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Fleet Management: Smaller managers risk being phased out

Like shipping in general, smaller players in the shipmanagement sector risk being elbowed out, argues the head of one of the world’s largest shipmanagers in today’s Maritime CEO interview.

Kishore Rajvanshy, the veteran founding managing director of Hong Kong-based Fleet Management, remarks: “I see that small shipmanagement companies are finding it extremely difficult to operate in this environment.”

Rajvanshy, who has been through many a shipping cycle, says the current downturn is causing financial headaches for managers around the world.

“The main challenge in this market really comes from management fees not keeping pace with establishment costs and the added credit risk caused by owners facing unprecedented financial stress in the dry shipping sector,” he relates.

His advice as how to navigate these tricky times? “You need to run a really tight ship,” he says, “to provide top level service while keeping a lid on establishment cost and navigating credit risk.”

However, Rajvanshy contends that the prolonged bad market situation is pushing more owners to mull using third party managers.

Restructuring among many shipowners is allowing them the chance to appreciate the value that professional managers can bring in terms of cost saving, asset play flexibility and freeing up of resources to focus anew on commercial aspects of the business, Rajvanshy contends.

“This is a clear growth space for professional managers,” he concludes.

Founded 20 years ago as a subsidiary of the Noble Group, Fleet Management is now part of the Caravel Group.

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