Page 47: of Maritime Reporter Magazine (February 1999)

CRUISE SHIPPING REVIEW • Ship Management extends to that of a fiduciary. From establishing operating budgets and negotiating contracts, to mon- itoring expenses and performing detailed cost analyses; the ship manager remains focused on con- taining costs and enhancing prof- itability. Monthly operating bud- gets are prepared and scrutinized to ensure that the cruise ship owner/operator's fiscal objectives are being met.

Dispelling the Myths

For cruise ship owner/operators who have established a 'partner- ship' with a high quality ship man- agement firm, any previous mis-

Circle 305 on Reader Service Card conceptions have been replaced by measurable advantages. For those who haven't, the myths still per- sist. Some owner/operators mis- takenly believe the costs for third- party management are too high.

They fail to recognize that effec- tive ship managers know how to operate a vessel at the lowest pos- sible costs, without any sacrifice to quality. Others fear a loss of con- trol and don't understand that the best ship managers give their clients all the tools and informa- tion they need to stay in complete control. Still others believe they can manage their cruise ship bet- ter and more cost-competitively. If, in fact, this latter group had a fully-dedicated, equally-experi- enced management resource on- board, then perhaps their belief would be well-founded.

Unfortunately however, many new cruise ship owner/operators now enterering the market, who attempt to manage their vessels themselves, have neither a dedi- cated team for the task nor the level of experience that third-party ship managers have. Ultimately, the operation becomes unwieldy and ineffective, resulting in a loss of quality both in the cruise ship's operation and related core rev- enue-producing functions.

Outsourcing services to qualified third parties is an accepted and widely used practice across numer- ous categories of business and industry and for good reason.

Cruise ship owner/operators reluc- tant to outsource their vessel's ship management should focus on the benefits of outsourcing in gen- eral and apply them in their con- sideration of third-party ship man- agement.

One Ship Manager For All

A final caveat to cruise ship owner/operators regarding ship management: when seeking out the most qualified and experienced ship manager based on the afore- mentioned qualifications, don't make the mistake of hiring two managers; one for hotel services and another for deck and engine services. The optimum 'partner- ship' reflects a one-stop shopping concept. It allows a qualified ship manager to assume full responsi- bility for all facets of operation.

This partnership keep sub-con- tractors to a minimum so that accountability is firmly placed with the ship manager. The on- board Management benefits from direct lines of communication enabling them to concentrate on product delivery and passenger service.

Mr. Barreiro de Leon is Manager

Hotel Operations & Passenger

Services for V. Ships Marine, Ltd. (Mineola, N.Y.).

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