In bulk shipping we try and avoid absolutes. Cargoes come in so many different shapes and sizes as do the ships that carry them.
Think about this....
You sell a very large amount of wheat to the middle east.....but when you sell it you have no idea at this early stage which ship will be carrying this wheat. Infact the shipment may not take place for 2 or 3 months so in reality it could be one of hundreds if not 1,000's of ship in the world fleet that could potentially carry this cargo.
So the problem arises.....If you do not know which ship will carry your cargo how then can you be sure that you will find the perfect ship in 2 months time? What if the only ship available is a little too big or a little too small?
Solution - when you sell the cargo allow for a TOLERENCE in the amount sold.
Eg Instead of selling exactly 20,000 mt of wheat to the middle east let the contract say 20,000 mt with a tolerence of 10 pct more or less.....depending on the ship that is nominated.
That way you can solicit offers from ships that can carry anything bewteen 18,000 and 22,000 mt.
You can see that this offers far more flexibility than trying to find the perfect ship that will carry exactly 20,000 mt...
This is an interesting area of bulk shipping....one that isn't understood by all. I reckon I'll do another post or two on this topic and highlight a grey area that you may find interesting.
Geez sorry for the boring 'shipping only' post...
Anyone got any good jokes?
VS
Good post VS, gives us a bit of the trader insight, which I gladly reward with a joke :
ReplyDeleteA mathematician, an engineer, and a physicist are being interviewed for a
job. In each case, the interview goes along famously until the last
question is asked: "How much is one plus one?"
Each of them suspects a trap, and is hesitant to answer.
The mathematician thinks for a moment, and says "I'm not sure, but I think it converges".
The physicist says "I'm not sure, but I think it's on the order of one"
The engineer gets up, closes the door to the office, and says "How much do you want it to be?".
I have been searching the internet for this, and I am glad I found it here! Thanks
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