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April 13, 2010

Ship suppliers face growing late payments problem

Ship suppliers are becoming unpaid bankers to the maritime industry according to Alex Taylor, Managing Director of leading U.K ship supplier, Hutton's. He says late payment is too commonplace and that ship suppliers are the "bottom of the payment chain."

"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," says Mr. Taylor, "but the problem is that the owner, the manager and the agent all understand the industry and accept this."

While chandlers traditionally have always understood the way the industry operates, says Mr. Taylor, "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 than us."

Mr Taylor says ship chandlers can't drag their 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."

"Our suppliers have strict 30-day payment terms," he says. "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 not."

"We have customers who we are supplying who owe us money going back six months and this is unreasonable," says Mr. Taylor. "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."

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