Why wont the shipbrokers return my calls?

The following email exchange is a typical one I have with Commodity Traders trying to enter the business.

 

Names and particulars have been changed a little to protect privacy

 

Quote

 

From: .......................

ent: Sunday, August 26, 2012 8:37 PM
Subject: Referral

 

Dear VS,

 

Thank you so much for your blog. I am just starting in the bulk commodity trading business and sometimes I struggle to understand what exactly the mails I receive mean. Last week I got a mail with questions regarding the shipping of an offer I am working on and I have to say that although I knew all the words I couldn't make sense of the whole text :-)) fortunately I found your blog and all the pieces fell into place.

 

I am writing to you because I need to find reliable (and efficient) ship brokers and you say on your web that you could help with this. As I said, I work with thermal coal, iron ore, grains etc shippings are mainly from the Americas’ to China.

 

I'm really new to this business, but what I have learned so far is that most of the offers for are FOB and most of the requests are CIF. The people I have worked with so far are slow to react (I'm still waiting for a quotation I asked for 10 days ago) so I think I should really try to build my own contacts with shipbrokers if I want to be successful. I would be really grateful if you could recommend me somebody.

Once again, thank you for your blog. You just don't know how much you have helped me already.

My best regards,

Jo Doe

 

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My reply

 

Quote

 

Hello Jo

 

Thanks for making contact

 

I think I need to explain the process so that you can see why you are getting no replies.

 

Chartering a ship is a little (actually big) different to say booking a container for shipment. The difference is usually 1 million bucks give or take a few hundred thousand dollars. The other difference is that unlike container shipping where a broker or an agent quickly looks up a shipowner’s schedule of rates, in bulk shipping it can take days and many man hours for a shipowner to give you a freight rate.

 

These two things mean two important things for you as a prospective customer.

 

1. Shipbrokers and shipowners will not spend days giving/preparing rates for you unless you have credibility. Credibility is gained by either showing them that the business is already bought and sold (i.e. its firm shipping business) or unless you can prove that the deal is 90 pct chance of happening.

 

You may say in counter "how can I know if the business is workable if I do not know how much the freight component will be?” And the shipbroker and shipowner will reply "that’s not my problem but I am not going to spend 2 days doing your job for you. If you have no idea of the freight component then it shows brokers and shipowners that you probably are wasting everyone’s time"....

 

2. If you have never fixed a ship before then your chances of getting support / freight rates / shipowners interest is virtually zero again unless you prove some credibility. They will not hand over a 25 million dollar ship to someone who does not know what they are doing. They will also ask to see financials. Unless you have a few million in your bank then how do they know they will get paid?


Shipping payment terms are generally upfront - i.e. the moment the ship finishes loading. So if you as a trader are waiting for money to be received from the buyer after the ship discharges then this will not work (in terms of cashflow). You need money and / or access to credit. They also need to know that if something happens to the ship that they can sue you. If your company is worth usd 10,000 bucks then they won’t touch you..

 

Hope this explain why you are getting no answers...

 

If you can prove your credibility to me then I can for sure help you....but I don’t want to waste your time and the shipbrokers / shipowners I recommend

 

Cheers
VS