Ship-broking ConceptShip-broking is a financial service, which forms part of the global shipping industry. Ship-brokers are specialist intermediaries/negotiators (i.e. brokers) between shipowners and charterers who use ships to transport cargo, or between buyers and sellers of ships.
Some brokerage firms have developed into large companies, incorporating departments specializing in various sectors, e.g. Dry Cargo Chartering, Tanker Chartering, Container Chartering, Sale & Purchase, Demolition and Research. Other "boutique" companies concentrate on specific sectors of the shipping market.
The principal shipping and ship-broking centers are London, New York and Singapore. Tokyo has a longstanding tradition in shipping/ship-broking, which is now more focused on Japanese domestic trade. Other places continue to develop in international shipping services, such as: Hong Kong, Shanghai, Delhi and Mumbai; Copenhagen, Geneva, Genoa, Hamburg, Oslo, Paris and Piraeus in Europe; and in North America, outside of New York and Connecticut, Houston is developing as a ship-broking center.
Until recently, it was commonplace for ship-brokers to cover more than one discipline, although nowadays the vast majority of ship-brokers specialize. The Institute of Chartered Ship-brokers sets educational standards throughout the industry, Fellowship of which is considered a great honor.
Ship-broking can be categorized as follows:
Sale and purchase
S&P brokers handle the buying and selling of existing or new ships (called new-buildings, in industry parlance). S&P brokers discuss opportunities and market trends with shipowners, report on sales, value Vessels, calculate freight earnings, advise on finance and endeavor to find ships for specific employment opportunities. When a ship is sold, brokers usually negotiate on behalf of the buyer and seller on price and terms and also provide a route to resolving any disputes which might arise. Some S&P brokers specialize in the sale of ships for scrapping, which requires a different set of skills.
Dry cargo broking
Dry cargo brokers are typically specialists in the chartering of Bulk carriers, and are appointed to act either for a shipowner looking for employment for a ship, or a charterer with a cargo to be shipped. Dry cargo chartering brokers have to maintain large databases of Vessel positions, cargoes and rates and pay close attention to the direction of the markets so that they can advise their clients accurately as to how to maximise profits or minimise expenses. Dry cargo shipping can be categorised by Vessel size: namely, Bulkers such as Capesizes, Panamaxes and Handysize are the main sectors. Each size of Vessel suits different types of cargo, trade routes. Thus owners, charterers and brokers tend to specialise in one or other of these sectors.
Tanker brokers specialise in the chartering of Tankers, which requires different skills and knowledge from Dry cargo broking. Tanker brokers may specialise in crude oil, gas, oil products or chemical tankers.
Tanker brokers negotiate maritime contracts, known as Charter Parties. The main terms of negotiation are freight/hire and demurrage.
Oil being a fast moving trade, freight rates for crude oil tanker charters are most commonly based on the Worldscale Index; the Worldscale Assocation publishes base rates annually.
Some specific voyages, such as named voyages (ie, from A to B) and for specialist ships, like LNG tankers (a highly specialised sector of the tanker market), freight rates can be agreed at a fixed rate between the parties.
Container brokers specialize in the chartering of container ships and provide container ship owners and charterers with market-related information.