General Stuff

With the markets still at historical lows (despite the occasional upward flutter) shipowners and shipyards continue to struggle, some even going out of business.

So what happens to those ships when the companies controlling them go belly up?

They can be scrapped (if they are old), sold if the market permits or ownership is transferred to the financiers who then have the headaches of working out how to generate income with these behemoths of the sea.

The net result is that prices for ships drop (sale prices) and the markets consolidate. Once again the reputable larger companies are picking up bargains left right and center. Reputable shipping pools are being inundated with poorly clients desperate for help..

++

Interesting to see that TMT (today makes tomorrow) head honcho Nobu Su is stepping down after what can only be described as an incredible career. i can remember 10-15 years ago when his name first emerged linked to deals that seemed unbelievable in timing, scale and audacity. What a ride it has been.

And let me be the first to quash those rumours that the Virtual Shipbroker has been personally handpicked by Nabu himself to take over at TMT...

I asked my tarot card guru and he said - "VS my son keepeth doing not much as not much is plenty under the sun"

Wise words...

Yours VS

Disaster - the Ships running late!

Ok - maybe 'disaster' is a slight overreaction. Having said that no-one likes a late ship..

So how does this play out in the real, cut and thrust, take no prisoners world of international shipping?

Charterers first - they need to give as wide a laycan (window for the ship to arrive) as possible. This needs to be negotiated in the sales contract and also with the port authorities and shippers in question. the greater the flexibility the less chance that a late ship will cause problems. Charterers also should insist on regular updates regarding the ships itinerary so that they can plan for the lateness (contingency planning). Sometimes shipowners are economical with the truth when there ship is running late. Charterers need to play hardball and even be in contact with ship agents at the previous ports in order to get a real idea as to the ships itinerary.

Shipowners - Need to be careful not to agree laycans that they know will be tough to meet. When it becomes obvious that a ship will be late - shipowners get scared. very scared....because the charterers now have lots of power. They can make the ship arrive at the port and then cancel the shipment if they so wish. So YES a late ship is ground for cancellation. Nothing worse for a shipowner to have a ship open Spot with no employment and the probability of no quick fix. I have seen ships miss a laycan, get cancelled and then wait 20 days (at 50 k per day thats ONE MILLION bucks) for a new cargo....Not nice!

So this is why you find that some shipowners tend to be economical with the truth when a ship is running late. They will tell you that everything is fine and then at the last moment drop the bomb that an 'unexpected' delay has occurred at the last possible moment and hence the ship is now running late.

They do this because the later it becomes apparent that a ship is running late - the less the time for the charterer to find a substitute vessel....leaving the charterer stuck and the shipowner still with a contract despite there being grounds for cancellation.

So there you have it - when a ship runs late charterers would like to know asap and shipowners just dont wanna tell them! Fun hey?

Shipowners aren't always the bad guys. i have seen charterers use 'selective' information for evil as well.

Your VS

Bulk carrier smashes into a smaller ship in Singapore

OUCH!

By request!

By request

Very Limited Spaces (im not joking either)

THE VIRTUAL SHIPBROKER BLOG PRESENTS

A 2 day professional development course

1st day - Essential Shipbroking and Chartering (Dry Cargo)
2nd day - Fixing Machine - Shipbroking and Chartering Best Practice..

Where: Dubai and London (Venue TBA)
When: May 2013

Who for?

Trainee shipbrokers and operations department staff

Managers already in shipping and chartering to refresh on fundamentals

Ship brokers, owners, charterers, government bodies, lenders and insurers

Shipping Lawyers, Bulk commodity traders, purchasing officers for bulk commodities

Cost - USD 2,000

Expressions of interest to virtualshipbroker@yahoo.com

The Virtual Shipbroker

What happens when a ship is late?

This is quite an interesting topic in the world of tramp (dry bulk) shipping because you know what ?? Ships are always dam late! Arghhhhhhhhh...

Being late in itself is ok. I am occasionally fashionably late to dinner parties - its expected. But in shipping the world of fashion (unless you are a broker from Scandinavia) has very little to do with anything.

Just on that topic - has anyone ever noticed when surfing the websites of various shipbroking firms - the ones from Scandinavia and parts of continental Europe with accompanying photos of the employees, look to have been shot by HELLO magazine. Hair and make up (tick), Tilt of head (tick) - I dont wanna name names but you know who you are!

A bit like this

Perhaps a more accurate representation would be

Director, Senior Vice President, Partner (owner of stilettos - Trixi)

Anyway

When ships are late this can cause a myriad of problems. Charterers have a laycan (a window for a ship to be delivered) for a reason. And this reason is usually because it says so in the sales contract between the buyer and the seller. So if the ship is late not only is the shipping contract put at risk but so is the sales contract.

Organising the cargo for a ship is not easy. One needs to arrange for the cargo to arrive at the port just in time (JIT) for the ship to arrive, then stevedores need to be arranged, as do the services of other ports infrastructure groups like grain elevators and the like. Permits need to arranged and all the paperwork must also be ticked off. So you can see if a ship is late - quite a few people have quite a lot to lose.

This issue is exacerbated in a very busy port that handles many ships in one day. Imagine then if this port experiences delays due to an accident or bad weather or a strike and then all of a sudden this 'late ship' has to then wait in line for 5 days before it gets loaded....

At the peak of the markets this five day wait could cost someone a million smackeroonies! not so much these days more like 50 grand....but that would still feed a small American village.

So how does this 'problem' play out in the real life cut and thrust of everyday shipping. How do charterers and shipowners alike navigate this thorny issue when it appears apparent that a ship will be late?

That will be my next post....

Yours
VS

Great news from some ex students

This from two close friends of the blog

I have changed some details to protect the identities - lots of people read this blog you know!

Quote

VS/SA

 

I hope you have been doing great.

 

It is just to let you know that last month I started as a junior broker at (name withheld but one of the larger firms) European dry cargo desk. This is the opportunity I have been fighting for. This would not have been possible without having kept fresh in my mind what I read from your e-books and learned from your great advice; therefore, I thank you.

 

Notwithstanding getting this opportunity was quite a challenge in itself, the real challenge starts now. Therefore, what I have learned from you will remain of great help and guide me forward.

Once again, thank you.

Best regards,

SA

unquote

and

quote


VS/NL

 

Hi VS! Hope all is well. So it has been almost a year since I have ended the VS course and I figured I would just let you know where I am at.

If you recall, I was able to enter the industry by getting an internship at (name with held but one of the worlds largest shipbroking firms). Well, that went well and was a great experience, but it ended up being a dead end. I No bitterness as I was fully aware some of these shops work in political ways, so when it came time to move on, I did.

I had a little bit of difficulty re-entering the industry once I left. It took some time but I barked up every single door until two great opportunities came my way.  Both offers were about equal, but I decided that I would take up the role with (name with held but one of the biggies). There were many reasons but the primary reason was that I believe to have found a mentorship type relationship with the individual who hired me.  I hope I made the right decision but I will only know in a few months. 

 

And all of this wouldn’t be possible if I hadn’t taking your course. Thanks for everything VS. I hope to be fixing soon. So be ready to receive another email once I get my first fixture.

Regards,

NL

 

unquote

 

Two very wise dudes on the path to shipping greatness....and very nice people too!

 

Those emails make this blog worthwhile

 

Yours

the Virtual Shipbroker

 

An answer for Ben!

Ben has left a new comment on your post "Inside Ship broking and Ship broker Fast Track.":

Hi VS,

Wonderful website and book. Congratulations! I have finished your book in a day and it has been a pleasure.

I have a question on a typical day for a shipbroker. While I understand every company organises their staff differently, I would like your opinion to reconcile my observations with what I have gathered from your book.

In the latter chapter on 'Orlando', it appears to imply a shipbroker's main task is a fixing machine. During my interview with company B, I saw how fixing a deal is just the start of a long process of servicing the clients.

The shipbrokers (not the operation executive) were in close contact with the charterers to resolve problems such as delays, cargo problems, and ensuring the goods arrive in good condition.

Have the roles of operations and shipbrokers become convergent? Or does the job of the shipbroker continues until the goods get delivered?

Thank you!
Ben

Posted by Ben to The Virtual Shipbrokers Books and Information at January 27, 2013 at 6:05 AM

Unquote

Ben - thanks for a great question. For most of my career as a shipbroker (remember i was also a shipowner and a charterer) I pretty much handled everything from fixing the deals right down to invoicing for payment. This also included doing 90 pct of the postfixture work along the way.

infact for most of the shipbroking fraternity they do not have the luxury of a 'post fixture' department. Most shops are quintessential small business's employing 2 or 3 brokers and one admin staff. So for many doing a full service job is necessity rather than choice. The middle to larger shipbroking companies do have extra staff to help with post fixture and this can be a godsend when time are busy.

The interesting point though is that I know many brokers who work for larger firms who refuse to hand over the post fixture duties to designated post fixture staff. This can be for a variety of reasons but suffice to say that if you have a usd 1 million dollar per year client in your pocket you are loathed to pass any responsibility to anyone else.

So i reckon the circumstances should dictate the systems. It also depends on the client (they may be happy dealing with different people) and depends alot on the quality of the post fix and operational staff. Who would you prefer trying to sort out a complicated stowage problem - a young aggressive dude with nice hair (read shipbroker) or a experienced old master mariner with no hair (postfix boss)?

Pretty easy answer that one!

Thanks for stopping by

yours
VS

Be kind to shipowners week!

A client recently said to me that one of his trusty shipowners seems to be in a bad mood recently and wondered if he (the charterer) may have done something to upset the gentleman.

Possibly.....was my reply. Shipping people are historically a grumpy bunch. long hours, stressful negotiations, deals falling over at the last moment, brokers not returning phone calls - maketh for a grumpieth shipowner.

Having said that I said a far more likely reason for a less than happy shipowner is simple - the CRAP state of the markets. Rates are so low just about every deal is a loser...which isn't good for most.

I'm not saying that no shipowners are happy - I am just pointing out that in historically low markets it would seem logical that the losers are the shipowners! Just like in historically high markets charterers would seem to be the losers..........Losers in this game we call dry bulk shipping.

But alas things in shipping are never that cut and dry. Shipowners with high costs and high debt and large new building order books have every right to be stressed. Their are shipowners however who have managed assets in a better way and infact now have huge competitive advantages with low costs, low debt and low new building exposure. The truth for the majority is probably somewhere in between...

One thing for sure is that the longer the markets stay in the doldrums - the less likely you will hear a cheery shipowner voice on the other side of the phone.

Good time to to be a commodity exporter or importer. As a percentage of the overall landed price of most bulk commodities - freight now plays less of a role (in percentage terms). There was a time not too long ago that the freight price for many commodities exceeded the commodity price (in certain markets)

So I reckon we should have the inaugural "be kind to a shipowner week" starting this Monday....

Maybe take your local shipowner pout for a boozy lunch or a game of golf. Sounds like a good excuse to celebrate 2013 to me...

Keep rocking
the Virtual Shipbroker