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Hi. I am a shipping company director, transport academic, author, family man and all round nice guy. I have worked as shipbroker, shipowner, freight trader and bulk charterer, in senior positions, with some of the largest and most disrespected (joke) companies in the world. Ask my advice on all things shipping and you will receive my blunt and always honest answer. Hang around to learn more about chartering and ship broker salaries, chartering and ship broker jobs, chartering and shipbroker recruitment agencies, cheap freight, maritime education, chartering and ship broker qualifications, become a ship broker, tips on how to be a successful bulk shipping executive, philosophy, Zen and the art of shipbroking, and much more. Yours The Virtual Shipbroker (recently proclaimed the guru of shipbroking) Copyright © 2009-17 by Virtualshipbroker

Sunday, July 26, 2009

"Who you calling a shipowner!"

Here is the thing about shipowning. The term can mean many things.

For a charterer, the term shipowner, means the charterers counterparty in any freight transaction. So this is the company who provides a ship at the right place at the right time.

Many charterers who are not that ofay with the world of shipping, presume that anyone who provides a ship must be a pure 'shipowner' and thus have easily caluclated fixed costs and required rates of return.

That is why in high freight markets you hear charterers crying foul of the filthy greedy shipowners.

Unfortunately for the unitiniated this only tells part of the story. Yes in high markets some shipowners (pure ones, for example) will benefit from raised asset prices and increased freight rates. But more often than not they will be facing the same market conditions as the charterer.

Ask yourself the question - How then have we seen in such a freight bubble some 'shipowners' go bankrupt?

Answer - because most shipowners are not 'shipowners'. They are 'ship operators' and 'freight traders'. These guys dont own ships, they lease ships for long periods and then re-lease the ships at shorter period trying to make a margin.

If the market rises or falls dramatically and they have the wrong mix of ships and cargoes then they can go bankrupt.

So unlike pure shipowners who are interested in long term returns and growth, these guys are mainly concerned with short and medium time frames. Cashflow becomes very important.

Ship operators / Freight traders (different terms for the same type of firm) need to be experts, and within the wider market are often the smartest guys on the blcok - because they have to be!
No resting on laurels here, they need to know the market at all times and they need to be great negotiators. They will sniff out a victim accross a dodgy vindaloo any day of the week.

This is where a good broker adds value. Many charterers THINK they are saving money by cutting out brokerage and attempting to deal direct with shipowners, freight traders and the like. If the charterers are not shipping experts then this is a very bad move indeed.

Any good freight trader, after being approached direct by some unsuspecting cargo player, will automatically raise freight rates, and negotiate favourable terms, if they feel they can get away with it.

Sounds a bit complicated - shoot with any questions if you have them



  1. hi VS,
    Great stuff. very substantive.

    So, ultimately,would you say a shipbroker is more of a mediator or negotiator?

    Also, If the broker is looking out more for the charterer so he doesnt get cheated (as in your scenario), are the shipoperators going to want to work with that broker in the future?

  2. Hello Peter

    I think any good negotiator is a mediator too!

    To answer your second point - in 'starting a shipbroker business' I talk extensively with regards to the different types of brokers. Charterers brokers, owners brokers, generalsists etc.

    The key to good broking in this situation is too, on the one hand, gain the confidence of the charterer, and on the other hand show the shiponwer respect during the negotiation process.

    As a broker, if you can help it, never make it obvious which side you are supporting (unless you have a good reason). So although you have recognised that you are helping the charterer you can also throw the shipowner a bone by looking after them in other ways. WIN-WIN-WIN!