The answer to the Riddle...

POWER (and influence)

Concepts I admit to struggling with over the years. Power is useful, intoxicating, dangerous and evil all at the same time...........in my opinion anyway.

And the idea of POWER is something that rarely gets talked about at corporate lunches, or business functions for one huge reason. People HATE the idea that they are influenced (even controlled) by those who wield power. If they admit this they admit to not being rational or even susceptible to charismatic individuals who get energy from having power. Hence the cliche's explaining the success of some.

POWER - they way I describe it and have seen it over the years is in many guises and I will try and explain more in future posts. If anyone can relate then I am pleased to hear your stories.

A riddle that took me years to figure out

Like any enthusiastic young buck straight out of university and trying to make a name for myself in the world of international bulk shipping, I worked hard and tried to figure out how the be the best shipbroker I could possibly be. Also - as a then unconscious INTJ (see Myers briggs) I see now that I was constantly trying to solve a riddle (because INTJ's are strategists) that in hindsight was not mine for the knowing - just then anyway.

That riddle - the riddle which I posed to all my mentors, colleagues and clients at any given chance, was also in hindsight out of their reach too..

For this riddle only reveals itself to those who look hard enough - in my opinion anyway. You see the problem was that I kept getting the same kind of answers when I asked a simple question - "What makes a great shipbroker?" and more specifically "who is the best shipbroker in the market?"

It was (and still is) a loaded question mind you because like politics - everyone has an opinion. And sure enough the tried and tested, almost cliche'd answers would waft across my bow - especially with regards to what makes a great broker. The usuals like "hard work", "experience", "great customer service" and 'street smarts". I sucked up these answers keen to take it all on board  - although deep down I had suspicions that I could have got the same answers from any business textbook i had read at university.

As for the other question - "who is the best broker"? a curious thing happened. Unlike politics where people had different views - this elicited a reply more common at a birthday party - just about everyone in my market (which is a pretty big one) sang out the same name....Len Maxwell....(not his real name because that would be embarrassing for both of us). This was over 20 years ago now and yep for the next 15 years whenever a discussion was to be had about who is the best most successful broker 'in the land' Mr Maxwells name would invariably come up. There were a few anecdotes about large deals but the crux of any conversations was that if Mr maxwell was the broker then as a competitor you should concentrate on something else.

As a client having Mr Maxwell handle your account was seen as a fairly important thing....it meant your account was worthy of his attention. In the crazy, high end world of million dollar deals and massive ships those of you new to the industry need only hang around for a while before you realise how reputations are made and destroyed in what is a truly global industry.

So back to the riddle - what in my opinion was the real reason Mr Maxwell was considered the 'Best Broker' in the land and how could I tap into this reservoir of riches and respect amongst my peers?

There was one thing he (Mr Maxwell) had more than his competition......and he had it in droves...

Who can guess what that was?........anyone? anyone?...

(oh and a tip - its not something boring like 'passion' - this is not Oprah - try again!

A question from a reader..

Quote

learningshipping has left a new comment on your post "Shipbroker commissions.": 

Hi, I am a shipbroker based in the Philippines. I am actually an old timer in shipbroking, but more of an snp shipbroker than a chartering broker. I am not an expert in chartering problems.

I am having a problem deciding whether a situation my shipowners are in is a case of deadfreight or a breach of contract.

It is said that when the charterer advises the shipowner that he cannot load any cargo
on the vessel, this becomes a breach of contract and not deadfreight because the shipowners can still mitigate his losses by finding a substitute cargo.

But what if the vessel has waited at the load port for more than 30 days (laytime agreed is only 5 days and a complete voyage would only be 15 days), shouldn't that
be considered deadfreight because the time lost is already equivalent to more than one voyage. In other words, the ship owner does not have any time to mitigate his losses.

Would appreciate your comments.

This will help me determine how much brokers commissions I deserve to get. If it is deadfreight,
I believe I should get 100% but if it is a breach of contract, according to clause 15 of gencon, I can only collect 30% from the party at fault.

More power to you!

Bobby 

Unquote

Bobby - excellent question and here are my thoughts...

Simple really - This in my opinion is a breach of contract. If the charterer took 30 days to notify the shipowner that no cargo will eventuate and the ship waited in good faith for that time - then the shipowner should be able to sue for the total amount of freight and any losses for waiting 30 extra days (detention).

The shipowners has been given no opportunity to mitigate so they should sue for the full amount i reckon.

So at the end of the day your commission will need to be claimed when and if the parties go to court and the amounts are settled. 

A deadfreight claim (again in my opinion) is only if part of the contract has actually been fulfilled (or started).

If anyone else has a different take own this matter - feel free to contribute

Good luck Bobby and thanks for the email

VS

Dry Bulk Carrier Ship Sizes

There is some debate with regards to the classification of ship sizes. Truth is as ships get bigger and the designs more flexible we have had to adjust the terminology we use.

A few short years ago (ok maybe 15 years) there were four ship sizes

Handy size, handymax, Panamax and Capesize

Here is my take on the current sizes and appropriate terminology
　

• Very Large Ore Carrier VLOC 210,000 metric tonne dwt (deadweight)
• Capesize 120,000-209,999 dwt 
• Post-Panamax 85,000-119,999 dwt 
• Panamax 65,000-84,999 dwt
• Handymax 40,000-64,999 dwt
• Handysize 10,000-39,999 dwt

I love big ships...think I might take up ship spotting and plan my trip to gibraltar (the best place to watch ships) armed with nothing but binoculars, whisky and cigars. I may even go commando.

Heaven (if shipping is your thing).

VS

A chanced philisophical idea

"A master in the art of living draws no sharp distinction between his work and his play; his labor and his leisure; his mind and his body; his education and his recreation. He hardly knows which is which. He simply pursues his vision of excellence through whatever he is doing, and leaves others to determine whether he is working or playing. To himself, he always appears to be doing both."
---Chateaubriand

I think Alain De Botton probably loves that quote!

So who is reading the virtual shipbroker?

Its sometimes a little lonely reading (and writing) a blog so occasionally I check out where my audience is coming from. I occasionally let you guys know the details just so that you know you are not alone as VS avid readers. This month was a good month (readership continues to grow) and had approx. 12,000 individual page views. So who's reading? Last Months Top 10 United States 1959 United Kingdom 1721 Singapore 1442 India 778 Greece 484 Germany 392 Australia 331 France 261 Spain 256 Turkey 253     France and Spain readership seems to be growing and for the first time they make the top 10. Usually Denmark and Norway come in between 6 and 8 but alas not this month. Must be the warmer weather. Otherwise all the top maritime nations are there except off course our east Asian friends Japan, South Korea and China who have never been huge readers of these types of blogs (including financial ones too) for various cultural reasons.   I will take readers from anywhere - even North Korea or from my home town the tiny Himalayan Kingdom of Bhutan. I have been speaking to the king about opening a local branch of the Institute of Shipbrokers possibly in one of the local Monastery's that isn't getting much use. But the king quite wisely stated that having a group of shipbrokers regularly attend a monastery is about as likely as the Italian mafia visiting the Vatican....hang on....maybe this could happen...leave it with me.   VS

A word on shipbroking Salaries and revenues

Dry Cargo Markets have been pretty crap for a long time and this means a drop in revenues. I know of at least two large shipbroking companies where only half of their brokers are currently breaking even. The strange thing is that although revenues are down salaries remain firm because finding good, hard working shipbrokers is difficult.

So gimme some numbers vs!

Well in London for example I would guess there are many brokers on around $100,000 pounds a year mark in salary and would be lucky to be bringing in $200,000 in revenue. When you take into account the extra costs a large brokering shop has in terms of rent, insurances, communicatrions, travel etc then profits are slim. In the USA we are looking at similar numbers.

In Singapore where shipbrokers still push for expat packages it is not uncommon to see people earning USD 30k per month (yes that's right) and only making USD 20k per month...so many brokers are infact costing the company money.

I am not sure how long this can last. These situations rely on 'fixing machines' to help prop up the rest of the office.

IMO a current day 'fixing machine' is fixing anything more than USD 500k in any given year. Anything above 300k is a star performer and anything below that is treading water.

All we need is a modest upswing and all this can change....we are at such a low base that a USD 5,000 per day change in the price of chartering a ship can increase revenues by 25 pct.

That's my take

VS

Market commentary

As many of you know I occasionally provide a bit of market commentary for various market participants and for news agencies like Reuters.

I am currently putting together a report for some clients summing up my thoughts for the remainder of the year.

Thought I would share a few of these observations

Overall the market in my opinion isnt going anywhere too fast or too soon. The biggest stumbling blocks for the shipping industry and pretty large ones. Namely the still large forward order book for new ships which is still outpacing ship scrappings 2 to 1...(in general although this varies a some when we look at specific sizes)

This will change but not just yet..2014 will see closer parity between ships coming in and ships going out!

The other issue is that much of the world is still an economic basket case. Sure Cyprus and Greece have millenia's of great contributions to the world - but in more ways than one it seems that the credit has run out.

And the economic problems in Spain have finally caught up with Barcelona and Real Madrid who have succumbed to the relentless efficiencies of the Germans giants Bayern and Dortmund...WOW 3 NIL at home.....And Messi isnt even Spanish!

Dont get me wrong I love Spain and even intend to live there for a few months next year...and in all honesty and with the greatest regard to my German friends - I dont really want to live there....hang on....good football, fast cars, schnitzel (is this Austrian?) and beer....

Actually a little known fact is that I once did live in Germany...In a place called ULM...between Stuttgart and Munich....3 of the greatest months of my life....but many moons ago...

Then theres America (USA OF) and China - out two superpowers. Mixed reports out of both in terms of the economies....but I reckon things will improve for both....

What does this all mean for the rest of 2013.....treading water...unfortunately...

Keep rocking

VS