Check my old posts here
https://virtualshipbroker.blogspot.com/2009/08/shipbroking-obsolete.html
https://virtualshipbroker.blogspot.com/search?q=platform
https://virtualshipbroker.blogspot.com/2009/06/shiptrading-platforms-part-2.html
So Here we are on 2020, during a bigger challenge than the GFC, and its time to revisit this space.
And yes the fight for the holy grail (maritime tech) is alive and well.
So what do we have?
1. We have a shipbroking market that seems a little resigned to the fact that this type of technology is slowly but surely making inroads. The strong, those with deep intrenched relationships, and with power to influence are increasingly being forced to use that power to remind others that 'we' are not going away. The rest of us are looking on watching helplessly like small puppies...(that analogy could be little too far but you know what I mean)
2. We have a large chunk of cargo interests (large mining companies for example) who since the GFC 12 years ago no longer want to 'play' the market. They have become highly risk averse, have hired 'logistics' professionals to carry out spot contracts, and see merit in saving 1.25 pct commission by either going direct or putting cargoes onto a trading platform - some of which they own and operate themselves.
3. We have a few well connected entrepreneurs who continue to try and nudge their platforms towards wider market acceptance. They are finding though that just about all of these entrepreneurs come with baggage - i.e. are they really independent, are they really offering value and currently take up is still very small?
4. We have a tidal wave of tech geniuses pushing their wares. They are so convincing that even those with real or legitimate questions around 'value' are made to feel like luddites for not embracing the next big thing.
5. We have shipowners (interestingly the ones who pay the commissions) who are embracing technology as a way to improve fleet efficiencies, manage risk and predict the future. Shipowners are being increasingly asked to 'look after' preferred brokers to preserve relationships and sometimes to keep a gap between them and the client.
6. And we have freight traders who are doing what they always do, sniffing around in the gaps looking for margins in a shipping market that is volatile. Counter party risk, market risk, currency risk - the list goes on. The irony here is that traders thrive on risk.......especially those on bonus schemes.
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So what does this all mean for shipbrokers? I am here to present a few reasons why we should not 'write off' shipbroking too fast.
1. Ship broking is the worlds second oldest profession and that alone means it must be with saving.
(Any resemblance to the world oldest profession is purely coincidental - ok thats an old joke but its been years since I've used it..)
2. Shipping is slow
Lets strip shipping back to its most basic elements. That is the movement of bulk goods over long distances. This takes time......and that hasn't changed. So my question to principals is WHAT IS THE RUSH?
Much of the new technology is about efficiency and speed but why do we need to be that much faster when the actual execution is slow? Fixing a ship in 20 minutes will make virtually no difference to any kind of economy than fixing in 2 days. The ship will still most likely need to finish discharging from the previous employment and then ballast to a load port - plenty of time!
So whats the rush? We actually have spare time. I used to like updating vessels positions because it gave me a menial task to to rather than sit and worry...(off course we factor in finding deals too)
SLOW SHIPPING - NOW THATS RIGHT ON TREND!
3. Efficiencies in the market. I actually believe that the charter markets have always been very efficient. What I mean is that through a normal negotiation process the markets will most of the time match the right ship for the right cargo. Thats why we run a voyage calculation. We look at the numbers and we compare one ships particulars to other competing ships. Thats why Cargo interests should cover many brokers and many shipowners just to make sure no ship slips through the process.
So efficiency was happening anyway (Trust me I have an economics degree!)
4. Now lets talk about the rise of the principal (on both sides) who is actively looking to save on commissions.
Picture this - the accountants get together (from a mining company for example) and say 'even though we don't pay the commissions we are paying for it in the freight rate'. So they work backwards and figure out how much commission has been paid by the shipowner 'on the back' of their cargoes and then rationalise that they can save money in the long run.
Fair enough - but not too fast........lets look at 'mark to market'.
Can they really be sure that the savings they assume they are making (in having a direct relationship with shipowners) is actually playing out in the freight rates?
Maybe, just maybe, the shipowners is 'over the moon' that the charterer wants to come direct. A consequence (like any good capitalist) is that the shipowner now sees an opening to raise their freight prices?
I was a shipowner so I know! Maybe not in the first few cargoes (keep the rates low) but after a relationship is formed shipowners would be licking their lips...at a comfortable charterer who now presumes they are getting a cheaper rate (without paying commission).
(Moral If you are a charterer having a smart shipbroker on your side may in fact SAVE YOU MONEY
And finally, maybe (just maybe) the large charterers are under investing in the shipping function and presume that fixing a ship is like booking a container.
How much are they leaving on the table by being less than savvy, by hiring logisticians instead of chartering experts?
How much are they leaving on the table not having a shrewd broker guide them?
Wow - I'm tired writing all that.....
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So to finish up - we shipbrokers need to do a better job at explaining our value. A value that benefits all parties in a shipping transaction..
Charge your glasses to another 1000 years
Hip Hip........Hooray!
VS
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