It’s interesting how, despite air travel being possible since the 1900s, we still rely so heavily on the sea for cargo transport. More than a century after the first airplane took off, it is still far cheaper to ship cargo than send it by flight. Some estimates state that the same cargo that costs $195 to send via sea would cost $1,000 by air.
It doesn’t look like we are going to see any serious disruption to the hold that freight shipping has over cargo transport. Thus, starting a maritime shipping company can seem like an interesting prospect for brave entrepreneurs.
It’s not going to be easy for them, though. There are numerous challenges that lie ahead for anyone trying to start and grow a shipping company in 2023.
In this article, we will aim to gain more context that can help you start and scale your maritime shipping company.
What are the Challenges that Lie Ahead?
Even for the most oblivious entrepreneurs, it is clear that launching a new company in this industry isn’t going to be a cakewalk. You would have to be overly optimistic or inexperienced to think it will be easy to compete with massive shipping companies that have been in this game for decades. Some of them have been in the trade since the early 1700s.
Let’s explore a few challenges and understand how they can be tackled.
Finding Enough Capital
It goes without saying that finding capital is going to be one of the biggest challenges you need to consider. If you have already planned and accounted for it, that’s good. If not, you will need to begin the journey of finding capital.
This can be challenging because investors tend to be aware of how risky the shipping industry is, especially for new ones. You will need to have scoped-out investors that trust you, or you are going to have a tough time.
So yes, venture capitalists and private investors are the most sought-after, but you do have other options as well. This can include debt financing in the form of traditional bank loans. Yes, they are a bit risky and will also require you to have significant collateral and a clear repayment strategy.
In many countries, the government also offers grants and subsidies to encourage maritime industry growth. It can be worth checking them out. Lastly, you can team up with others to form strategic partnerships. This can make it easier to find your footing as you get to pool your network and contacts together.
Crew and Staffing Problems can Sink your Company
Say you managed to raise enough capital to launch your maritime shipping company. Congratulations! You managed to deal with the first major challenge. However, you aren’t in the clear yet. Finding a qualified crew is also extremely important.
This goes back to even the old days when ship captains often had a hard time finding good crew. Things have improved, but it is still easy to end up with a poorly skilled or incompetent crew.
Having just launched your company, it’s unlikely you are swimming in funds. As a result, you will have to set appropriate expectations for crew quality. Yes, we would all like to hire super-qualified, highly experienced crews that can handle anything thrown at them, but it’s important to be realistic.
That said, the situation isn’t without hope. There are certain management services, like Martide, that can make finding good crews a breeze. Such services typically source talent pools from around the world and also take care of wage management.
According to Martide, this allows shipping companies to simplify the crewing process while still having control over and vetting who gets selected.
Hopefully, your maritime shipping company has managed to stay afloat after dealing with capital and crewing challenges. You might have also faced other challenges along the way, such as finding contracts and clients, but you survived. That’s great.
At this stage, it’s easy to start feeling comfortable, as things seem a little more secure. You aren’t worrying about the survival of your company, and the revenue has also started to pick up. However, certain events outside your control can end up putting a spanner in the works.
The shipping industry is often hit the hardest when there are economic downturns and geopolitical events. Trade tensions, sanctions, conflicts, and more can all affect the industry.
At a certain level, virtually all maritime shipping companies plan ahead and have ways to tide over the impact of external events. This can involve investing in comprehensive insurance policies that ensure your entire operation doesn’t get overwhelmed by a single conflict or trade disruption.
To wrap things up, no one said that it was easy to start a maritime shipping company. It is a massive, high-risk industry that requires significant investment and capital to succeed. That being said, if you do manage to pull it off, the revenue and income you can expect can make it well worth the trouble.