Established Sept. 2014 and kicked off business from Jan. this year.
“Play a role in helping Korea mariners to advance into overseas markets.”
V. Ships, the world's largest ship management company managing over 1,100 vessels, founded ‘V. Ships Korea Co., Ltd.’ as a subsidiary in September last year, and started business in Korea. V. Ships Korea began business promotion from last January, taking time to set and open the office and recruit staff.
As Representative James Hwang of V. Ships Korea said, it’s very meaningful that V. Ships, operating more than 70 offices over the world, has established a local subsidiary in Korea, not just an office.
“V. Ships thinks Korea is a very attractive market since it has excellent infrastructures such as fleet ranked the top 5 in the world, high-quality human resources, shipping finance and first class shipbuilders. Especially, V. Ships has reviewed for long the way to take advantage of Korea to advance strategically into the Northeast Asia market and decided to establish a local subsidiary in Korea accordingly.”
V. Ships plans to build a bridge to connect Korea ship owners with V. Ships and plays an active role to expand Korea ship management service industries. Furthermore, it will be a foothold for outstanding Korea mariners to go into the world through V. Ships.
V. Ships is well aware that they will experience continuous difficulties entering into the world market. Although Korea has excellent infrastructure for shipping business, most Korea ship owners tend to manage their own ships through their affiliates instead of outsourcing. In this respect, V. Ships expects that such a trend will be naturally changed if they provide tailored services to Korea ship owners. That’s the reason why V. Ships has appointed Mr. Hwang as Korea representative, who graduated from Korea Maritime and Ocean University (a 52nd-year class graduate), to operate V. Ships Korea.
“It will be important that we should secure several more clients in Korea, but on the other hand, we also wish V. Ships’ launch of business in Korea becomes a turning point to change our country’s ship management environment overall. Large-sized overseas shipping companies like Front Line and China Shipping have their own ship management affiliates, but they have created service competition by letting V. Ships handle some of their ships, such as large mega container ships. Korean ship management service industries, which have stably grown in a closed market, must change with time.”
V. Ships, formed in 1984 in Monaco as a Russian shipping company’s ship management affiliate, has become an entirely independent company in 10 years and has concentrated on ship management business. As a result, the group has grown to become the world’s largest supplier of ship management service and is currently managing about 1,100 vessels with more than 25,000 on board seafarers and annual sales in excess of USD540 million.
According to Mr. Hwang, Korea’s robust infrastructure will be enough to make Korean ship management companies outpace V. Ships if a system of mutual competition is established by benchmarking V. Ships.
V. Ships began its business in Korea but is not interested in blurring the market by employing a low-cost marketing strategy. It must be tempting to use such tactics since clients are lured into contracting a low-cost company under the situation that clients do not want to change their ship management company because it requires a lot of time and cost to do so unless there is a merit of cost-saving. Nevertheless, V. Ships does not wish to compromise on service price.
“Despite the fact that we must be flexible in terms of cost in order to succeed in the Korean market, V. Ships head office has kept stubborn on this point. V. Ships can consider to set a similar price strategy because it is still important to begin business in the market, but we believe that offering low prices to new clients is to act in bad faith to other previous clients who let us manage their 1,100 ships, paying a fair price.”
There is prejudice that ‘V Ships provides a high-quality service, but cost is expensive’. In this connection, Mr. Hwang emphasizes that V Ships’ management cost may appear higher than that of Korea ship management companies, but considering overall incidental expenses including insurance premium, repair cost, lubrication oil, provisions and spare parts, etc., the difference in management cost will not be much and the cost will be more competitive than other ship management company on a medium-, and long-term basis.
As said above, it could be possible that V. Ships has a strong bargaining power through economy of scale. It has managed more than 1,100 vessels, which enable it to receive supply of lubrication oil and spare parts at the lowest price through annual contract with suppliers. In the same context, it will be able to lower insurance premium and ship repair cost, etc.
Furthermore, V. Ships has its affiliate like Seatec providing direct ship repair services while conducting safety inspections by supervisors who work in its 70 offices worldwide. They make V. Ships available to proactively respond to marine accidents and PSC inspection to their fleet and rapidly deal with the matters, from which they can minimize additional cost that ship owners will bear. Having invested USD16 million to improve Ship-Sure system, the company has now provided the ship owners with real-time information regarding their ships and crew members.
Finally, Mr. Hwang mentioned his plan that if their management fleet is increased, they will improve the quality of services through additional hiring Korean superintendents and engineers, and added the following comment.
“For the time being, our service plan in Korea is that we use manning service from the 3rd party crew management companies, and regarding ship management service, our head office directly performs the job. However, after our management fleet is increased to a certain volume in the future, we will make separate organization, by recruiting Korean superintendents and engineers, to provide high-quality services to our clients in Korea.”