For most businesses in the marine industry, a fleet of vessels makes up one of the company's biggest expenses. Chartering barges, tugboats and other marine vessles is an increasingly popular way to keep costs down while also providing the flexibility to scale up or down to meet changing business needs.
Chartering marine vessels is an espeically compelling alternative to owning for companies operating in industries that tend to experience greater market fluctuation, such as oil and gas, construction, steel, and others with a need to respond to varying capacities.
Advantages to chartering include:
- Increased flexibility. This is often the single biggest benefit of chartering because it gives marine operators the ability to either respond to new opportunities or scale back as needed.
- Risk management. Chartering helps all companies protect against risk related to the macroeconomic environment. Because charter agreements are short-term, the company using the vessel isn't stuck with the overhead of owning a vessel through an economic downturn.
- Tax optimization. In most cases, charter payments can be treated as an expense on the income statement, thereby reducing the net cost of the vessel.
- Enhanced cash flow. Typically, only the first payment is due at the outset of a charter agreement, which means marine companies can conserve cash for reinvesting in the business.
For more information and a complete list of benefits of chartering marine vessels, read this article written by Ronnie Evans, Key Equipment Finance director of marine finance, published by Workboat magazine.