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!

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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