Over the last few decades, outsourcing has become a predominant strategic option for business management as firms focus on core areas while extending their reach to foreign markets and globalizing supply chains. The shipping industry is not an exception in this trend and a growing number of shipping companies seek for reliable and competent partners for supporting their focal business. While the transition toward outsourcing unfolding in the shipping industry provides shipping-related service companies with a plethora of business opportunities, ship management companies increasingly offer comprehensive ship management service departing from conventional marine crew supply.
In order to attain competitive edge, it is particularly important for ship management service providers to analyze selection criteria and service needs of shipping companies in choosing their business partners. By doing so, a ship management firm can improve customer satisfaction, and consequently, increase service renewal rate, which will offer a solid ground to become a major player on a global stage armed with reliable and professional service quality.
Using a dataset consisting of 1,088 vessels owned by 188 ship-owning companies as of July 2016 obtained from the Korea Ship-owners' Association, this study investigates the extent of ship management outsourcing among Korean shipowners and the determinants of their outsourcing decisions. Specifically, this study examines current logistics capabilities of domestic ship management companies from the viewpoint of shipowners and suggests which aspect of logistics capabilities need improving for enhanced operational performance. In addition, this study also investigate key drivers in shipowners' decision to outsource ship management.
The results of econometric analysis indicate that logistics capabilities significantly depend on the type of ships (bulk, container, chemical tanker, RO-RO, fishing carriers and others) and that shipowners' outsourcing decision is associated with morality and reliability of ship management service providers, superintendents' ability and reduction of OPEX cost. Overall, the results of this study imply that ship management companies should figure out specific service needs of shipowners in terms of logistics capabilities for better business performance.