Can management companies at both ends of the size spectrum offer an equally high standard of service and support to yachts. Is it a David and Goliath story or is it the way of the ‘corner shop’ versus the major international supermarket chain?
Regulation and Safety are two words often juxtaposed in the modern business of yachting. As yachts have increased in size, so they have moved firmly into the realms of shipping as defined by several conventions; SOLAS, GMDSS and MARPOL to name but a few. It has long been the way of the commercial sector to maintain much of the management of a vessel ashore, so it is perhaps unsurprising that yacht operations are emulating this system. This is evidenced by the significant increase in the number of management companies providing shore based support and administration. Indeed with the inception of ISM, the shore based operation is considered an integral part of the safety standard on board a vessel.
ISM then, is one of a number of regulatory requirements for larger vessels which demands verifiable standards be maintained ashore. It is generally accepted that operating a large yacht is becoming more and more complex and in turn, yachts are becoming more and more reliant on their shore support to help them navigate through the sea of documentation and regulation.
It is the realm of the Flag State to determine exactly what level of regulation and compliance it requires of a vessel and her operators. The future is almost certainly to continue the trend of more regulation rather than less and while this will mean more shore support is likely, the flag states are not well equipped to monitor a management company’s performance. Many companies rely on international standards such as the various “ISO” standards or subscribe to Quality Management System providers like Det Norske Veritas (DNV). Many of these standards are recognized and respected by many flag states and go some way toward filling the niche for a standardized level of quality. These standards of course cost money which in turn means increased costs are passed on.
When talking about yacht management companies it seems we are talking often about polar opposites in the scale and size of operations. Perhaps it is only a perception stemming from their marketing strategy, as companies in the yacht management business generally seem to be offering to cover all the bases through their wealth of resources or offering a more personalized, efficient service through their comparative agility or flexibility.
A company offering shore management to a vessel smaller than 500 GRT, needs little more than a cell phone and a calling card to set up in business. Yachts under 500 GRT are not required to comply with the ISM or ISPS code and therefore the shore side management they utilize is not regulated by any international standard or convention. This surely means less standardization but does this in turn lead to a lesser standard?
“There is only one standard of safety management.” says Erik Schiffelbian, Designated Person Ashore (DPA) and Company Security Officer (CSO) at Vessel Safety Management of Fort Lauderdale. “We manage both vessels that are required to comply with the ISM code and those that are under the 500 GRT limit. We treat them in exactly the same way in principal, only the paperwork requirement differs.”
Schiffelbian went on to point out that for the smaller vessels, adopting the full ISM standard provides captains and crew with a head start as ultimately if their career leads them to larger vessels they are better prepared for the associated paperwork. “We do our best to encourage and support the philosophy that ISM is simply a tool that contributes to the safe operation of a vessel. To this end we have made our ISM systems logical and streamlined and not cumbersome and bureaucratic.”
The role of a management company has therefore evolved beyond providing purely safety management support. It is routine for management companies to handle much of the administration required of a yacht. From the crew payroll to effecting payments to contractors and from organizing refits to providing technical and logistical support, yacht management is multi faceted. The very fact that ‘management’ is so diverse, perhaps gives larger yacht management companies who have a wealth of institutional knowledge under one roof, or at least under one brand umbrella, an advantage. So is size the issue when it comes to management standards?
“As one of the largest yacht management companies Fraser Yachts is able to bring a vast number of resources to bear,” offers Michael Bach, the Manager of Business Development at Fraser’s Ft Lauderdale office. He adds, “I can walk just down the corridor and find expertise in chartering, brokerage, crew placement and safety management.” Bach echoes the sentiment that operating a yacht is likely to become an ever more complex proposition. This especially as new regulations such as the Maritime Labour Convention (MLC) will bring with it additional challenges to the design, building and operation of yachts in the near future.
However, there are surely some advantages to the smaller companies offering management. After all, the ‘Boutique’ business model is well established in the luxury sector. One captain suggested the larger firms simply cannot offer the personal service offered by the smaller companies.
“I prefer small management companies that deal with predominantly smaller yachts.” Says Ken Maff, Captain of M.Y. Kapalua. “For me they are far more hands on and much less likely to have an agenda outside that of supporting the captain in his efforts.” He went on to suggest, “The larger firms sometimes have to put their corporate objectives before the interests of the boat.”
Maff’s management company is MTS Yachts who were asked what they perceive their comparative advantage to be if any? “With fewer boats we are able to develop a far greater technical knowledge of each vessel,” says Graham Thompson, president of MTS Yachts. “Our ethos is support and not management and we see our objective to assist the captain and leave him to deal with the owner.” But what of the lack of resources compared to the larger companies who a have vast in house network of expertise? “With so long in the business we have an extensive network and can call on any number of experts who provide tailored technical assistance on the scale we need when we need it.” Thompson points out.
For all the freedoms that yachting allows there are clearly many conventions that must be observed. Whilst many choose to operate their yachts privately, the regulated standards required of commercially operated vessels have, unsurprisingly, become accepted as ‘best practice’. Large vessels over 500 GRT that operate commercially, must comply with the International Safety Management (ISM) code. The ISM code stipulates that the safety management and pollution control system onboard, must be augmented by a formal system of compliant safety management ashore. A company offering shore based ISM support to vessels over 500 GRT must hold a document of compliance (DOC) issued by a flag state and is under the scrutiny of regular external auditing.
Ultimately the provision of any service is a subjective choice. Companies providing management support to yachts are in a competitive market place and their standards will likely be shaped through the Darwinian method and the free market. However it is clear that safety management should be of a universal standard and be a product of the owner’s responsibility to maintain a seaworthy vessel and the captain’s responsibility to oversee that process without compromise. Regulations will change, but so too will technology and the efficient capacity to comply with more stringent demands of the authorities. Management with all its connotations is a part of modern yacht operation and if there is a migration of executive responsibility away from the bridge and towards the office, with it will come greater scrutiny.