6p's of 2020 (Prejudice, protests, pandemics, people, politics and protectionism)

It goes without saying there is currently a lot of pain in the world.

WTF is happening!!!!!!!!!!!

We have a real confluence of events that make the world seem like it is on the edge of something?

In no particular order we have

• A huge stirring of emotion around the 'black lives matter' events in the USA which has spilled over to all corners of the world. This points to how badly, as human beings' we treat each other and how prejudice, in many forms is still a part of everyday existence for many. If we are honest we know the shipping industry still has issues. We know that 'bias' and 'prejudice' (many time unconscious) is open to anyone who looks. Which nationalities are more likely to do certain jobs, social status, look at the income divide around the globe....etc etc

• We have a pandemic which has scared the &(&(&^$$##@ out of us and is still wreaking havoc. This will come with very real personal and economic consequences. Are we on the cusp of a depression? How will the next 10 years play out? Will we as nations become more insular and will protectionism increase?

• We have an unprecedented political divide already present over the last 5 years. Never have we witnessed normal people be so divided into Liberal vs Conservative camps. There seems to be no in between. Friends have been lost, family members divided and controversial political characters make us look deep inside to try and figure out fact from fiction.

• We have a world where most people acknowledge that we cannot trust the media (whether that be tradition or the new forms) because they too seem to be divided strongly down political lines. Attention grabbing headlines, fake news, the ability of social media to spread the word - all these things have made finding the 'truth' harder than before....

• We have a seemingly un abating 'Technology revolution' that is infiltrating (for good and bad) all aspects of our work environment. That is quite disconcerting for many who cannot tell with any kind of certainty what the future holds. Jobs are less secure, the rise of the gig economy, robots etc etc

• We have a physical environment that is changing and becoming more volatile - all at what appears to be at an alarming pace. Will our houses be swallowed up by rising seas? Will our rainforests disappear? Will our air be ok to breath? What will the earth look like in 100 years?

• We have a young generation saddled with dealing with all of this crap....we call them un motivated, living only for now, un reliable, chasing experiences and not planning for the future....but maybe that is just a smart way of dealing with all of the above...

ALL THESE THINGS ARE COMING TOGETHER NOW AND WHAT WE ARE SEEING IS A REACTION TO THAT 


My thoughts go out to everyone who has lost loves ones, those who continue to face unfair prejudice, those who have lost jobs, those who are suffering confusion, stress and melancholy (or worse), those who feel misunderstood, those who are trying to find the truth amongst the noise, and those saddled with solving the worlds problems.

The skies will clear - I'm sure of that. Lets keep things simple, respect each other and look for ways to be proactive and positive. The world is still a much better place than it was 100 years ago...and I reckon better is to come (FOR EVERYONE).

VS

The rise of shipbroking platforms Part 2

I have had a great response to my post a few short days ago. 

If you missed it https://lnkd.in/gA-Kkzb

I have messaged with brokers, shipowners and even a couple of high profile owners of chartering platforms - and we have had a very open discussion about where we are at in this space. I am very appreciative to all. Its amazing how many great people we have in our Industry. Its equality encouraging how people are very happy to offer opinions if the subject is broached in the right way.

Part of the reason I run this blog is to connect with people in the industry and have frank conversation about whats really going on.

As one broker friend of the blog put it yesterday

"Your incisive, frank and, oftentimes, cynical (not a dirty word in my book!) observations are a breath of fresh air' - thank you....that is the intention.

Anyway back to the great people in this industry and the furious debate as to what the future holds for shipbrokers. 

Indeed one owner of a platform agreed that problem is uptake, and another agreed saying that very few of the market offerings had the ability to scale up. Interestingly this same entrepreneur believed that the only one with any chance to find the holy grail is actually one of us! (and the biggest one at that). 

Begs the question.....Should we, the wider broking fraternity be less scared of shadowy upstarts and petrified of the 'Ally' in front of us?

Public companies, by there very nature, become slaves to 'shareholder value' where ever that may lead....

++

I did have a great chance to hop on and surf a number of the platforms. Historically I have used a few of them for quite a long time. 

Here is a list in no particular order - I've probably missed a few (including those run by charterers)

You should check them out

Vessel Bot

Ocean Freight Exchange

axs marine

Open Sea Pro

ship next

Marufreight

Sea

Shipamax

It goes without saying - there are some very impressive service offering amongst this lot. And I mean 'a lot' because as you can see the space is becoming quite crowded. 

The technology definitely makes everyones work just that little bit easier and that little bit faster. Efficiency and speed....good mottos to live by. I also like the trade information, the efficient routing programs, live bunker updates etc etc

It does leave some obvious questions though...

If everyone is using this stuff where is the advantage? I think the new normal is keeping up rather than pulling away...and again there may be an argument that in an increasingly efficient market  with big data maybe its just one side of the equation that needs this....Why do both sides need to be told the same thing?

Some simple freight trading observations. If you are a shipowner with a ship 'deemed' to be in the best position for a cargo is this good news or bad news? And vice versa is a charterer is stuck with no ships showing upon the radar (except one) is this good news or bad news - from a negotiation perspective? 

The other interesting development is the auction system being pushed around by some heavy weight charterers. 

I have an interesting story to tell. I was actually part of one of the first cargo auctions of this type many moons ago. I think it was probably 2004. Not only was I part of the auction I won the auction on behalf of the shipowner I was working for at the time. 

The cargo was small - maybe 10,000/5 pct. 

The charterers went to great efforts to set up the auction and it was a reverse auction.....so the last bid won...the time limit was 30minutes.

So there we were - watching the screens and it was exciting. Interestingly thought the 10 or so shipowners/operators who took part actually kept bids very high...for the first 28 minutes that is....

Finally with seconds remaining I put in a knock out bid (compared to the others) and won the auction. 

And we (as shipowners) were very happy because we got a much better price than we thought....

The auction worked....thats for sure...and not for the charterer. They stopped with the auction system soon after. 

I wonder if auctions become the 'in thing' if shrewd shipowners in major markets will have an 'informal' understanding about turf and territory.....

You never know

Interesting times

VS
Shipbroker (most of the time!)

The continued rise of chartering platforms

In 2009 (eleven years ago can you believe that!) on this blog I wrote a number of articles about the potential rise of shipbroking/chartering platforms and whether in years to come that will render the role of a shipbroker obsolete. At the time we (the bulk shipping industry) were collectively just starting to re emerge out of the GFC that rocked the worlds economies.

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.

+++

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.....

+++

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

Did you know shipbroking is a financial service?

Hi everyone 

To those of us in the industry we don't often answer the question

"What does a shipbroker do?"

With 

"We offer a financial service to shipowners and cargoes charterers' - Note:Wikipedia's defines ship broking as a financial service.

More likely we answer with ideas around 

• Matching counter parties (thousands of ships / thousands of cargoes)
• Acting as an unbiased intermediary
• Negotiation expert
• Providing market advice 
• Expert technical advice (certainly in the area of SNP)
• Expertise in the area of contracts and legal matters

Whats interesting about those layman definitions is that in essence they deal with 'money', often in large sums, and I guess this fulfils some definition of a financial service

From the net - 'Financial Services is also the term used to describe organizations that deal with the management of money'.

I do however think that this doesn't adequately (not by a long shot) cover the role of shipbrokers in the wider market. 

BUT.............and there is an increasingly 'big BUT' (Don't google that)

Are shipbrokers or at least the larger savvy ones - morphing into real bonafide financial services companies?

There is no huge news here because players like Clarkson's and Ifchor have large Financial services divisions. In fact for 30 years various shipping companies (mostly in Scandinavia) and on the sale and purchase side of things have helped facilitate financing in some form or another. 

To a wider extent this is just part of a global movement where innovation led by fintechs (computer programs that enable banking) mean that non-financial companies can now offer financial products.

Why does this work? Non-financial firms (like shipbrokers, real estate agents, health care providers, Universities etc) – have myriad unique assets, notably a large customer base, unique insights, and crucially, trusted relationships. 

Capitalizing on these, some shipbrokers have realised they can offer financial products that help the client and at the same time compliment there core business's.

In a world where shipbrokers are constantly trying to justify value in the market - have these big buys (like Clarkson's and Ifchor) found a way to offer value to customers, stay ahead of the pack and keep growing exponentially. 




Not all shipbrokers can offer financial products - this is obvious. Most shipbroking firms are 1-5 people shops with limited asset base. Is this a problem?

Does this have implications for smaller shops? 

Its a bit like asking what business is McDonalds in? Most people say hamburgers.....those in the know say 'real estate'. 

20 years time. What business is Clarkson's in? Shipbroking (or ................is it banking?)

VS

Hows your brand?

The current state of the world, more than ever, shipbrokers, freight traders, shipowners, and charterers need to assess their own personal brand.

And here I do not mean the brand of the business you work for. I mean your own personal private brand.

We can argue until the cows come home about teamwork and loyalty (both very important aspects of being a great citizen) but the truth is in times like this its your own personal brand that can make the difference between having a job and not...

And you know what - growing your own personal brand is becoming increasingly difficult in a shipping world that values loyalty, conformity and less risk. Ill explain more...

With consolidation happening everywhere in most industries what I am noticing is that those most comfortable within organisations have a strong persona brand. Ie - the company needs them....

This could be for any number of reasons but most likely

1. They could be a huge revenue generator
2. They have very close client relationships
3. They are just awesome at what they do
4. They have become internally indispensable (the boss can't function or they help with internal politics)

Case in point: One shipping executive I know feels fairly comfortable (rightly so) because of the strong bonds he has created over many years in a particular region of the world. He gets inside word on new business, often gets non market repeat business and for a shipowner or freight trader this is very valuable (regardless if the cargoes make money or not).

And you know what - listen up those over 40 years old. This will become even more important as you become an elder statesman.

In my books and blog click here I talk a lot about how to build your own brand in the shipping world. Like any good business you personally should be looking to secure long term profitable relationships. You too should be constantly evolving and learning new things.

Any smart business build walls around itself - protecting itself from the ups and downs of the market.
The irony here is part of that is not letting individual brokers get too powerful.

So how can you build your own brand in an ethical way? This requires an interesting mindset for any good loyal employee. Yes trust in the business but also watch and remain detached to some extent. Naivety won't pay the bills.

And lets be clear - I am not out to undermine great business's. There is nothing better in the world than finding somewhere to work that you love.

As a business owner myself - I am completely comfortable with this. Part of a being a great business is keeping staff happy. It is my experience that staff will stay for ever if they are given the opportunity to be rewarded fairly and have the opportunity to grow as people and professionally. Im not sure shipping has always been great at that.

How is your own brand?

VS
(tackling the difficult topics)

Shipbroker Performance and wellness Hack

Attention Shipbrokers (a generic term covering all chartering people)

I have an activity that will change your life!

This one is a ripper because for me it ticks a lot of boxes. Firstly - I am a shipping geek. This means I like big ships.

Most summers I rent the same eco friendly tiny house house in Gibraltar, put on my ships captain hat, wheel out a deck chair and with binoculars in hand (18 hours per day) I watch bulk carriers enter and leave the channel.

I like watching them in the morning, in the afternoon and evening because the light is different.

I make sure I have a freezer full of organic chicken wings, bbq sauce and Eastern European beer. I might take a probiotic to help with my stomach.

Im sitting at the tip - you need to squint

So with shipping geek credentials verified I have a hobby that is 'next level'. This one we can do from our own homes (tick), this one we get to actually perform a physical function instead of tapping on a computer (tick), this one has a meditative element important for the wondering mind of chartering people everywhere (wellness tick), and this one we can do 'even' while negotiating (improve performance - bloody big tick).

SHIPBUILDING!

Not big ships - small ships. Some of you may already be converts.

These guys are the best in the business Premiership models

Entry level

As a lockdown activity this is a no brainer. Buy an elite model and you will be at it for months - maybe years..

If you are still an office goer - think of this scenario. Big day at work, 9 pm in the evening, you are sick of watching tv, Netflix, trolling the Net, speaking to your loved ones....and..... they may in fact be sick of talking to you (been there!). Plus you may be working on a deal.

Your mind cannot switch off. Go to the liquor cabinet poor a glass of Red (or a lemon lime and bitters) and slowly move toward your home office.....close the door (lock if necessary). Laid out in front of you is an amazing labour of love. A 'slow hobby' to get you back on track.

Advanced

I have done an extensive search (for myself) and even contacted a few for a chat.

These guys have the best product. High variety, High quality models kits.

I had a chat to the owner Rashid Lalloo who is a super nice guy. The business itself has a great story and after becoming interested I found this press release https://www.pr.com/press-release/785529. Well done to them.

Send Rashid an email rashid@premiershipmodels.com and if you tell him 'the virtual shipbroker sent you' - he will look after you. I told him ship chartering people always look for deals..its in our DNA

https://premiershipmodels.co.uk/contact-us/

Happy Living / Happy Fixing
VS
(ps - leave a message and say hello)

Bulk shipping is like the EPL

Bulk shipping seems to me to be a lot like the EPL (English Premier League football).

Long time readers of the blog will know my love for sport. Golf (9 handicap), skiing, tennis, more recently basketball and football all play a part in my enjoyment of life. I like playing them, watching them and like my relationship with shipping, I love analysing them.

So the EPL is still the number one league in the world. Most money, many of the worlds top players, 3 or 4 of the worlds top 10 clubs, closely followed by Spain, Germany, France and Italy.

But the truth is I find watching the EPL quite boring. There is no doubt regarding the skill and level of overall expertise on show but all this in some weird way has managed to take the character out of the game.

Here is the irony - all the technology (stats revolution), sports science, diet, MBA style management etc designed to give clubs an edge has in fact brought them closer together. All top clubs now spend millions on these same elements.

So no longer are those things necessary to get an edge they are now necessary just to keep up!



So on the field we see some interesting things. We see almost perfect football. Strong, fast athletes who are so well drilled into team tactics that any mistake sticks out like a sore thumb...

The precision is something to watch. Some of the greatest players virtually never make a mistake. First touch is perfect, pass hits the mark, and through some system or another the ball makes its way up the pitch and a goal is scored (hopefully).

But off course teams are now equally as well drilled in defence.

The game now seems like a war of attrition rather than a thing of beauty. So now I like watching the championship (the league below the EPL) because I see things that are unexpected - less than perfect.

So how is this like shipping? Well the last 10 years (and certainly the last 5) we have see the rapid expansion of technology (big data) trying to gain traction in the industry. We also have so many more MBA education, highly credential boffins running the big companies these days.

Data is analysed in every direction, trade routes, commodity markets - even the share market is now being compared to the shipping markets just to see who can get an edge.

The problem from my perspective is when you combine this amazing information (some great people in marine Tech no doubt) with almost unlimited access via so many media channels - then where is the advantage? The technology guys need to make a buck so unless someone pays millions for exclusivity then others are getting the same information.

Currently I can follow 20 companies on 'linkedin' who give me free technical market information - but so can everyone else. 

I can also pay a subscription to a private company who will have disseminated the market in 30 different ways - but so can everyone else

I can rely on my broker to send me market reports - but so can everyone else.

And here is the interesting kicker - the market has now factored that 'intelligence' in.

So efficient market analysis is now part of the actual market. The market is now being influenced by 'risk' professionals more than ever before.

So in my mind the result is a little bit boring. It means that you could argue there is little advantage listening to anyone and just get on with your job and 'face the market'. You might just save thousands of dollars in consultancy fees.

If you are shipowner - just buy low (ships that is), watch your cash, diversify with long term and short term charters and play with the futures market.

If you are a charterer - Buy low (freight), hedge where you can, and if you feel like taking on some risk then keep your exposure open.

If you are broker - I do know that the technology is helping speed up processes which is great. Butt the bottom line is the same. Its all about relationships.

That leaves a whole big space for freight traders (ship operators) - historically the guys willing to play the game and take on most of that risk. These guys should be spending more on tech then others I would think - and talking to those in the know this is the growth area.

Whats the moral? Well in the EPL we love watching the stars. The ones that can dribble and that can change a game of their own feet and their own willpower. That will never change and these guys earn the big bucks deservedly. You also get the feeling that those very top guys probably go into dream mode when the 'experts' come in.

Its difficult to see the 'gaps' when everyone toes the line. The smartest in the room will always find a way.

Trust your instincts and believe in yourself.

Enjoy the weekend
VS

Bulk shipping - strange times indeed

Yes it is a strange time in international shipping. Its a strange time in the world. Globalisation being questioned, technology taking over (too much information - not enough good information), pandemics, locust plagues, oil wars, massive political divides all over the world, no sport, no tinder - the list goes on...

If bulk shipping was a person they would likely be diagnosed as having split personality disorder and probably committed to a loony asylum (thats not politically correct - yes I know). The tanker market is artificially pushed to crazy levels due to an oil war (although that market is changing rapidly), the cruise market decimated due to corona (will it ever come back to previous levels?) and a dry bulk market where its hard to figure out how many shipowners and operators are going to survive.

Sure the last week or so there are good signs out of China but my sense is we are looking for anything to be optimistic about. China doesn't operate in a bubble and yes their domestic market is huge but they rely on western consumers to buy their stuff. From a supply perspective it appears that political tensions with Australia and other western countries means that China are flexing their muscles and playing hardball on coal imports and grain shipments.

That doesn't come without a cost on both sides of the spectrum. There is a reason trade historically flows between nations and mostly it down to pure economics. Once we mess around and throw politics into the equation then resources don't necessarily get placed where they should.

So where does that leave the shipping industry coming to the end of the financial year? Its bonus time people and there will be have and have nots. The tanker community will probably be happy but nervous. Any shipping companies (brokers, shipowners etc) that have diversified business's across all major markets will also be ok.

But some are struggling and the whispers are only getting louder.



What can we do as companies and individuals but hustle like we always do. Although the above is true how much has really changed?

Focus on

• Quality
• Improvement (continuous learning)
• Relationships (help each other out) 
• Adaptability
• Flexibility
• Stay positive

VS