Here is an interesting way to look at the TC vs VC decision making process.
Another tough one to get your head around - so bare with me.
Lets say you the charterers have a cargo of coal ready to fix on voyage charter to a shipowner. The shipowner will price this voyage as follows
Cost plus margin (expected profit) = total freight charged.
The point here is that the shipowner will only move the cargo if he sees a profit. Or put another way - you the cargo owner are paying someone a margin to move your goods.
So the other choice you have is to remove that margin by doing it yourself at cost. This means instead of Voyage Charter you decide to try Time charter.
The only problem with attempting to do this voyage at cost (time charter) is that now you have extra risks and responsilities. You also need more xpertise and manpower to execute the voyage.
This is where the margin (payable in a voyage charter) goes. In a voyage charter you are paying a slight premium because you are giving over risk and expertise to a shipowner.
The reason why I have been thinking about these concepts is because I am currently mentoring a very small group of students who are super keen to expand their shipbrokering and chartering knowledge.
This blog process helps get the concepts clear in my mind.
Hoping it helps you too..
- The Virtual Shipbroker
- 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