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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

Tuesday, November 22, 2011

Should a charterer do business with a shipowner in financial trouble?

There are a number of shipowners / shipoperators around with less than healthy financial positions. Some of them are quite well known, the banks and creditors are onto them and they are treading a fine line hoping to stay afloat until market conditions change.

So the question is "should a charterer fix with a shipowner who is in some financial trouble".

Well theat depends.

First thing is this. The charterer is the one who pays the shipowner, so this is a prefered position to be in. You are the the one who owes the shipowner not the other way around. So yes i think from a starting point fixing your cargo to a fincially insecure shipowner is ok. What you don't want to be doing is fixing your ship to this same owner (to cover one of their cargoes) because they then need to pay you.......and this will be problematic. Especially if they are in survival mode.

Secondly for voyage cargoes, a financially strapped shipowner will more than likely be super aggressive which is great as the charterer gets a super cheap rate. The reason a financially strapped shipowner craves voyage cargoes is because of cashflow. If he fixes a voyage cargo he get 95% or 100 % cash upfront. If on the other hand the cash strapped shipowners opts for time charters he gets drip fed cashflow every 10 or 15 days.....which is not great for him.

So there is an opportunity for a win / win in this case. Cheaper rates for voyage charterer, cahsflow for owner on the skids.

The biggest problem you can have is if the ship carrying your cargo gets arrested. Then your cargo could be stuck onboard causing immense pain for months to come.
Never fix a long term contract with a shipowner unless they are financially sound.


Dont comma rockin if the repo man comes a knockin...(that makes no sense but run with it...)

VS

4 comments:

  1. What about the risk that the ship gets arrested, causing the ship to miss the laycan, or worse, if your cargo is already aboard?

    ReplyDelete
  2. Hello CH

    yes this is always a chance. If a ship is arrested the parties can allow operations to continue without the ship being able to leave the port...although this is still a risk.

    Thanks comments

    ReplyDelete
  3. hi vs nothing to do with the post you made but i would like to ask if it is possible for charterers to become bunker traders? how different is the job scope apart from the fact that ur now dealing with oil?

    ReplyDelete
  4. Virtual ShipbrokerDecember 2, 2011 at 2:15 PM

    A bunker Trader or a bunker broker?

    VS

    ReplyDelete