Ship suppliers: Operators should stop using chandlers as banks

The following is the text of a press release from the International Shipsuppliers and Services Association:
(LONDON) — Ship suppliers are becoming unpaid bankers to the maritime industry
according to the UK’s leading ship supplier, Hutton’s.

Late payment is too commonplace and adversely impacts on ship suppliers who
are the “bottom of the payment chain”, according to Hutton’s Managing
Director Alex Taylor.

“People say the sector is being used as a banker and that’s right,” says Mr
Taylor who has experience of clients stretching the limits when delaying
bill payment. “You have the shipowner who potentially uses a ship manager as
a bank, who then potentially uses an agent as a bank, who
potentially uses the chandler as a bank,” he outlines, “but the problem is
that the owner, the manager and the agent all understand the industry and
accept this.

“In the meantime you have us and other chandlers who traditionally have
always understood the way the industry operates but this late payment
approach stops with us. It can go no further than the chandler because we’re
at the bottom of the maritime chain. We are the ones that are affected and
we end up bank rolling everyone higher up the chain to us.”

Mr Taylor explains: “We ship chandlers can’t drag our feet over payment
because our suppliers are not in the maritime industry and they are simply
not going to let it happen. It’s just not acceptable
in the real world – you’ve got to pay on time and that’s it, people don’t
accept anything less.”

He says that the current economic climate is exacerbating this cashflow
problem. “I think that’s because as the market has got more competitive
people aren’t making the money that they used to do,” he says. “It comes
down to the old adage that the money is better in my bank account than in
other people’s.

“As a chandler we are at the bottom of the maritime pile and we are the last
person to get paid. But our suppliers have strict 30-day payment terms and
if you don’t pay within 30 days your account is stopped and they won’t trade
with you again unless you keep in payment terms, but in this
industry the managers and the owners seem to think it is acceptable and it’s

Emphasising the point, Mr Taylor reveals: “We have customers who we are
supplying who
owe us money going back six months and this is unreasonable. You sit down
with someone and you agree on a price and in that agreement you agree on
payment terms. That price that has been agreed upon, that price is correct
for paying within those terms. If someone wants to say they’re going to pay
in 120 days then that’s fine and people can factor it into the prices and
if a supplier doesn’t want to accept those terms they won’t do it and the
customer can find someone who will. To agree to pay in 60 days and then
stretch it out for months and months is underhand.”

Alex Taylor’s views chime with those of the International Shipsuppliers and
Services Association (ISSA). President Jens Olsen has gone on record saying:
“Late payment is a growing concern for ship chandlers in the world’s ports.”

Pointing out that late payment “remains a principal cause of concern on
behalf of our members” Mr Olsen said: “We are working as an association to
help our members.”

By Professional Mariner Staff