The art of War

Shipping is War. Its a friendly war of sorts, but be under no illusion it is WAR.

Its a bit like a world cup soccer match. It may seem friendly before kick off but the best players are prepared to die on the field if they have to.

So whats my point? The point is that negotiations are usually always robust and each side should do whatever they can to get an advantage.

A shipowner will use whatever he has at his disposal to get a high freight rate and favourable terms. The same goes for a charterer. The should do whatever they can to try and secure the best possible outcome (low freight rates and good terms) for their stakeholders.

How then does this manifest in a negotiation? It can get extremely willing. People get angry, People make preposterous claims, executives send letters that seem like legal threats...any advantage that can be gained will be (if the person is doing their job).

And guess what? This is expected. And the funny thing is that after days of quite stressfull rhetoric once a deal is done all parties shake proverbial hands and then get themselves prepared for the next round of negotiations to take place.

So never feel guilty about pushing your case if you feel you are in the right. The "opposition" may get upset for a period but they soon forget when the next deal arrives on their computer screens.

Its all part of the game.

VS

The VS Dry Cargo Shipbroking and Chartering Certificate

Is in full flight.

6 Students are 1 month into the 4 month program. No one pulled out after 2 weeks so this is a good sign..lol.

By all reports they are learning alot. By the end of 4 months all the little things they are learning will 'click' and their overall knowledge of how things work will be akin to many with atleast 2 years in the industry.

A great thing about the process is that new questions arise with every group of students. It allows me to get a clearer picture of the issues (blank spots) facing people wanting to enter the industry.

Which brings me too a great question.

One of the students has asked "VS - When (what time frame) do Charterers and Shipowners aim to fix their Cargoes and Ships?". He goes on to state that he heard somewhere that shipowners always try and fix ships 2 week before they are open (finished discharging the last cargo).

So whats the answer?

Is it one week before for both ships and cargoes? is it 2 weeks, one month, six months etc etc...

Some things to consider when answering this question.

1. Is the market on the move? If the market is going up then would a shipowner want to fix his ship early or late? If the market is going up will the charterer want to fix his cargo early or late?
Same vice vera - if the market is in freefall?

2. What risk profil do the shipowners and the charterers have? Low risk firms like to fix early (2-3-4 weeks prior). Firms with more higher risk profiles are more likely to wait until the last moment in search of a great deal.

The longer your wait the possiblity you may find a great deal. But it also increases the risk of default. Wait too long and you may be left with no options. This can be super costly.

3. Depends on the counterparty. In a rising market the shipowner may have every intention of waiting until the market rises further UNLESS offcourse a charterer comes to the table early and agrees to pay an attractive rate in order to lock in the ship. Same goes the other way. In a dropping market the charterer may think the best thing to do is wait for a cheap ship BUT a shipowner may see the writing on the wall and drop his rate dramatically before the market tanks altogether.

4. Depends on the loading and discharging areas. If a piece of business (ship or cargo) is open in a geographical area that has limited supply of counterparties then you will be better off to fix early. If there are lots of different opportunities then you can afford to wait!

++

A good broker knows how all the above play into a certain equation / negotiation. Knowing the above variables and how they fit into a situation enables the broker the try and manipulate the situation in order to bring about a fixture (sooner rather than later)...

Good question...

I hope this explains the decision making process faced by shipowners and charterers alike.

VS

Commercial vs Operational roles

Good question

qte

dear vs,


i am a graduate of maritme studies in greece.I am a really hard worker and very passionate about shipping but i believe that i lack of communication skills and i am not so much an extroverted personality.do you think tha i could succeed as a shipbroker?? would you recommend a ship operation career rather than a shipbroker? And finally,is a ship operator paid as well as a shipbroker?I am looking forward to hearing from you.

thank you in advance

unqte
 
Many thanks for the question. I am glad you have a level of self awareness regarding your strengths and weaknesses - that can save you years and lots of heartache!
 
Your thinking is very sound. It doesnt necessarily mean that quiet people dont make good commercial employees though. It takes all kinds.
 
My suggestion is this. Your entry level job should be in vessel operations and post fixture. Spend a few years doing it and if your confidence and communication skills improve then maybe you should then consider moving accross to a commercial role. If you love your operational role then nothing lost! Keep going.
 
Senior operational roles can pay handsomely. Firms NEED good operations people. The role is much more secure and less stressul (differetn stress) then commercial roles.
 
In general though - you will find the overall pay scales are 20-30 percent less. (still very good!)
 
Thanks for the message
 
VS

In transit

On a business trip at very short notice. Those waiting on a reply from me (regarding anything) I will be sure to get back to you next week...

Cheers
VS

Charterparty Question - good one too...

qte

hello vs

how do charter parties are formed if no one knows the clauses or understands just the basic ones.
where does one draw clauses from to form 35 pages?
Is shipbrokers' knowledge limited to specific charterparties according to the owners that trade with them?

thanks

Unqte
 
Many thanks for the question. What you are alluding too are the 'rider clauses' which are the additional clauses that can add another 20 to 50 pages to a charterparty..
 
How are these formed? Good question. Truth is that over the years various rider clauses do the rounds, so to speak, and then end up as standard type clauses in various types of charterparties.
 
You will find that many of the clauses form organically. BHP for example may have (20 years ago) insisted on a specific laytime clause. Slowly this clause gets accepted by shipowners and then other 'charterers' hear about the clause and decide they also like it and then incorporate same into their charterparties.
 
Same goes for shipowners. Many moons ago, for example, shipowners and their lawyers came up with various rider clauses they wanted to be part of any charterparty they agree too. During the course of negotiations these charterparties would be discussed and agreed and disagreed too. Eventually they find their way into standard type charterparties and eventually anyone and everyone agrees to them.
 
The shipowners have help too. For nice shipowner friendly rider clauses go to the Bimco website. These guys produce a number of shipowner friendly clauses covering every rider clause imagineable.

(In truth the Bimco sanctioned cps are well balanced these days because most shipowners are also charterers depending on the day)
 
Heres another thing that many people dont realise. Charterparty clauses are highly negotiable. Some people are experts at these clauses. Being a Charterparty guru can save you and make you millions of dollars.
 
In a high market (low supply and high demand for ships) - shipowners can push through just about any clause they like.
 
But when the market drops look for the charterers to push through clauses that no shipowner of right mind would ever agree too...
 
So we end up having 'shipowner friendly charterparties" and "charterer friendly charterparties"...the trick is to spot the difference.
 
If you need help on a charterparty drop me a line - maybe we can work something out. I have put together a number of charterparties over the years skewed towards both shipowners and charterers. Im happy to help out ........................for a fee! Very underrated thing is getting your cp right! Could save you (or make you) millions

Cheers
VS

Thanks to the Followers

I just wanted to acknowledge the 71 Followers of the blog. It can be a thankless task being a follower when you dont get any feedback whatsoever.

You will be glad to know that when I log on the first thing I do is see if anyone else has signed on as a follower. And if they have it warms my waters...thats for sure.

Amazing stuff and Thanks again.

Some of you have incredible art work too...one or two a bit raunchy..

I might organise a party for this exclusive club (one day you never know)

Cheers
VS

The plaintive shipowner is back - and he is angry!

qte


Not an new but increasingly stong armed scam by some of the world's major charterers (you know who you are) is this - a ship arrives at a load port within the laycan to load - expected waiting time is 10+ days. NOR is permitted to be tendered at anchorage. No surveys are available at anchorage. If the vessel should subsequently fail survey (ie after berthing after a 10+ day wait) the previously tendered NOR is deemed to be void and all time waiting/demurrage accrued does not count and owners has to tender a new NOR once vessel has passed survey. The usual rule of time ceasing to count from time of failure to time of passing is being thrown out the window as these majors shove their charter party terms down the throats of Owners.


Think about it - as an Owners you have sent your asset to the load port within the required dates saying here i am as required - survey me, berth me, load me. The charterers are then saying wait off the port at our convenience for however long (think aussie coal loaders) and should you happen to fail once we berth you and survey you all that time waiting counts for nothing - we are talking $100,000's

Where is the justice / equitable terms?

Why dont people just use the Gencon time waiting clause?

Again the Owner has to take it in the neck as arrogant Charterers exercise their power.

The plaintiff shipowner

Unquote

Wow - strong words PS. Im gonna have to think about an appropriate reply.

Anyone else willing to agree or disagree?

Makes it worthwhile....

This week

Qte

My name is John and I have just landed myself a job with a local shipbroking company! You're book has helped me immensely in steering me in the right direction for the nature of the work and also for the interviews that I went through! Thank you so much!

Unqte

and another

qte

Chapter 7 was very relevant to myself, particularly since I've now got a foot in the door - Very good read

Unqte

I get these emails occassionally which keeps me motivated. Thanks for the feedback...

Cheers
VS

Baltic Dry Index Up and all is good..

Once again the shipping markets continue to defy the economic uncertainties in Europe and the USA.

The Baltic Dry Index passed the all important 4,000 point last week (down a little since then).

The job market is steaming along aswell. Havent seen so many advertised chartering and shipbroking positions for a long long time.

Here is hoping for some sustained recovery across all sectors.

VS