The picture for ship management in Germany is mixed, believes Bernhard Schulte Shipmanagement and Schulte Group chief executive Ian Beveridge.

He expects ship managers to be able to operate in niche areas such as LNG, cruise or offshore wind. But he said the cost of managing ships in Germany may make it difficult in other areas — and that the outlook for smaller ship managers is bleak.

“There are segments we can be successful from here,” Beveridge said. “That is LNG, where [a] higher cost structure can be supported because the fees are higher.

"Another area is the cruiseship sector, where we are expanding, and the offshore wind business, where we have several people."

He added that there are possibilities to manage other vessels where they are part of the German tonnage tax system and have to be managed from Germany.

Strip those away and it makes little sense for ship managers to be based in Germany, he said.

Cost management

For German ship managers, Beveridge said the issue is cost management.

“The issue is to be competitive on the cost side and also to meet the service expectations of customers,” he said.

“That's not really in the DNA here. People have been more owner-managers and under the KG [limited partnership] system were not servicing third-party customers.”

He added that the demands of the KG-era were “totally different” to what is required to manage ships for owners in Japan or Greece.

“That mentality is not fully present here and the cost structure is higher,” Beveridge said.

“So competing on the management field is difficult — and our competition keeps reducing management fees unnecessarily.

“It means a lot of the business we see, it doesn't make sense to do from here because it's loss-making.”

Digitalisation and remote working might help equalise costs in some ship-management functions. But that will not help the smaller managers now that the recovery in shipping markets has led German banks to sell vessels.

“Definitely for the small owners, it [is] not possible to see where the future growth will come from," Beveridge said. “I think many of these small owners will go out of business in due course. That's the brutal reality."