International bulk shipping is about averages not absolutes!

Having been around for 20 years doing this chartering caper I find myself explaining to many clients that a successful shipping voyage is part good planning and part good luck.

Here is something thatmight surpirse the unitiated. I reckon that for every 10 voyages, 7 will have something go wrong (from a chartering perspective). They may not be huge problems but they will be problems none the less.

Despite best efforts many ships run late and miss cancelling. Ships break down at sea, break down at port, get delayed in a Q's, get caught in bad weather etc etc.

Then there is all the things that can happen on the shore like strikes, berth delays, cargo contamination, hold contamination, delays in surveys etc etc....
One can go mad trying to control and estimate all the possible contingencies.

The cost of these problems WILL effect the bottom line for the voyage.

So here is my advice to all of you. Shipping is about averages and never expect perfection. More than that YOU NEED to manage 'expectations' all along the food chain especially if you are from a Cargo based company. Senior executives who have no idea about shipping will blame YOU if something goes wrong. So you need to condition them that THINGS do go wrong whether they like it or not. Equally as important you need to point out to them when things go right (andyou have saved them thousands of dollars).

If you have a bad voyage this month on average your next one will be fine. Thats the point...if over a year things have gone relatively well then you deserve a drink!

Another important point i would like to make is, that from a commercial perspective, a shipowner, operator, charterer makes their money when the deal is fixed. As opposed to when the voyage is underway.

If as a chartering manager for a cargo company I manage to fix a cargo USD 3.00 under the market then why would I sweat on losing 5 hours of laytime?

If as a shipowner I manage to fix a lucrative 5 year contract why would i freak out about a request from a charterer to change one stem from January to February.

Do yourself, your hair color, and your psychiatrist a favour and don't sweat on the small stuff.

Try anyway!

Yours
VS

Answer

If you bought a house 10 years ago for USD 100k and only just sold it for USD 150k you could say that you have made a 50k profit (not taking into account inflation, opportunity cost etc).

However if the house next door, exactly the same, sold 2 days earlier for USD 200k would you still think you have made a profit?

I am using the word profit liberally in the explanation. And this is the same with voyage calculations. In a voyage calculation the shipowners is not attempting to find the 'profit' figure against all his costs. He is looking to find the profit figure against the 'Market'.

The market represented by the the 'Timecharter IN' figure he or she uses in the calculation.

So in the case of the house - against the market the guy looks to have made a usd 50k loss.

(NB in a voyage calculation we have a final profit or loss figure. This can also be represented with a surplus or deficit figure. Same thing!)

Cheers
VS

A Voyage Estimation Question - who knows the answer?

If you bought a house 10 years ago for USD 100,000 dollars and sold it this year for USD 150,000 have you made a profit?

And yes thisis a voyage estimation question...once i get some answers I will explain.

Rgds
VS

Voyage estimation pack almost there!!!!!!!!

You would not believe what I am waiting on. My adobe acrobat is playing up so I can add the security features I need. This should be fixed over the next day or so.

To wet the appetitie...Here are the dry cargo voyage estimation examples that are in the tutorial

1. Handymax coal Indonesia to china
2. Handymax coal Australia to India
3. Handymax cement South East Asia to Europe
4. Handymax parcels from Black Sea to Far East
5. Panamax coal Australia to India
6. Panamax Iron Ore India to China
7. Panamax Coal USEC to Europe
8. Supramax grain USG to Japan
9. Handysize grain River Plate to Europe

Thanks patience

Cheers
VS

Haiti - donate if you can!

Red Cross donation details

http://www.icrc.org/web/eng/siteeng0.nsf/iwpList2/Help_the_ICRC?OpenDocument

Another legal question

Anyone care to have a go at an answer! Would like the benefit of hearing Gary's always wise perspective...

Quote

good aft VS! thanks yr reply reg period of brokerage payment. Have however next question, born from alive practise.. Vessel performed bulk grain shipment from black sea to ec india(kolkata). upon fixture has been agreed(and stipulated in CP in written) that chtr's broker will collect his brokerage from ows. when vsl sailed, broker faced his invoice to ows. during passage, chtrs changed dport from kolkata to chittagong and agreed with ows(against addtl amount) to change dport..transit time was arnd 25-27 days, and broker few times approached ows to remit his comm, but ows replied tht they will pay afer ''shipment will be completed''. disch took longer time than was agreed as per CP, and vsl fallen into demurrage(arnd usd 60,000), which is still under dispute/discussion.Already 5 month gone after fixture and 2 months gone after completion of discharging. When broker approached ows again(after completion of disch, with no shortage), ows advised tht they will not pay brokerage again, whilst ''all financial outstanding debts will be settled, including demurrage". Question: are they right to avoid brokerage payment in this case?? Why broker should be ''hostage'' in this situation??


January 13, 2010 6:57 AM

Unqte
 
Rgds
VS

When is the shipbroker commission payable?

Good Question from one of the readers.

Answer. Once the freight has been paid and you the shipbroker have invoiced the shipowner. Give the shipowner 30 days to settle your commissions.

NB:

If you are worried about getting the brokerage frm a particular shipowner many shipbrokers ask their 'friendly' charterers, to deduct this amount from the frieght payment and then collect the money from the charterer.

EG

So lets say that total freight is USD 1,000,000
Less
Brokerage USD 12,500.
Owners total revenue is USD 987,500 (thanks gary)

++

Instead - Ask the charterer to only send the onwer USD 987,500 and to send you the shipbroker the USD 12,500 owing (from the owner). This happens all the time. Sometimes the owner gets cranky because they want to control the flow of money. In reality the charterer should have no problem with this.

Cheers
VS

Happy 2010 to you all..

I thought I would start of 2010 with a philisophical question. It is not shipping related perse' however I am sure some of you can relate.

Question

If a man speaks in the forest, and there are no women around to hear, is he still wrong?

According to my wife the answer is yes..