offices in Manila.
10. Chartering broker from Piraeus and Geneva.
11. Charterer from China and sub-charterer from Brazil.
(The above constitutes a hypothetical example of a bulk carrier vessel.)
The list of services and the corresponding nationalities could be more extensive, if it were a detailed reference to all the necessary services for the management of the vessel.
A shipping company, consequently, competes directly with every shipping company that has the same characteristics as it, regardless of its location and place of operation. A Greek-owned shipping company managing ocean-going vessels directly competes with every company, Greek-owned or other, anywhere in the world, that manages vessels similar to its own, provided they operate on the same sea routes. This means that the specific company must, for determining its strategy and its management method, take into account all the factors that affect its operation at an international level.
The globalized character of the operating environment of shipping companies will become more apparent through the brief examination of the markets for the main productive factors, as well as the possibilities of cooperation between competing companies that are offered in the freight markets.
*The information for the above article was sourced from the book “Organization and Management of Shipping Companies”, by Prof. Ioannis Theotokas (Alexandria Publications, 3rd edition, September 2019), pp. 202.
Get the book by clicking here.
