Cargo is KING?

A good question from a reader

 Quote

BikafellaJan 30, 2012 09:53 AM

You seem to be a very knowledgeable person - so please can you tell me what the expression "cargo is King" means - does it mean that if you are a shipowner you are a pauper ?

It would seem to be very strange if a shipowner was regarded as someone who was not wealthy person.

i think if market is lacking tonnage then the owner has the upper hand so ship would be king - but i never heard THAT expression before….

if the market has lots of ships the cargo owner or charterer is generally in a stronger position - so both situations are valid but in that case why such expression for only one of them ?

unqte

Thanks question. "Cargo is King" is an old BULK shipping expression and has nothing to do with the wealth or otherwise of shipowners. Infact Shipowners are some of the wealthiest people in the world with a high number being billionaires especially in places like Scandanavia, Greece, London, Hong Kong etc

"cargo is King" is a trading term and it basically means that much of the power is in the hands of the charterer because at the end of the day the 'charterer" or cargo client IS THE CUSTOMER!...

Without cargo a shipowner wont have full ships and without full ships they cannot make money. So its always in a shipowners best interests to keep his clients happy.

Now the waters do get a muddy here especially in high shipping markets when infact it appears that charterers need shipowners more than shipowners need them. Prices for ships go through the roof and it is now the charterers to turn to try and be nice to shipowners so they get a good freight rate rate. It was like this for "naughties" (2000 thru 2011) during the great shipping bubble!

From a shipbrokers perspective I have always found that there is much more power being in bed with a charterer then with a shipowner. Shipowners although they pay the commissions the charterers are usually the ones who can dictate channels and decide which shipbrokers they want to work with. They can do this because they can select who to show their cargo... So in shipbroking very often cargo is KING.

But like most things there needs to be a balance and exceptions to general premises. In shipping we all need eachother and the experienced instictively understand this. Indeed many shipowners due to size and covereage are super powerful and many smart brokers know how to look after their interests. Infact many brokers only broker tonnage.

Shipping is full of Little Kings from all walks of life (and im not sure thats a good thing!)

Keep rocking
The Virtual Shipbroker!