Introduction
This report introduces the research that needs to be conducted to prepare a budget and review the STCW Convention. The first step is collecting key information necessary to create an operating budget. This includes analyzing any associated costs with ship acquisition, such as maintenance, fuel, and personnel requirements. Additionally, there should be research into market rates for shipping services. Once this data has been gathered, it can be used to accurately determine the cost of owning and running a shipping venture. The second part of the project requires an examination of the STCW Convention (Standards of Training Certification and Watchkeeping). This international agreement sets forth regulations related to the minimum qualifications required by seafarers working at sea (Akbarpoor, Mirabbassi, and Kamrani, 2019, p. 13). It is important to review the details of this agreement to ensure that any personnel hired by the company have met the necessary qualifications and training requirements.
Budget for Purchasing the Small Fleet of Ships
Various factors require consideration when preparing an operating budget for the company’s new shipping division. First, there is a need to consider the size of the vessel. This will impact things like fuel consumption and crew costs. Second, focus on the regular routes and the frequency of trips. This will help to determine crew salaries and ongoing maintenance costs for the vessel. Secondly, consider the route the vessel will take. This will affect things like insurance premiums and port fees. It is important to factor these in when calculating the total cost of running the division. Third, consider any additional fees and taxes that may be applicable depending on the chosen route.
Fuel and lubricants are the most significant cost associated with operating a fleet of ships, accounting for approximately 50-60% of total expenditure. Daily fuel and lubricant costs can vary depending on ship type, route, speed, and cargo carried. For example, in 2020, crude oil prices ranged from under $50 USD per barrel to over $100 USD per barrel (De La Rue, Anderson & Hare, 2022). Crew wages form the second largest expense associated with operating a fleet of ships. Crew salaries vary depending on rank and experience; however, generally, wages range from approximately US$500-US$2000 per month for an able seaman to upwards of US$10,000 per month for a captain (De La Rue, Anderson & Hare, 2022). The third element of daily operating costs is the smaller expenses associated with the running and maintenance of ships.
This includes repair and maintenance fees, port fees, insurance premiums, and other administrative costs such as communications and navigation services. These costs typically account for 7-10% of total costs (Fan & Luo, 2013). To provide a complete breakdown of daily operating costs associated with ship investment, it is necessary to look at each component in more detail. For example, fuel and lubricants are the single largest cost element of a ship’s operation and can constitute up to 50% of daily operating costs (Fan & Luo, 2013). The cost of fuel and lubricants depends on factors such as the type and size of the vessel, voyage duration, bunker prices, and engine efficiency. Other major daily operating costs include crew salaries and wages (up to 20%), spares and consumables (up to 10%) as well as maintenance costs (up to 5%) (Fan & Luo, 2013). Finally, it is important to factor in the cost of port fees and insurance premiums.
Insurance premiums are an essential cost for ship owners and operators, as they cover any potential damage or losses to the vessel in the case of an accident. The exact cost of insurance premiums depends on the size, age, and type of the vessel (Karlis, 2018) but can generally range from 1-5% of a vessel’s daily operating costs. Stores and provisions are also a daily operating cost; these consist of consumable items required by the crew on board (food and clothing) and maintenance items (tools and spare parts). Stores’ costs depend on the voyage length and number of crew members; these costs range from $5 to $15/per day per person (Karlis, 2018). Port charges are usually charged by the port authority/country based on the size of the vessel.
Nonetheless, the monitoring regime and tools for managing a small fleet of ships are essential to provide an efficient, safe, and cost-effective service. To ensure the safety of personnel and property on board, as well as the integrity of cargo, it is important to have an effective system that monitors all aspects of ship operations (Alsos et al., 2022, p. 012030). An excellent way to achieve this is through digital monitoring tools such as satellite tracking systems and remote-control devices (Ruponen et al., 2022, p.108666). These tools can track vessels from afar and give real-time updates about their position and status. Satellite tracking systems can also be used for navigation, allowing for more accurate course direction changes or route optimization (Ruponen et al., 2022, p.108666). Remotely operated systems allow operators to monitor a range of indicators related to the vessel’s performance and can be used to detect abnormalities that may indicate a malfunction or an accident.
In addition, predictive analysis is another powerful tool for managing a small fleet of ships. Predictive analytics allow operators to anticipate potential problems and take preemptive measures to prevent them from occurring in the first place (Lim, Pazouki, and Murphy, 2019, p. 338). For example, predictive analytics can identify areas with higher-than-average levels of traffic congestion or dangerous weather patterns that could pose a risk to ships (Lim, Pazouki, and Murphy, 2019, p. 338). By being aware of these risks, operators can take action before any harm comes to personnel or property on board.
Nevertheless, digital monitoring can be costly and may not provide the necessary information for effective decision-making. Furthermore, digital monitoring is subject to privacy laws that regulate how data is collected and used, which could lead to legal issues if proper protocols are not followed (Lim, Pazouki, and Murphy, 2019, p. 338). Finally, some digital monitoring systems may require specialized software or hardware to operate properly, increasing costs even further (Lim, Pazouki, and Murphy, 2019, p. 338). Despite these drawbacks, digital monitoring continues to be a powerful tool in helping organizations better manage their operations and resources.
Standards of Training Certification and Watchkeeping (STCW)
Key Requirements STCW
As a specialist in maritime training and certification, I am well-placed to provide a short report outlining the key requirements of the STCW Convention. The STCW is an international convention that sets minimum standards for the training and certification of seafarers. The International Maritime Organization administers it (IMO), and all ships flagged by countries that have ratified the STCW must comply with its provisions (Gundić et al., 2020, pp.245). To be certified under the STCW, seafarers must complete a series of exams and on-the-job training. The STCW is an important convention as it helps ensure seafarers are properly trained and certified. It also helps to promote safe shipping practices and protect the marine environment.
The Standards of Training, Certification, and Watchkeeping for Seafarers (STCW) are important international conventions that guide the training and certification of seafarers. The STCW Convention sets out the minimum standards of competence for masters, officers, and watchkeepers on seagoing ships. The STCW Convention was adopted in 1978 and has been amended several times, most recently in 2010 (Gundić et al., 2020, pp.248). The Convention is currently in force in 170 countries, making it one of the most widely ratified conventions in the International Maritime Organization’s (IMO) history. The goal of the STCW Convention is to ensure that all seafarers have the necessary skills and knowledge to perform their duties safely and effectively. The STCW Convention is divided into five main sections: Basic Safety Training, Advanced Firefighting, Bridge Resource Management, Engine Resource Management, and Medical Training.
The key requirements of the STCW Convention are that seafarers must be properly trained and certified for the ships they serve on and that they must maintain a high level of watchfulness while on duty. Seafarers not meeting these requirements may be denied port access or subject to other sanctions. The STCW Convention is an important tool in ensuring the safety of both seafarers and the ships they serve on. By ensuring that seafarers are properly trained and certified, the Convention helps to reduce the risk of accidents at sea. Additionally, by requiring seafarers to maintain a high level of watchfulness while on duty, the Convention helps to prevent collisions and other accidents.
The Importance of STCW
The importance of the Standards of Training Certification and Watchkeeping (STCW) cannot be overstated. The STCW is essential for ensuring that seafarers have the knowledge and skills necessary to safely and effectively perform their duties. The importance of the STCW lies in its ability to improve safety at sea and in its potential to contribute to developing a more professional and efficient global maritime workforce (Dirgeyasa, 2018, pp.41). By establishing minimum standards for seafarer training and certification, the STCW helps ensure seafarers are properly qualified for their positions. This, in turn, helps improve maritime operations’ overall efficiency and effectiveness worldwide.
In addition, by helping to ensure seafarers are properly trained and certified, the STWC contributes to developing a more professional maritime workforce. This is important for improving safety at sea and promoting the efficiency and competitiveness of maritime operations on a global scale. With its far-reaching impact on safety and efficiency, it is clear that the STCW plays a vital role in supporting the work of the IMO and contributing to the overall development of the maritime industry. To ensure compliance with the Convention, all seafarers must be trained and certified following its requirements (Dirgeyasa, 2018, pp.41). This includes both new entrants and those already working at sea. Moreover, seafarers must participate in refresher training courses every five years to keep their qualifications current. The STCW also requires that ships are staffed by properly qualified personnel who have been issued appropriate certificates of competency. As such, shipowners and operators must ensure that their personnel meets the applicable certification requirements.
An Appraisal on the Effectiveness of STCW
The Convention is generally considered to be effective in achieving its aim of setting minimum standards for the training and certification of seafarers. However, the agreement has been heavily criticized for not addressing fundamental issues such as seafarers’ working hours and other associated rights (Muirhead, 2021, p.257). With most vessels having crews from multiple nations, there is a need for improved measures to ensure fair working conditions for seafarers (Ekashlan, 2021, p.152). In addition, some countries have been slow to ratify the Convention or to implement its provisions (Kim et al.,2021, p.105031). As a result, the full benefits of the Convention have not yet been realized. In response to the various issues raised, the International Maritime Organization (IMO) in 2014, introduced a set of amendments to the Convention (Mercer and Sharpe, 2021, p.267). According to Sharabidze and Dolidze (2021, p.156), these amendments aim to improve the effectiveness of STCW by tackling some of its weaknesses and reinforcing seafarers’ rights. This will ensure seafarers are provided with more opportunities and protection at sea. The amendments also address some of the outdated provisions of STCW and make it more relevant to the current industry standards (Xu, 2020, p.7). With these amendments, the IMO strives to guarantee seafarers a safe and secure working environment. The amendments will also align STCW with other international maritime conventions and introduce additional safety measures.
The International Labour Organization (ILO) has addressed some of these issues through its Maritime Labour Convention 2006 (MLC, 2006). This Convention sets global standards on working and living conditions for seafarers while still recognizing the special nature of life at sea (Dirgeyasa, 2018, pp.41-47). The MLC, 2006 also contains several important provisions to ensure seafarers can exercise their rights as workers, such as the right to be paid according to national or international labour laws and to receive medical care and other benefits (Dirgeyasa, 2018, p.42). Over 70 countries have ratified the MLC, 2006 (Dirgeyasa, 2018, p.41). These countries represent about 90% of global merchant shipping fleets by gross tonnage (Dirgeyasa, 2018, p.44). As more countries ratify this Convention and implement its provisions, seafarers’ rights and the standards of their working and living conditions are likely to improve.
The effectiveness of STCW can be seen in its effectiveness to reduce human error, promote consistency across nations, improve job opportunities, and provide a platform to standardize qualifications worldwide. One area of strength within STCW is its clearly defined structure with specific objectives (Engtrø, 2022, p.15). This helps ensure that all countries have a common set of goals and practices to follow regarding seafarers’ qualifications, experience assessment, and training (Kim et al.,2021, p.105031). Furthermore, the clarity provided by STCW allows for a consistent training and certification system across different training centers (Alexandrov, 2021, p.112). This ensures that personnel are properly trained and can attain an internationally recognized certification. This helps them gain domestic or international job opportunities in the maritime industry, as the STCW certification is accepted worldwide (Fish, 2019). These systems helps seafarers move seamlessly between different countries and can allow them to pursue a career path more easily than if they were merely relying on a national qualification system.
Despite its effectiveness, there have been some criticisms about the effectiveness of STCW, including inadequate enforcement, lack of flexibility, high costs for training and certification, and limited recognition by non-IMO nations. Enforcement has been seen as one area where STCW could be improved, with many countries not taking action when noncompliance is observed or reported (Zhang et al., 2022, p.1655). The cost associated with obtaining STCW certification and training is another criticism often voiced by seafarers, with some pointing out the lack of financial assistance available. Finally, although STCW is an internationally recognized standard, some countries outside the IMO have yet to recognize it as a qualification for work in their waters (Sharma et al., 2019, p.24). Overall, the effectiveness of STCW has been seen as largely positive. Its structure provides consistency across nations, while its recognition helps create job opportunities worldwide. However, enforcement remains an issue, and there are still high costs associated with obtaining certifications which could be addressed to make the process more efficient. In conclusion, STCW remains an effective measure concerning maritime safety and should continue to be implemented while striving towards improvements to address existing weaknesses.
Conclusion
In conclusion, starting a shipping division for this company will require a significant investment. However, it can be profitable with the right planning and management. To prepare an accurate budget and review the STCW Convention, one must collect key information about the vessel. This information should include the vessel’s size, capacity, speed, and range. Additionally, a person will need to account for typical costs associated with operating the vessel, such as fuel, crew salaries, and maintenance. Finally, it is important to have a plan for monitoring all of these costs on an ongoing basis. Considering these factors, one can ensure that the company’s shipping division is successful. With the right strategy and execution, an individual can maximize efficiency while controlling costs. This will help the business to grow and ultimately achieve long-term success. With a strategic approach to managing the shipping division, they can ensure that the organization is prepared for whatever comes its way. When starting the process of establishing a shipping division, it’s important to plan. Making sure all the necessary information is collected at the start can help avoid unforeseen issues or expenses down the line. Additionally, having processes in place for monitoring costs regularly will enable the company to stay on top of budgets and ensure efficient operations. With proper planning and management, one can ensure that the enterprise’s shipping division is profitable at each step.
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