When discussing the hot topic of costs savings, I am asked the question: should the crewing be outsourced or managed in-house?
This is really the fundamental question.
If the decision to use third-party ship manager has been already made and a crewing was a part of the deal, it still does not mean that the crew management process should be left uncontrolled. It is smart to proceed with benchmarking and cost analysis to support the decision, on the annual basis.
For example, you would want to make sure that time, resources and costs spent for in-house crew management, will be more significant and will justify the outsourcing of the process, without compromising quality and safety of the crew. And as the fleet situation changes, the decision might be changed as well.
Here I have collected the factors to consider deciding what is optimal for the company in the current situation in the given market.
It is common thinking that the companies outsource ship- or crew management in order to achieve cost reduction and improve time and resource performance management. The decision to outsource crew management is usually supported by the financial analysis that shows the cost savings. The thing is that in many cases, that analysis was done with the assumptions of the current fleet situation, such as the number of vessels in operation or laid-up, a number of permanent and temporary crew employed, labor market situation, and many others. If the situation changes it is time to reconsider.
Some of us might think that if to outsource crew management, the employers’ liability would automatically be transferred to the shoulders of crew managers, and that is wrong. Good overview of the Owners’ obligations versus Crew Managers’ is given at the explanatory notes at https://www.bimco.org/contracts-and-clauses/bimco-contracts/crewman-a-cost-plus-fee-2009
Shipping KPI related to crewing
It is a good idea to set up the crew management fee based on KPIs. Here I am listing KPIs related to crewing.
- Health and safety deficiencies
- Lost time injury frequency
- Lost time sickness frequency
- Cadets per ship
- Crew disciplinary frequency
- Crew planning
- HR deficiencies
- Officers retention rate
- Officers experience rate
- Training days per officer
- Budget performance
Other KPIs can also indirectly relate to crew management.
In both options of crew management, in-house or outsourced, the company shall monitor performance via KPIs and that brings the use of the additional resources.
Economies of scale
If the company wants to benefit from the economies of scale provided by the crew manager, it is a good idea to monitor the number of seafarers handled by the crew manager or their local crewing agents.
I think the company-employer can really benefit from the corporate agreements made between crewing manager or a manning agent and training institution if it covers a big number of crews. For example, the price for the shipowner to train 50 crew for the BOSIET would be 1000 USD each, while for the crewing agent with the 1000 crew per year it would be only 940 USD.
To achieve that, the crewing manager shall have a training plan (not the same as training matrix) in place, estimating the number of trainings per each quarter for each training course, negotiated with the crewing agent or the local office.
In terms of crew travel, as per my experience, I do not see a lot of difference one can achieve negotiating margin by volume with travel agents. But it is another story.
There is the number of the other factors to consider, like “willingness to deal with logistic noise”, increased HR staff to handle crewing department, inter-department communication, level of cost control and so on. Whatever choice the company makes, the decision should be based on the thorough analysis, preferably made by third-party consultants, as they can assess the situation “free-of-historical dependency”.