Bimco case study

Published Dec 2, 2016 5:02 PM by Tony Munoz

(Article originally published in Sept/Oct 2016 edition.)


A century ago it pioneered the first standard charter party agreement. Since then it’s championed the interests of its members in everything from contracts to training and education and the environment. No wonder it’s become the most trusted brand in the industry.

By Tony Munoz

In 1905 a group of shipowners from Scandinavia, the U.K. and northern Europe gathered in Copenhagen to agree on freight rates for the upcoming timber harvest. They had been competing for years and wanted to find a better way – a system that would benefit everyone and prevent some from going out of business. They reached agreement, and thus was born what was originally called the Baltic and White Sea Conference and later became the Baltic and International Maritime Council. Today it is known simply as BIMCO.

            Eight years later, in Paris in 1913, a similar meeting produced the first draft of a standard charter party agreement, one that would cut across regional differences and resolve costly disputes before they could arise. It was a breakthrough moment, and it set the tone for what would become a BIMCO trademark: the quest for standardization in everything from contracts to rules and regulations to safety, training and the environment.

            Today BIMCO is the largest maritime trade group in the world. With headquarters in Copenhagen, its 2,200 member companies hail from 120 different countries and represent over half of global tonnage. BIMCO’s membership mirrors the industry itself. Greece is #1 in terms of number of members while Japan leads in tonnage. Of the 10 largest members, five are from Europe and five from Asia. It enjoys NGO status and works closely with the IMO, government agencies and other international maritime associations on all things maritime.

            In many ways it’s become the voice of the industry, although Secretary General & CEO Angus Frew demurs and says that distinction is really shared with the International Chamber of Shipping, with whom BIMCO – naturally – works closely. Regardless, it’s a well-known fact that “when BIMCO speaks, people listen.”

Badge of Respect

Membership is not a given. BIMCO has a full-time Membership Department that screens applicants on the basis of their finances, management, operating and safety procedures, and environmental record before passing them to the Board of Directors for their approval. Membership confers credibility and even prestige on the recipient, much like membership in a private club does.

            “It’s considered a badge of respect,” says Frew.

            Membership has its privileges. BIMCO members are much more likely to win contracts with fellow members and third parties than non-members. They feel safe doing business with one another because they have all earned the equivalent of the Good Housekeeping seal of approval. BIMCO meetings and conventions provide fertile ground for member interaction. And BIMCO will go out of its way to defend its members’ interests, including the collection of undisputed sums owed but unpaid as a result of mediation.

            And, of course, BIMCO’s contracts are the norm and are used by members and non-members alike. It’s estimated that seventy-five percent of maritime transactions involve the use of BIMCO contracts. SUPPLYTIME and BARECON are two of the most widely used, for offshore and bareboat contracts, respectively. GUARDCON is another, for armed security personnel. Others cover newbuildings, shipbreaking and vessel sales, to mention just a few.

An Ocean of Expertise

Beyond the business benefits, members enjoy an astonishing array of services. They run the gamut from piracy reports and industry outlooks to education and eLearning courses, software programs, and emissions and compliance guidelines. All are aimed at giving members the tools they need to succeed in an increasingly competitive industry.

            Among the more innovative is the Shipping KPI System, originally developed by a cross-industry group but now run exclusively by BIMCO. KPIs are key performance indicators generated by the system using 64 performance indicators in areas like Operations, Navigation, Health & Safety, Human Resources, the Environment and Security to measure and report performance on different types of ships in different industry sectors. The results allow shipowners and operators to benchmark their performance against the industry average and identify areas for self-improvement.

            Another first was BIMCO’s lead role in the publication early this year of “Guidelines for Cyber Security Onboard Ships,” a groundbreaking manual in an area of growing concern. The product of a joint effort among BIMCO, CLIA, ICS, INTERTANKO and INTERCARGO, the guidelines encourage companies to take a risk-based approach to cyber threats that is specific to their business and the ships they operate. Well-publicized cyber-attacks against major banks, eBay, SONY and even the U.S. government have given the issue all the more urgency, and an incident onboard a ship at some point in the future is inevitable. The point is to be prepared and know how to respond.

            Frew says this is a big part of BIMCO’s mission – to anticipate future areas of concern and alert members while giving them the means to respond effectively. He recalls the moment he first realized that cyber was a threat. It was in 2014, shortly after he had been named Secretary General, and he was attending a trade show in the U.S. He was attracted by a satellite display at a telecom supplier and wandered over to inquire. The ensuing conversation convinced him that the growing use of satellite communications and the Internet onboard ships posed a real vulnerability.

Environmental Concerns

Two areas of ongoing concern for BIMCO are the newly ratified Ballast Water Management Convention, which will enter into force next September, and the proposed implementation of a global cap on sulfur in marine fuels of 0.5 percent in 2020.

            The ballast water issue centers around the fact that there are as yet no type-approved treatment systems for use in the U.S. Owners who trade in U.S. waters and who invest in one of the 50 or so systems already approved by the IMO for use everywhere else in the world may be at a huge disadvantage if they later find the system they bought does not pass muster under supposedly higher U.S. standards.

            “A U.S.-approved system would be very helpful,” deadpans Frew, who is a firm believer in a single universal standard – for all the obvious reasons. 

            As for the sulfur cap, it goes back to 2008 when the industry approved the 0.5 percent limit as part of the adoption of the revised MARPOL Annex VI. No one really paid attention at the time, but 2020 is now fast approaching. BIMCO is not against the cap per se. It just doesn’t believe the industry can get there in time and the date should be pushed back to 2025 – for two very good reasons.

First, according to an independent study partly funded by BIMCO, there won’t be enough low-sulfur fuel available by 2020 because the refining industry will have insufficient sulfur removal capacity. In other words, the global refining industry will be unable to produce sufficient low-sulfur fuel to meet industry demand. 

            The second reason for concern goes back to the “level playing field” concept that is central to BIMCO’s mission: How do you enforce a global 0.5 percent sulfur limit on the high seas? Companies that “cheat” and use cheaper heavy fuels will have a huge leg up over those who play by the rules. The enforcement issue is a stickler, and so far no easy solution is in sight.

Freshening the Image

By the time you read this BIMCO will likely have introduced a new website and corporate identity, part of what Frew calls “freshening the image.” He has already reversed the decline in membership. Now it’s time to bring the brand up to date. He had done the same thing in his previous job as CEO of the U.K. Chamber of Shipping. With BIMCO he was simply doing it on a bigger stage.

            “We need to make sure we remain relevant, that we are communicating effectively and communicating the right information,” he explains. The website had become cluttered, “a bit of a mishmash,” and needed a redo. The corporate identity similarly needed bringing up to date, said Frew.

In a survey of members leading up to the makeover, BIMCO found an amazing degree of trust and satisfaction with 99 percent of respondents saying they would renew. Members also looked to BIMCO to provide leadership to the industry and to partner with others (ICS, INTERTANKO, et al.) in doing so. The only complaint was the need to communicate better.

            As for the future, Frew sees his role as “maintaining the brand” and anticipating issues before others do. He looks for “breakthroughs,” new ways of doing things and of expanding BIMCO’s role in the process, all with an eye on BIMCO’s members and their needs. Above all, he wants to communicate effectively and deliver the right information in the right way. “We have the most trusted brand in the industry,” he muses, “my goal is to keep it that way.” – MarEx

Tony Munoz is Publisher and Editor-in-Chief of The Maritime Executive.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.