Argos Shipping Company Business Plan

The proposal attempts to inaugurate a new shipping business to meet the demand for an overwhelming increase in the shipping services. Moreover, an increase in the level of international business has led to a rapid increase in demand for shipping services that offer reliability, convenience, speed, and promise. Moreover, the shipping industry is rapidly changing and growing because of the rapid rate of international trade, however, it is still pertinent to realize that shipping industry involves a lot of money because the business is competitive and capital intensive. More importantly, starting the shipping business requires having in-depth knowledge of container, import, and export, and logistics industries. Despite our intention to start the shipping business, we still need a business plan to realize our goal.

A business plan is one of the strategies that can assist a start-up company in succeeding in the shipping business, and one of the important aspects of the business plan is the funding to start the business.

The objective of this document is to write a business plan to start the Argos Shipping Company.

The initial budget will be $75 Million and we aim to buy the new ship to start the operation. However, we will like to buy a container ship that will transport containers from one country to the other. We aim to buy the ULVC (Ultra Large Container Vessel) of 41 capacity, and the length will be 366 meters (1,200 ft) with 49m (160.7 ft). The ship will have a capacity of 18,270 TEU, and will be able to transport the Maersk Triple E. class to different destinations. Since the business is capital intensive and will involve a lot of funding to start, we will lease a ship to evaluate business profitability before we start the business in full scale. However, we will use the business and marketing strategy to achieve high profitability by absorbing the unmet demand. Initially, we will focus on the niche market, and underserved routes to serve unmet demand. Moreover, we aim to use up-to-date technology to identify the shortest possible routes to reduce the costs of operations as well as reducing low marketing costs with maximum efficiency to deploy resources.

Since our business is located in the United States, we will need to register our merchant ship in Luxembourg under the flag of convenience to reduce our operating costs as well as avoiding the regulations of our home country. We will register in Luxembourg flag using their national flag to assist in determining the legal jurisdictions to operate and determine our tax obligation. The benefit of declaring our flag of convenience is to reduce our tax costs and operating costs. We will register our shipping business in accordance with Luxembourg "article 5 of the Luxembourg Maritime Act 1990." (Luxembourg Maritime Administration, 2017 p 1). We will use P&I (Protection and indemnity) insurance to protect our business from unforeseen business risks. We will join a P&I Club to allow us in risk pooling, and to source information that will assist us managing our business effectively.

Our certificates for the shipping business are as follows:

We have International Tonnage Certificate of 1969 that determines our net tonnage in accordance with Article 7, Tonnage Convention. We also have the "International Load Line Certificate" to operate the shipping business.

Our crew member will consist of officers, specialist technicians, and lower level crew.

Category

Crew Per Vessel

Average Salary per Month

Nationality

Crews

Master

1

$8,755

European or American Nationality

Chief Officer

1

$6,430

European or American Nationality

Second Officer

1

$3,175

European or American Nationality

Third Officer

1

$2,770

European or American Nationality

Chief Engineer

1

$8,100

European or American Nationality

Second Engineer

1

$5,885

European or American Nationality

Third Engineer

1

$3,085

European or American Nationality

Fourth Engineer

1

$3,040

European or American Nationality

Electrician

1

$3,830

European or American Nationality

Bosum

1

$1,590

European or American Nationality

Able Seaman

2-4

$1,230

European or American Nationality

Ordinary Seaman

1-3

$890

European or American Nationality

Oiler

1-3

$1,265

European or American Nationality

Wiper

1

$850

European or American Nationality

Fitter

1

$1,550

European or American Nationality

Cook

1

$1,598

European or American Nationality

Messman

1

$720

European or American Nationality

Source: Deloitte (2010)

The organization structure for our shipping company is as follows:

Board of Director will be in charge of the administration of the company. The board will select the top officers, their remunerations and termination if necessary.

Managing Director will be responsible for overall management of the company. The auditor will also ascertain that the company fund is used appropriately.

The main departments will be as follows:

• Legal Marine insurance

• Finance and Accounting

• Administrative

• Technical

• Linear Department

• Chattering Department

• Dry Cargo Department, and • Tanker Department.

The fig 1 reveals the organizational structure of the company.

Fig 1: Organization Structure

Source: Pearson (2002).

The legal department will be responsible for drafting the "contracts for new buildings, company law, national/international taxes, purchase/sale of ships. The company lawyer is also often on the Managing Director's staff, and/or secretary to the Board of Directors. Frequently, this department will often also handle marine and other insurance matters that may arise of a legal nature." (Pearson, 2002 p 3).

The administrative department will be responsible for internal control, internal service and personnel. The internal control is to ensure that all the company activities are carried out based on the company policies in accordance with the national and international law. The accounting and finance departments will be responsible for the budgets, finance and accounting of the company.

The marine and technical department will be responsible for the fleet management that includes repair, storing, manning, operations, and dockings. The department will be responsible for identifying the new ships that will be used for the shipping operations.

Marine Claim and Insurance department will be responsible for the ship insurance and claims. The Liner Department will be responsible for the linear trade, and assisting the company to enter into a co-sailing agreement. The linear department will also be responsible for the booking and marketing of cargo, document port facilities, allocation of space, loading and discharging. Dry and Tanker Cargo Department is the Chartering Departments. The tanker department will be responsible for handling bunker contracts for our fleet.

The third party company is critical for our operation, and we will use the third parties to carry out our non-core business operations. We will outsource our non-core activities to the third parties to reduce our cost of operations. In the contemporary business environment, outsourcing has become the strategy that firms employ to achieve competitive advantages and reduce the cost operations. (Brewer, 2006).

Dawne (2003) believes that when companies face their core competencies by transferring non-core activities to the third parties, they will be able to achieve competitive advantages. Thus, we will use the third parties to outsource out the non-core activities to achieve competitive market advantages. Moreover, we will need services of the third parties to procure materials that we will use to manage our shipping operations.

The wages and responsibilities of personnel at the office is presented in Table 2

Table 2: PERSONNEL PLAN

Responsibiities

Wage

Human Resources Personnel

HR personnel will be responsible to manage the company personnel

$5,600

Sales & Marketing Manger

They will carry out adverts and marketing for the company

$5,700

Director of Sales & Marketing

They will be in overall control of adverts and marketing for the company

$7,300

Cargo Service Manager

They will foresee the cargo operations.

$5,540

Accounting Manager

They will be in charge of overall accounting operation of the company

$6,500

Legal Officer

They will be in charge of drafting legal document for the company

$5,800