How to Start a Tug Boat Business

by Felicia Greene; Updated September 26, 2017
Tugboat pushing ship

Tug boats perform varied maritime commerce functions. Tugs maneuver large ships in and out of the ships’ berths. Tugs also shepherd powerless barge convoys up and down current-driven rivers. Cruise ships depend on powerful tug boats to nudge them into crowded docks without incident. Tug boats also assist in environmental projects, perform salvage work and assist with maritime rescues. Tug boat fleets include harbor tugs and more powerful vessels that operate on the open ocean. A tug boat business owner analyzes unmet or poorly met market needs and supplies vessels and services that address clients’ requirements.

Items you will need

  • List of business offices near port waterfront
  • List of appropriate dockage facilities near business office
  • List of required tug boats
  • List of required captains and crews
  • List of regional ports' tug service needs
  • List of maritime companies operating in your regional port
Step 1

Document your tug boat business. Select a business structure with a certified public accountant familiar with marine-based businesses. Business structures include S corporations, limited liability companies and conventional corporations. Consider factors such as your financial situation, risks and benefits of each business structure and the tax implications resulting from each choice. Ask your accountant for examples of other marine businesses that operate under each business structure.

Step 2

Complete your business start-up tasks. Contact a commercial insurance agent with marine industry experience and familiarity with special risks of a tug boat business. Ask about business liability insurance, including policies with coverage for ship damages incurred during the tug's operations. Visit your city or county clerk’s office to obtain a business license, and ask about other needed special permits. Contact your state Department of Revenue about the need for a sales tax license for your service-based business.

Step 3

Lease office and dockage locations. Select a business office convenient to your city’s or region’s major port. Ensure that your office services include high-speed Internet for efficient client communication. Investigate a satellite-based communications system if you plan to operate tugs on open waters not reached via cell phone transmissions. Locate nearby tug dockage facilities so you can track tug operations and crews can easily access your business office.

Step 4

List and analyze your regional tug boat competitors. Identify the type and number of tugs based in each port. For example, tractor tugs are conventional tug boats that perform varied harbor and barge operations. The tug’s engine horsepower and configuration also provide clues to the tug’s intended purpose. List regional markets that seem inadequately served, and identify a service niche for your tug boat business.

Step 5

Purchase your tug boat fleet. Determine the type of work your tug boats will do, and list the types of tugs you must purchase for those tasks. If you plan to concentrate on harbor or river work, conventional harbor tugs likely are adequate. Oceangoing tugs are larger, more powerful and contain crew living quarters. Barge tugs are configured differently as well. Locate new or used tug boats in online marketplaces and targeted commercial marine publications.

Step 6

Hire experienced captains and crew. Seek qualified tug boat captains to operate your fleet’s tugs. Ensure that captains are familiar with your service area's bodies of water. The Coast Guard has established captain’s, or master’s, license requirements based on the weight of the vessel commanded. The Coast Guard issues 100-ton to 1,600-ton master’s licenses. Look for qualified mates, seamen and deckhands as well. Contact maritime employment services, merchant marine institutes and captain’s license schools to find qualified candidates.

Step 7

Market your tug boat business to regional ports. Meet with your city’s port captain or harbormaster, who maintains oversight of all port operations. Present a proposal that meets the port’s specific tug service needs and provides you with a competitive edge. For example, offer volume pricing to a busy cruise ship terminal. Provide incentives to cargo terminal operations that maintain regular schedules, which reduces last-minute requests for your company’s tug services.

Step 8

Contact maritime companies. Locate companies that regularly send ships through your regional port. Examples include container ship companies, oil tanker fleet owners and cruise ship companies. Profile each company’s operations and identify its needs. Prepare tailored proposals that provide excellent service and value to each client. Respect foreign-owned companies’ cultural customs while building your business relationships.

About the Author

Based in North Carolina, Felicia Greene has written professionally since 1986. Greene edited sailing-related newsletters and designed marketing programs for the New Bern, N.C. "Sun Journal" and New Bern Habitat ReStore. She earned a Bachelor of Science in business administration from the University of Baltimore.

Photo Credits

  • nomis_g/iStock/Getty Images