Business Structures for Shipping Companies

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Business Structures for Shipping Companies

A shipping company provides a valuable service by facilitating seamless and professional cargo transfer. They are vital conduits for global trade and manage fleets of diverse vessels that crisscross the oceans.

Shipping companies also offer warehouse fulfillment by managing raw material and finished product storage on their premises instead of manufacturers’ or retailers’. This helps reduce their storage costs while improving warehouse productivity.


A partnership is an ideal business structure for a shipping company. It offers flexibility and is relatively easy to set up. It also makes it possible to share the profit and loss incurred by the company. However, it is important to remember that the partners are jointly liable for the debts of the company. This may be a concern if you have a large amount of capital invested in the business.

Strategic partnerships enable courier services to provide a more diverse range of shipping options that are cost-effective for businesses and consumers alike. These partnerships allow for collaboration between different players in the shipping industry, from traditional shipping companies to e-commerce platforms. These partnerships are essential to the evolution of the shipping landscape, as they help to create a seamless and efficient shipping ecosystem that benefits everyone involved.

Shipping companies often form strategic alliances with other carriers to fulfil demand on specific trade lanes through the sharing of vessel space. These arrangements are known as Vessel Sharing Agreements (VSAs). Greve et al. (2012) report that a variety of criteria influence the selection of partners for an SA, including market complementarity and port coverage. The former refers to the ability of an alliance member to enhance its own capacity and geographical reach, while the latter refers to a potential for gaining access to new markets.

C Corporation

A corporation is a legal structure that separates owners from the company and protects them from personal liability. It also provides for a tax deduction on business income and can have shareholders. A corporation is required to have a business plan and should register with the state. Once registered, the IRS will issue an Employer Identification Number (EIN) for shipping company the company. The EIN is necessary for bank accounts and to hire employees. If you decide to operate as a C Corporation, it is advisable to consult an attorney for help in drafting your Articles of Incorporation.

Once your legal structure is established, you can start working on the startup expenses and the development of a business plan. The business plan outlines how you will launch and grow your shipping company. You will need to determine your operations, staffing needs, competition and funding sources. Once completed, the business plan will provide you with a roadmap to follow and will be useful in presenting to potential funding sources. You should consider registering your business name and establishing a website for your company. You will also need to acquire business insurance and a truck and/or trailer.

Limited Liability Company (LLC)

A limited liability company is an increasingly popular business structure for shipping companies and other businesses in the transportation industry. An LLC provides owner protection against business debts and liabilities and offers operational flexibility and tax benefits. It is easy to form an LLC and you can register it online or in person. When registering an LLC, you must choose a name that shipping lithium-ion batteries internationally is unique and that does not violate any state or federal laws. You must also select a registered agent that can receive service of process and other legal documents on behalf of the LLC. The agent must have a physical address in the state where you are registering. BizFilings includes registered agent service with its incorporation packages.

In addition to the Articles of Organization, you must draft an operating agreement that sets forth the rights and responsibilities of the members, managers and shareholders of the LLC. The agreement must include the name of the company and a statement that it is an LLC. The operating agreement may be entered into before, at the time of or within 90 days after filing the Articles of Organization. The Department of State does not provide a sample operating agreement.

You must also obtain commercial auto insurance, cargo insurance and passenger liability insurance for your vehicles and any goods you transport. You must also get a federal employer identification number (EIN), which you use to open bank accounts and for tax filings.

Other Legal Structures

Shipping companies have to deal with the challenges of managing ship operational aspects in conjunction with their company structure and business strategy. Considering the nature of the industry and the volatility of its day-to-day operations, there is scarce research elaborating on the combination of these two elements. A relevant elaboration is provided by Theotokas (2007, 2018) who studies the particular characteristics of Greek shipping companies and their evolution over the years with specific references to family-oriented hierarchical organisational structures where clear command chains and accountability are established for each department and personnel.

To support his discussion, he introduces the P-I matrix which maps and identifies external stakeholders in terms of their power and interest to the company based on their position within the organisational hierarchy. The upper right quadrant includes the key stakeholders such as the executive team, onboard and onshore company personnel, flag authorities and brokers. This group of high-power, low-interest stakeholders needs to be kept well satisfied and informed about the daily company activities but also not over-consumed.

The lower right quadrant includes the suppliers of equipment, sub-contractors and consultants to the shipping company. This group has a medium-power but high-interest as they can provide valuable insights about the company’s operations but also have to consider competitors and potential market risks. The lowest quadrant includes the other stakeholders that have a low-power but high-interest such as customers and charterers.

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