Shipping companies

There are several advantages for a transportation company to outsource a peculiar service or section. The chief advantages with outsourcing are better cost control, lower hazard and the outside provider ‘s expertness.

Better cost control is achieved because outsourcing leads to less fixed costs and more variable costs. This means that the company in the short term is more flexible, and able to set costs faster and in some instances with less fuss. Outsourcing a service or section besides lowers the demand for an initial investing by taking the capital injection necessary for set uping a department/service. Less fixed costs and less long term fixed assets means lower hazard for the company.

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In economical theory there besides is an general sentiment that outsourcing in many instances leads to be decreases, due to a little internal section within the company non holding the same grade of expertness as a bigger outside provider and hence non being able to present the services at a competitory cost. This deficiency of expertness compared to the outside provider that specialises in the section might besides take to a lower quality of service if the work is kept in house.

With respects to expertise at that place besides is a large advantage in that the company can maintain focal point on their nucleus concern where they have the necessary know-how and remain clear of outside perturbation.

There are nevertheless besides disadvantages with outsourcing. The chief job is loss of control due to the company non holding the same supervising over the work being done. Another job is that the outside provider might non be able to set the service every bit good as an interior section after the company ‘s demands at any given clip.

The grade of the advantages/disadvantages with outsourcing varies greatly with the complexness of the work that has to be done, the possible nest eggs and the importance of in-house supervising. A certain grade of outsourcing of services will ever be i.e. transit for a company ‘s employees, postal services, large Information technology reforms etc.

Solstad has decided to maintain outsourcing at a lower limit and incorporate transportation operations are a portion of the company ‘s doctrine [ 1 ] . The company manages the entire operation of the vass [ 2 ] , and have a big onshore support mechanism which includes cargo, crewing, accounting, renting, proficient, and other administrative maps. The company is however unfastened to outsourcing services and will measure whether it is possible to accomplish more cost effectual operations and an optimum return on capital employed in cooperation with new providers with a position to long-run strategic co-operations [ 3 ] . Such coaction is besides evaluated with respect to hazard and capital injection.

6 ) How has your company financed its vass? Explain advantages and disadvantages by such funding.

It is n’t possible to happen public information on how most of the particular vass have been financed. However harmonizing to a intelligence article in Skipsrevyen [ 4 ] about the acquisition of the M/S Normand Seven, the long term funding for that vas is provided by Eksportfinans in cooperation with Nordea Bank, Fokus Bank and Danmarks Skibskredit AS.

The company ‘s balance sheet does n’t demo in item to whom the long term liabilities is owed, so to reply the inquiry we will hold to presume that the funding of the M/S Normand Seven is representative of how Solstad usually finances its fleet.

As of the terminal of 2008 the company have long term fixed assets in vass and new edifices of 7.289.858.000 NOK [ 5 ] . This equals merely over 70 % of the company ‘s entire assets of 10.213.357.000. The assets are financed with a entire equity of 3.697.624.000 and entire liabilities of 6.515.734.000. Out of the entire liabilities long term loans to recognition institutions/leasing duties sums to 4.831.208.000.

In economic theory an equity ratio of 30 % is by and large considered healthy, and the company besides states in the one-year study that the purpose is to be financed by the proprietors ( equity ) with a ratio higher than 30 % . The entire equity in per centum of entire assets in 2008 was 36 % , good above the company ‘s end. The company ‘s equities are of import when you need to raise capital from outside beginnings, as it may supply security for the loaners.

Assuming that the funding of M/S Normand Seven is representative for the full fleet the long term liabilities is provided by commercial Bankss like Nordea bank, Fokus bank, and Danmarks Skibskredit every bit good as authorities backed ship recognition strategies like Eksportfinans. Harmonizing to the one-year study some of the fleet is besides financed by renting understandings.

The advantages in acquiring mortgage-backed loans from commercial Bankss are that capital can be raised rapidly and flexibly, while the proprietor is still left with full ownership of the concern.

The disadvantages by such funding is that commercial Bankss are uncomfortable with loans that are longer than 5-6 old ages [ 6 ] and frequently prefers to have a balloon payment that might be hard to manage for the transportation company. A leasing company is frequently more attractive if the borrower want longer finance than a commercial bank is willing or able to take onto their balance sheets. Eksportfinans besides offers longer term finance than is usual for commercial Bankss, and offer refund periods for up to 20 old ages [ 7 ] .

Commercial Bankss usually take small hazard and necessitate a batch of security to protect their investing. Harmonizing to the one-year study [ 8 ] some vass are placed as security for the mortgages. In add-on, histories receivables and bank sedimentations ( 2007 ) are tied. Solstad ‘s loan understandings are besides capable to the proprietor ‘s working capital being positive at all times and that the market value of the vass sums to at least 110-125 % of the outstanding loans. The company states that they satisfy all conditions of the loan understandings at 31.12.08 [ 9 ] .

11 ) Name three of the most of import conventions your company must adhere to. Give grounds why those are among the most of import 1s.

Solstad have ships registered in the Norse International Ship Register ( NIS ) , Isle of Man Ship Registry ( IOM ) , and the Norse Ship Register ( NOR ) . Some of the standards for NIS/IOM/NOR registered vass are that they adhere to international conventions such as “ Safety of Life at Sea ( SOLAS 74 ) ” , “ Prevention of Pollution from Ships ( MARPOL 73/78 ) ” and “ Standards of Training, Certification and Watch maintaining ( STCW 95 ) ” every bit good as other international ordinances ratified by the flag provinces.

“ Safety of Life at Sea ( SOLAS 74 ) ” is the most of import international pact protecting the safety of merchandiser ships in the universe. The first version of the pact was passed every bit early as 1914 in response to the sinking of the Titanic. [ 10 ] It prescribed Numberss of lifeboats and other exigency equipment along with safety processs, including uninterrupted wireless tickers.

The purpose had been to maintain the convention up to day of the month by periodic amendments, but a wholly new convention was adopted in 1974. The convention regulates among other things usage of the planetary maritime hurt safety system, set building standards ( subdivision and stableness, machinery and electrical installings ) , fire protection/detection/extinction, obligatory life-saving contraptions and agreements, wireless communications, safety of pilotage etc. and is the centerpiece of nautical safety.

Prevention of Pollution from Ships ( MARPOL 73/78 ) is the chief international convention covering bar of pollution of the marine environment by ships from operational or inadvertent causes [ 11 ] . It was designed to minimise pollution of the seas, including dumping, oil and fumes pollution. Its declared aim is to continue the Marine environment through the complete riddance of pollution by oil and other harmful substances and the minimisation of inadvertent discharge of such substances.

MARPOL contains 6 extensions, concerned with forestalling different signifiers of marine pollution and screens pollution by oil, chemicals, harmful substances in packaged signifier, sewerage, refuse and air pollution.

The International Convention on Standards of Training, Certification and Watch maintaining ( STCW 95 ) sets qualification criterions for Masterss, officers and ticker forces on seagoing merchandiser ships [ 12 ] . The purpose of the convention was to present internationally acceptable minimal criterions associating to preparation, enfranchisement and watchkeeping for officers and crew members.

Today there are amendments refering quality criterions systems, inadvertence of preparation, enfranchisement processs and remainder period demands. The amendments require that mariners are provided with familiarisation preparation and basic safety preparation which includes basic fire combat, simple first assistance, personal endurance techniques, and personal safety and societal duty. This preparation is really of import in guaranting that mariners are cognizant of the jeopardies of working on a vas and can react suitably in an exigency.

Literature and mentions:

  • * Annual study ( 2008 ) . Annual study 2008 Solstad Offshore ASA. Skudeneshavn. * Financial study ( 2009 ) . 3rd one-fourth 2009 Solstad Offshore ASA. Skudeneshavn. · International Convention for the Prevention of Pollution from Ships ( MARPOL ) ( 1973 ) . hypertext transfer protocol: //www.imo.org/Conventions/contents.asp? doc_id=678 & A ; topic_id=258 * International Convention for the Safety of Life at Sea ( SOLAS ) ( 1974 ) . hypertext transfer protocol: //www.imo.org/Conventions/contents.asp? topic_id=257 & A ; doc_id=647 * International Convention on Standards of Training, Certification and Watchkeeping for Seafarers ( STCW ) ( 1978 ) . hypertext transfer protocol: //www.imo.org/Conventions/contents.asp? doc_id=651 & A ; topic_id=257 * Misje, M. ( 1989 ) . Solstad rederi A/S 1964 – 1989. Skudeneshavn: Solstad Rederi. * Misje, M. ( 2004 ) . Solstad rederi AS: 40 & A ; aring ; R 1964 – 2004. Haugesund: Nils Sund boktrykkeri. * Presentation 3rd one-fourth ( 2009 ) . Presentation 3rd one-fourth 2009 Solstad Offshore ASA. Skudeneshavn. * Solstad Offshore ASA – web site. hypertext transfer protocol: //www.solstad.no * Stopford, M. ( 2009 ) . Maritime economics – 3rd edition. New York: Routledge. * Zachariassen, J. E. ( 2008, 21. April ) . M/S «NORMAND SEVEN» . Skipsrevyen. * Eksportfinans – web site. hypertext transfer protocol: //www.eksportfinans.no/Bransjer/Skip.aspx
  • [ 1 ] Annual study, page 2 [ 2 ] Annual study, page 13 [ 3 ] Annual study, page 13 [ 4 ] Zachariassen, 2008 [ 5 ] Annual study, page 26 [ 6 ] Stopford, 2009, page 284 [ 7 ] Eksportfinans website [ 8 ] Annual study, page 49 [ 9 ] Annual study, page 49 [ 10 ] International Convention for the Safety of Life at Sea ( SOLAS ) , 1974 [ 11 ] International Convention for the Prevention of Pollution from Ships, 1973 [ 12 ] International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978
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