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Wednesday, June 3, 2009

Fixing Machine - Tip 3.

Getting Support!

Scenario. You are a competative broker and one of your close cargo clients has a new cargo voyage order. When you see the order on the computer your first thought goes straight to a particular ship that you know is perfect for this cargo. One big problem though. There are 7 other brokers who have exactly the same thought at exactly the same time. The race is now on to garner the support of one or both the principals. Should the two parties fix then YOU want to be the broker involved.

So what to do?

Average broker - after receiving the voyage order he quickly sends the order to the shipowner. In the email he tell the shipowner that this cargo suits his vessel perfectly. At the same time he finds the vessels description from a previous email and sends the vessels description to the cargo owner. In the email he states that this ship is perefect for this cargo.

Half an hour later he first calls the shipowner and asks if he has an interest in the cargo. The shipowner says he does but he is not willing to rate the business as yet. Shipowner also hasnt decided on which broker he will support as yet. All 7 brokers have also sent him the same cargo and some of them have also made a phone call.

So left with nothing from the shipowner Mr Average then looks to the cargo owner. He calls the charterer and asks if he has an interest in the ship. The charterer says that off course he does. The broker then asks the charterer for his 'rate ideas'. The smart charterer says 'no ideas' awaiting interest from the shipowner. The charterer then tells the broker that he will support any broker that brings in firm interest from the shipowner. So again left with nothing!

Mr Average then sits back and will make the same phone call later in the after noon waiting for someone to make a commitment. Average outcome for 6 out of the 7 brokers.

Fixing Machine - Upon receiving the order the first thing he does is pick up the phone (not send an email). He calls the shipowner immediately to tell him about the cargo. The shipower thanks him. The broker then tells the shipowner that the order will be coming to him on email within 5 minutes.

Then the broker quickly rings the cargo owner to tell him about the ship. Without any prompting the broker also tells the cargo owner that the shipowner has an interest and that he is already running a calculation. You will note that the broker is taking a liberty here because he has no idea that if the shiowner is running a calculation or not. But this doesnt matter because it is a damn good guess that the shipowner is running a calculation. Also it makes the charterer believe that the broker has the support of the shipowner and that the shipowner has already picked a channel! Well done fixing machine!

Next step - instead of straight out asking the charterer his freight ideas he approaches it a little differently. He tells the charterer that a similar cargo was fixed last week for usd 20.00 and was wondering if this is ballpark for the charterer. The charterer appreciates the market information and tells him that it sounds a little high and that he will wait for firm interest from the shipowner before he commits to a market expectation.

So the Fixing Machine isnt quite there yet. Although he has done great ground work he still technically does not have either parties firm support. He really needs to find out either 1. the charterers freight ideas or 2. the shipowners freight ideas.

Next step - he runs a voyage calculation! 10 minutes later - after a quick voyage calculation, making guestimates regarding certain costs the broker now has a ball park figure in his own mind what the cargo could be worth in todays market. USD 19.00. This is just a rough idea and inlinwe with the usd 20.00 that was fixed last week. This information is enough to stimulate conversation.

Next step. Try and get the charterers to devulge his ideas. He then rings the charterer and tells the charterer that after speaking to the shipowner the shipowner mumbled something about USD 20.50. You will note that the broker is once again taking a liberty because he hasnt in fact spoken to the shipowner. But he is taking a calculated risk - he has added usd 1.00 to the calculation to protect himself and he has not stated that this is the shipowners firm indication. He mererly stated that the grumpy shipowner mumbled usd 20.50 under his breath.

Good news. The charterer begins to speak and devulge more information to the broker. It turns out the charterers ideas are usd 18.00.

With this information the "fixing Machine' was able to cement the shipowners support and 4 days later the cargo was fixed at usd 19.95 per metric tonne.

The Fixing Machine strikes again! The smarter he works the luckier he gets!



  1. Hi VS

    Thank you very much for this writing...

    Isn't it a bit dangerous that if charterers accept the price you mumbled as shipowner's word but shipowner counter higher than the charterers offer? you have to make sure that charterers will offer lower than the offer you made.

    thanks again.

  2. A mumble is just a mumble - not an offer! Brokers cannot make offers - they can only pass them on...