Assessment of third party and full in-house management based on shipping performance indexes in Turkish coaster management

Due to its unique geographical location, connecting Europe and Asia, surrounded by seas on three sides, Turkey is quite open to development in maritime and it is indeed obligatory to follow the improvements closely in maritime industry and progress on the field as soon as possible to have an emerging economy. Considering the countries dominating the world economically and politically, it is relatively obvious that they get benefit from maritime industry substantially and impact upon maritime business. As a country, willing to be in a leading and influential position in the world, it is critical for Turkey to keep in step with the rapid developments on maritime and thus enhance its capacity to compete globally. When Turkish maritime trade is taken into account, it is seen that the trade which is named as coaster transport and operated by coastal navigation primarily through Black Sea and Mediterrenean coasts, through the Strait of Gibraltar without ocean passage, through Atlantic Ocean coasts of Europe and Africa and through Suez Canal on the coasts of Red Sea by means of low-tonnaged ships (1000-12000 DT) by small or medium-sized maritime companies has had the leading position in maritime industry for years in Turkey. However, coaster owners express that these days they cannot operate their ships as they used to do in the past. Besides, it is apparent that Turkey used to have a major market share in Black Sea - Mediterrenean coaster transport, faces a danger of decline in the market share nowadays. Progress in maritime business in the world is quite rapid, therefore, the companies and the countries keeping up with these changes compete better in the sector, increasing their market share day by day. Lately ship management has been more crucial than before since the ships are bigger, more economic, more environmentally-friendly and faster as a result of the developments in technology and ship building industry. Moreover, with the help of the improvments in communication technology, data transfer is faster and there is an increase in international convention and rules to which all the companies have to obey. All of these factors make ship management a neccessity. In the first part of this study, the aim and hypothesis of the study are explained and some general knowledge on the subject is presented. The aim of the study is to find out that if there is a statistically significant difference between performances of fully third party managed and fully in-house managed ships. The first hypothesis, formed in this context, is H0: There is no statistically significant difference between the performances of fully in-house managed ships and fully third party managed ships. The second hypothesis is H1: There is a statistically significant difference between the performances of fully in-house managed ships and fully third party managed ships. In the second part, with the help of literature review, firstly coaster transport is defined and then upgrowth of coaster transport in the world and coaster transport in Black Sea and Mediterrenean regions to which Turkish coaster transport sector appeals are examined. In the third part, Turkish coaster transport sector has been investigated from the past to the present and its importance and value in maritime industry in Turkey are clarified. In the fourth part, ship management and outsourcing in ship management have been reviewed and the present situation in outsourcing in ship management in the world and in Turkey is explained. In the fifth part, BIMCO's shipping key performance indicator standards and calculation method are presented in a detailed way. In the sixth part, Shipping KPIs (used to evaluate the performance of the ships and shipping companies lately) of the ships fully managed by owners and fully managed by third parties are analysed to find out whether outsourcing in ship management leads to a rise in performance of the ship or not. A decsriptive survey model which is a quantitative research method is used in the study and in this part, the universe, sampling, data gathering procedure and the results are stated. The data used to calculate the Shipping Performance Indexes are gathered by searching company archieves, ships' logs and a data collection form, prepared according to the BIMCO's Shipping KPI Standard V3.0, which is filled by companies' authorised personnel. The data collection form consists of two parts: The first part aims to get information about the ships' and the companies' profile and the second part aims to get necessary information to calculate the Performance Indicators which are first used to calculate the Shipping Key Performance Indicator values and Shipping Key Performance Indicator ratings, and then by using Shipping Key Performance Indicator ratings to calculate the final Shipping Performance Indexes of BIMCO. Due to the restrictions of the study, such as difficulty in finding fully third party managed ships, lack of necessary information and the unwillingness of companies about participating in the study; two fully third party managed and two fully in-house managed ships are used in the study. The Shipping Key Performance Indexes of the ships are compared by using one way analysis of variance test. The results of the one way analysis of variance test have shown that the second hypothesis of the study is true and there is a statistically significant difference between the performances of fully in-house managed ships and fully third party managed ships. In the last part, the study is finalized by discussing the results, limitations of the study and recommendations for further studies. According to the results of the one way analysis of variance test, it is seen that there is a statistically significant difference between the performances of fully in-house managed ships and fully third party managed ships in favor of third party ship management companies. This result indicates that the owners, managing their vessels by the traditional management way, can be more successful if they prefer using third party ship management companies. Third party ship management companies also provide a good service to those who do not have any experience in maritime industry before and can be an option for unexperienced investors. To pass over the confidence problem between the owners and third party ship managers, ship management contracts can be developed, such as "performance based ship management contracts". In this study BIMCO's Shipping KPI Standard V3.0 is taken into consideration but owners can develop their own Key Performance Standards and use them to control the third party ship management companies' performance. For further studies, it is better to increase the sampling of the study to get more reliable and valid results.