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Monday, February 13, 2012

Negative Freight Rates - Another great question

Dear VS,
Thanks your nice web site and professional approach.
The day has come when the first ship has been fixed with the negative figure hire rate (Charterers are Glencore, Owners are GMI, rate -2,000 usd/day).
The fixture with 0 hire rate has been concluded earlier already (Norden was the Charterer).
Can I have your thoughts about brokerage commission payments?
Does that mean that Charterers should pay the broker instead of the Owners?
Percentage from the value of daily bunker consumption?
Or may be the broker (since always taking part of Shipowner hire rate) should pay something to Charterers on top?
:)
Thanks.
ACE
unqte

Thanks question. Truth is there has been quite a few zero freight rate fixtures over the last year or so and going into negative territory doesnt surprise me. Crazy stuff hey!


As a shipbroker if you are facing negative freight rates, no freight rates or even very very very low freight rates i suggest you negotiate a lump sum commission from the very beginning of the negotiation. You cannot work for free. So when you send out the first counter speak to the shipowners and state how much you want. Ie USD 5,000 bucks...


That should do it!

Cheers
VS
at

5 comments:

  1. AnonymousFebruary 13, 2012 at 11:16 PM

    $ 2000 / day will not even cover the operating cost for supramax vessels.

    So what prompts the Owners to fix at this level. Is it because the voyage is a back haul one??
    Is laying up the vessel is a better option in this distressed market??

    Rgds
    Varun

    ReplyDelete
  2. The Virtual ShipbrokerFebruary 14, 2012 at 12:40 AM

    good question Varun

    yes its usually backhaul / repositioning.

    we will see more scrapping, layups etc etc its happening now and expect this to continue.

    ReplyDelete
  3. AnonymousFebruary 15, 2012 at 4:56 PM

    Here is an article on it if anyone is interested.

    http://www.inc.com/constantine-von-hoffman/why-now-is-the-time-to-order-from-overseas.html

    Cheers,
    LN

    ReplyDelete
  4. The Virtual ShipbrokerFebruary 15, 2012 at 5:07 PM

    thanks LN

    great link. I published my post before this was written by mr von hoffman...

    it certainly is a talking point

    ReplyDelete
  5. amsmtgMay 19, 2012 at 2:56 AM

    It's not that good a link, Mr VH fails to point out that the charterer pays for the bunkers - conveniently forgetting the usd1.6M payable for fuel at 35MT p/d for a 65 day backhaul trip.

    Oh and to the question - most brokers (certainly on larger sizes) will swallow the minimal commission on the deal in the hope of getting repeat biz on the same trade when the market is not on it's bum.

    Sorry for the silly delay time to comment, but only stumbled upon your great site today...

    brgds,
    ams

    ReplyDelete