Freight Shipping Project Management

One of the most important functions of any successful freight shipping operation is project management. Project management is essential to operations of all sizes, so it is important to consider your options and hire a company with both the experience and the knowledge to ensure that your specific needs are attended to with the utmost attention to detail. There are a number of intricacies that must be taken into account in order to ensure a successful operation, and we will discuss them all here.

What is Project Management?

Project management is an organizational tool that allows companies to adapt to the varying needs and demands of their services. It allows them to be flexible, fostering their ability to be innovative and deliver the best service possible with the resources available to them.

What Makes Project Management Work?

In a word: Teamwork. Successful project management is dependent on strong teamwork, and by extension, the quality of the humans that make up the project management team. The goal of project management is simply this: to take the objectives of a company and make them a reality.

What is Ship Management?

Ship management is the process of adapting to the demands of the ever-changing international freight shipping industry. The freight shipping industry is known to be both volatile and highly demanding. Given the importance of freight shipping to the health of economies across the globe, it is imperative that those offering ship management services are:

  • Expeditious
  • Flexible
  • Exhibit strong communication
  • Able to prioritize

The Human Element of Ship Management

The human element is the single most important factor in any ship management operation. The success of any ship management organization will be directly tied to the culture it provides for its management team. A culture of cooperation and teamwork between both onshore and offshore personnel is imperative to the overall success of the endeavor. Because of this, many in the industry consider ship management to be somewhat of an art form.

Demands of Project Management in Shipping

As mentioned, freight shipping is a highly volatile industry with a huge number of variables in play at any given time. In order to fulfill the demands of a given operation, freight shipping project management must be able to:

  • Adapt quickly and effectively to changes in the business environment
  • Build and sustain a healthy culture of cooperation between onshore team members, offshore team members, and the client
  • Retain the traditional form of freight shipping management on a smaller scale

Characteristics of Traditional Ship Management

Traditional ship management was performed by the shipowner on the family level. This model worked very well for a long time due mainly to the ability to respond to opportunities swiftly through the efforts of family members or a small, trusted crew. In this model, every demand was able to be accounted for; from daily operations to planning to the formation and execution of long-term policy.

Changes in Traditional Freight Shipping

As the global economy grew, and with it, the complexity of demands on shippers, many of the operations necessary to complete a shipment grew beyond the expertise of those running the family shipping business. Because of this, shippers were forced to turn to affiliates in order to cope with the increased complexities in:

  • decision-making
  • assimilation of information
  • problem-solving

At this point in freight shipping history, there were simply too many moving parts to be accounted for, as evidenced by a number of major accidents that occurred at the time. It became clear that the system for managing freight shipments needed updating. Thus, project management was introduced to the industry and independent project management companies came into being.

Independent Project Management Companies

It was at this point that the International Safety Management Code (ISM Code) was introduced to the industry, bringing with it three major changes in managing:

  • Cost
  • Procedures
  • Training

In order to cope with these new demands, it was necessary to develop:

  • Technological advancements
  • Enhanced regulatory system
  • Training programs

Once this was accomplished, it became possible to effectively outsource the management of freight shipping operations to an independent third party.

Responsibilities of Project Management Companies

Now that management duties have been transferred to an independent third party, so do a number of responsibilities entailed in carrying them out. It has become the responsibility of freight shipping project management teams to:

  • Ensure that all vessels under their direction are in compliance with rules and regulations
  • Run in a safe manner
  • Run in a cost-efficient manner and avoid superfluous spending or incurring fees or penalties
  • Run in a manner that poses as little threat as possible to the environment

Compliance With Regulations

Nearly every developed country engages in some level of freight shipping to import or export goods and resources. With so many nations involved, it is inevitable that regulations regarding ports, tariffs, environmental concerns etc. will vary. It is the responsibility of project management to know and ensure compliance with all of them for a given operation.

Safety

Human capital is at a premium in the shipping industry. There has long since been a shortage of specialized labor in freight shipping and that means that every member is a valuable resource in need of protection (not to mention the fact that they are human beings, and nobody wants to get hurt on the job). It is the responsibility of project management to provide a safe work environment for all who are under their direction.

Cost-Efficiency

It is imperative to the survival of the industry that project management operates in the most cost-efficient way possible. With so many variables in play, there are any number of ways that things can go awry and incur additional cost or losses. It is the responsibility of project management to make every attempt to avoid these costs and maximize the profitability of the operation which they have been entrusted with.

Environmental Threat

Freight shipping can pose any number of possible threats to the environment. Given the huge scale of freight shipping operations today, it is extremely important that all involved exercise due diligence in protecting the environment in which they operate. This can mean minimizing the expenditures of fuel necessary to transport goods or maintaining safe practices to avoid accidents that could dump huge amounts of goods or chemicals (fuel etc.) into the ocean.

Management by Projects (MBP)

Management by Projects is a term coined by Dick Sharad to describe the system he devised to carry out any business-like project. It is a systemized process with three major functions:

  • Planning
  • Executing
  • Controlling

It is particularly applicable in the context of operations like freight shipping, which are characterized by their size and complexity and demand a designated project leader to manage it.

Characteristics of Management by Projects

There are numerous ways to approach the concept of MBP, but ultimately it can be boiled down to the following. Management by Projects will entail:

  • A set of activities that is predefined
  • A projected amount of resources necessary to carry out these activities
  • A multidisciplinary team of specialized individuals
  • A definite start
  • A definite finish
  • Must be completed in the required time
  • Must be completed up to expected quality standards
  • Must be completed with an expected economy

These are the characteristics that distinguish project management from other forms of management; namely, general or corporate. These requirements necessitate that MBP takes command of the following:

  • Quality control
  • Cost
  • Risk Management
  • Time Management
  • Information
  • Communications
  • Contracting
  • Procurement of Materials
  • Scope of Operations

MBP as Employed in Freight Shipping

The above is a description of the functions performed in an operation employing the MBP method. However, the freight shipping industry has its own set of unique characteristics that require an MBP system to be adapted to its specific needs. In freight shipping, these are:

  • Procurement
  • Commercial Operations
  • Fleet Management
  • Crewing
  • Engineering
  • Technology
  • Project Management for maintenance and repairs

Who is Involved?

As we have mentioned, any freight shipping project management team utilizes the collective expertise of a multidisciplinary team of workers. But who are these workers? What are their positions and functions? Here are a few that you might find in a well-structured project management team.

  • Ship Manager
  • Superintendent
  • Purchaser
  • Fleet Manager

The top dog in an operation like this one is the Fleet manager, whose responsibility it is to collaborate and communicate with the other members of the team. In doing so, the team is able to facilitate all technical and operational requirements for their fleet of vessels and the personnel who run them. All services are provided for in-house.

Human Requirements and Culture

The model outlined above is not the only one in use, but it does a fine job of illustrating the different factions involved in freight shipping project management. In any model, it is imperative that the human aspect is addressed by cultivating the proper culture. All successful models place a high level of importance on communication and cooperation between:

  • Operations
  • Fleet Personnel
  • Purchasing
  • Technical Department

Rather than treating each department as an individual entity with its own goals and management team, each group is encouraged to consider itself within the framework of the whole. With this in mind, each department understands that, ultimately, it is one unit of the whole with a single, shared ambition under the direction of a unified team of leaders.

Shipowners Now

Remember the shipowners we spoke of earlier? Well, they did not cease to exist when project management companies began to take over operations. Project management simply takes ownership of the management and direction of the operation, not the shipments themselves. The implication here is that the ship owners still have the ultimate say in how their shipments are used (after all, they are the ones paying the bills).

Role of Shipowners

Some ship owners choose to take a more active role in the operation of their vessels. Obviously, it behooves them to grant some level of autonomy to the Fleet Manager employed through the project management firm. If they were to mandate that every detail of the operation required their personal approval, the process would simply not be feasible from an efficiency standpoint.

On the other hand, it is understandable that the owner of a multi-billion dollar vessel would be protective of his or her investment, and choose to take an active role in its management and achievement of profitability. After all, you don’t acquire an asset of such value without some very real business acumen at your disposal in the first place.

Responsibilities of Upper Management

As we have discussed, the various project management companies will be structured differently in order to provide the direction necessary to carry out their functions. For the purpose of this part of the discussion “upper management” will encompass all positions who top the hierarchy in each respective model, including:

  • Ship Owners
  • Fleet Managers
  • Superintendents
  • Purchasers
  • Ship Managers

It is the collective responsibility of this group to ensure that the following considerations are properly managed:

Time and Cost

It is imperative to any business operation that time is properly managed. As they say, “time is money” and with an operation of such magnitude, even the smallest instance of time mismanagement can come with an exorbitant cost. For this reason, scheduling and negotiation of the price of a charter are entrusted to top management.

Quality and Risk

Project Management companies must comply strictly to the ISM Codes referenced earlier. Should they fail to do so, they will not be certified to do business. Compliance with ISM Codes is built into the core of every project management company’s Human Resources Program, which is overseen by a member of top management.

Portfolio Management

Portfolio management is the area in which each company will differ from its competitors the most. The manner in which each company chooses to manage its portfolio is dictated by the unique capabilities of those in charge and at their discretion. Each management team’s chosen strategy will have a direct effect on the success (or failure) of their individual enterprise.

Conclusion

Project management in freight shipping today is incredibly complex and offers some unique challenges to those in charge. It is critical that these obstacles be navigated with precision, and due consideration of every aspect involved, as each has the potential to dictate the success, or lack thereof, of the entire operation. By developing and employing the strategies discussed here, project management companies have revolutionized the freight shipping industry and grown it to a scale that is capable of supporting the entire global economy.

Sources:

https://lib.dr.iastate.edu/cgi/viewcontent.cgi?article=2593&context=etd
https://www.apm.org.uk/resources/what-is-project-management/

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