A Shipbroker is a person or entity who
- arranges transportation of goods by sea
- arranges employment of a vessel or
- sells and buys ships on behalf of her clients
A shipbroker acts as an intermediary between ship owners and charterers or the buyers and sellers of ships.
A shipbroker maybe part of a shipbroking department in the principal’s own organisation, or part of a separate company within which individual brokers tend to specialise as owner’s or charterer’s brokers.
There can be an extended ‘chain’ of brokers (occasionally only one) between the two principals.
Each broker involved in the negotiations receives a commission on the gross freight or hire earned by the ship owner.
Various shipping business activities which now operate under the general heading of ship broking, may be divided into three main “disciplines”:
- Dry cargo chartering
- Tanker chartering
- Ship sale and purchase
In this article we will consider in detail a typical business day of a dry cargo Shipbroker (written in 1st person) and the actions that a Shipbroker takes during the negotiations and servicing of a single voyage.
Bear in mind that the process of “fixing” a vessel definitely takes more than 1 day, some running into a few weeks depending on the urgency of the deal. But considering the fact that a Shipbroker works with many clients and many contracts simultaneously, the daily operations could include all items from this list.
The process usually starts with a call from a principal (in our case it is the charterer). The charterer has just secured a sales contract for, say movement of coal in bulk, and is looking to conclude a charter party, so he urgently needs a ship.
First and foremost, I need to gather following information from the charterer before going into the market :
- Charterer’s & Shipper’s background
- Type of cargo, quantity, stowage factor
- Loading & discharging ports
- Loading and discharging rates according to Charterer’s sales contracts
- Commission details
- Laycan (shipment date)
Based on above details, I then check :
- Charterer’s and Shipper’s reputation
- Last few shipments of this charterer, business address and contact details, person in charge
- If the shipper is known I check with them whether the cargo is in port or when it is expected to arrive
- If there are any possibilities to improve loading/discharging rates
- If it will be possible to avoid or reduce address commission as it influences final freight rate
Armed with these details I go into the market looking for a ship, but as a professional Shipbroker I already know :
- Rate idea for this business
- The real chances of finding suitable tonnage quickly and
- Most importantly which ship owner to call so as not to delay the whole cycle
A charterer or ship owner expects any Shipbroker worth his salt to have such level of awareness and provide some initial rate/vessel idea.
Now comes the arduous task of contacting the right ship owner and starting the process of negotiation.
Depending on the current state of the market, I could get the right vessel and rate required in one call but there are times when I have to make dozens of phone calls and emails and still wait for a few days to find a suitable ship/terms.
Well now that I have identified the right ship/rate,
- I send the ship owners initial rate offer to the charterer
- If the rate offer is to the liking of the charterer, then I get the complete terms and conditions of the charter from the shipowner and send to charterer for review
- Charterer may agree to the terms or may wish to make some changes which I then communicate with the ship owner for their confirmation
- Once an agreement has been reached, I advise the ship’s details including ships certificates (where required) to the charterer
- The final fixture recap is prepared and confirmed with both parties
- Get timely confirmation that all subs lifted
- Charter party is signed by both parties
The fixture is now complete.
But before you think I can now relax with a drink with an umbrella in it, let me tell you that all of the above is just half the battle.
Post-Fixture – Loading
Everything is beautiful and hunky-dory on paper, but there is still a lot to be done on my day.
I still need to
- ensure that the charterer/shipowner has nominated an agent at the ports
- ensure that the load port agent has received the nomination from shipowner in order to nominate the ship with the port
- monitor the agents, stevedores, shipper, cargo movement on a daily basis
- monitor that the bills of lading drafts are confirmed in time
- monitor and report loading speed, loading berth, weather conditions etc on a daily basis
- ensure that the shipowner and charterer are informed daily about current stage of loading process
- check NOR+SOF upon completion of loading and find out if demurrage occurred or not
- receive, check & send freight invoice
Post-Fixture – Discharging
Ok so all the required stuff from the port of loading is done, but I still need to
- ensure that the payment of freight and commission is done (get the swift copy etc etc)
- ensure that the discharge port agent receives the nomination together with ETA
- monitor the ships ETA to discharge port and discharging prospects/queue on a daily basis till berthing
- monitor and report discharging process, holidays, weather conditions etc
- check NOR+SOF, if there is demurrage
- do my final calculations of discharge port demurrage and its payment control
Now I can sit back with that drink with an umbrella in it.. Oh wait, I am getting another call from another cargo owner looking for a ship..!!
So as you can see, shipbroking is a demanding and often stressful career, but the rewards can be good for a successful shipbroker.
Shipbroking is a highly competitive field and as per some unconfirmed reports, indications are that there are far more Shipbrokers than shipowners or charterers in the world.
A successful Shipbroker will therefore have to build a strong network of contacts around the world, behave ethically and morally and follow best practices.
In some cases it means that you may spend decades on relationship and network building, yet not be able to cover 80% of your main activity segment.
Fortunately there is a very useful solution which can assist you to do all of the above using an integrated system.
OpenSea.Pro is the first ship chartering marketplace system using which you can
- Monitor the state of the world freight market in real time
- Instantly find vessels or cargo that match your requirement
- Get offers, discuss terms & fix charter party online
- Start your firm negotiations and
- Send a final recap or other ship’s docs or whatever you need in a single chat
Hope this guest article about a day in the life of a shipbroker was insightful.
Do you wish to share what a typical day in the life of “you” looks like..??
Drop me a line with a small bio of you and your work function and if suitable to this blog and useful for all, I will publish it..