Chandlers suffering as ship managers don’t pay bills on time

The following is the text of a press release issued by the International Shipsuppliers & Services Association:
(LIMMASSOL, Cyprus) — Ship managers and ship suppliers “find themselves in the same boat†when it comes to dealing with ship owners’ cash flow problems, the head of the International Shipsuppliers & Services Association (ISSA) has claimed.

Jens Olsen said now was the time for owners to be more upfront with their suppliers if they are experiencing problems as late payment can have disastrous effects on suppliers’ own cash flow and their ability to supply ships in the world’s major ports.

“Late payment, and in some cases the non-payment of ship supply invoices, is a growing concern for ship chandlers in the world’s ports and causes us further concern now we are in the midst of the global downturn and the slump in shipping movements,†he told delegates attending a shipmanagement conference in Limassol, Cyprus.

“We are working as an association to help our members by showing owners the impact their slow paying has on the ability of companies to continue to supply them. Other innovative ideas are under active consideration to get around this problem but it remains our principal cause of concern on behalf of our members.

“I believe the time has come for ship owners and managers to look upon their ship suppliers as partners without whom their vessels simply could not operate. You have to question whether you regard your supplier as an ally or as a foe: a partner or a necessary evil. I would hope the former in both cases,†he told delegates.

“We have touched on this issue of the impact of poor freight rates and tight cash flow on the ship supply sector. We sympathise with our manager colleagues who complain about the pressure they face from owners keen to pass on late payment issues down the line. We want to help but that does not mean ship suppliers should end up being the bankers to the managers and the owners.

“I know of one instance where a ship supplier member waited 12 months for a £1,000 payment only to be asked by the manager if he would finally accept discount terms on the heavily overdue amount. Another ISSA member secured a court order payment for the late payment of a £25K bill only to be told that the debtor defaulted on his second £10 monthly payment,†Mr Olsen stressed.

He said that as an industry, ship suppliers couldn’t continue to operate like this. “If the owner and the manager fail in their obligations soon you will have no suppliers left.

“Ship arrest is still an option but a trusting relationship can mean ships are supplied correctly and efficiently and the supplier gets paid. Ship suppliers are starting to consider more seriously, the legal route, but we are always open to negotiation and enhancement of the benefits of a
relationship,†he concluded.

By Professional Mariner Staff