Chartering Information

An essential component of Shipbroking and Chartering practice is the exchange of information, where the precision, reliability, speed, timing, and other quality factors are crucial. Presented below are the primary sources of Chartering Information, the foremost Chartering Information centers globally, the methods used to transmit this Chartering Information across the Chartering Network, the communication tools employed, and the critical importance of timing. Significant attention is dedicated to describing the functions of Shipbrokers and Ship Agents in managing this business data. It's highlighted that Chartering Negotiations through orders, position lists, indications, offers, counter-offers, etc., are vital information channels.

Types and importance of Chartering Information

Professionals involved in Chartering and Shipbroking are key receivers and providers of Chartering Information. The constant stream of Chartering Information and its analysis and evaluation are necessary for accurately assessing the current conditions and trends in the Freight Markets. The quality of Chartering Information (correctness, reliability, accuracy, speed, timing, etc.) is always critical. Detailed explanations of the main sources of such Chartering Information follow below.

CHARTERING MARKET REPORTS

Chartering Market Reports are disseminated by the Baltic Exchange or other significant entities such as BIMCO (Baltic and International Maritime Council), Intertanko (International Association of Independent Tanker Owners), ASBA (Association of Ship Brokers and Agents), on a membership basis, or by specialized Chartering Market analysts on a subscription basis, or by major Shipbroking companies to Shipowners, Charterers, other Shipbrokers, and Agents, banks, etc., offering a detailed snapshot of the prevailing conditions in the Ship Chartering Market over various periods. By comparing the insights from various Chartering Market Reports with personal assessments, one can develop a relatively precise view of the state of the Chartering Market in areas of specific interest. A comprehensive Chartering Market Report typically focuses on the major Freight Markets, whether they be dry cargo, tanker, container, or gas markets, and may also cover the S&P (sale and purchase) of ships or specialized markets. Different ship sizes are often addressed separately (e.g., a dry bulk market report may include individual analysis for capes, panamax bulk carriers, supramax bulk carriers, hand bulk carriers).

Additionally, developments in the Chartering Market across different geographical areas may be individually addressed, such as a dry bulk market report that focuses on either the Atlantic or Pacific basin, or for different commodities such as Fixtures concerning grain, coal, iron ore, etc., which are grouped and showcased together. When a ship is chartered and a Freight Rate or Hire Rate is agreed upon between the Shipowner and the Charterer, then the ship is said to be “Fixed.”

 

CHARTERING ORDERS

Below, we will examine Chartering Orders, Ship Position Lists, Indications, and Offers/Counter-offers as primary sources of Chartering Information. These elements are also integral to Chartering Negotiations. A Chartering Order represents every request for transporting specific cargo from one port to another. It can also relate to a requirement from a Charterer, Shipper, or Owner of Cargo to Time Charter a ship for a short or long duration. Among Charterers and their Shipbrokers, between Shipowners and their Shipbrokers, and across Shipbroking firms, these Chartering Orders circulate individually or in lists that encompass multiple orders. The party requesting Chartering service is said to “place an order on the Chartering Market” and will then await responses from the Shipowner potentially interested in the order.

An example of a Chartering Order is as follows:

ACCT HANDYBULK 45/55,000 DWT GRD DELY NORTH CONTINENT 26-30TH JUNE 1 TCT VIA BALTIC TO TURKIYE SCRAP METAL DURATION ABT 40 DAYS WOG REDELY DLOSP 1SP MARMARA 3.75% ADDCOM

This order details the Charterers’ need for a geared ship of 45,000–55,000 DWT for a Trip Charter (TCT Time Charter Trip) transporting Scrap Metal from the Baltic Sea to Turkiye.

SHIP POSITION LISTS

This section includes data on the availability (open) of ships for new assignments. Shipowners and operators distribute these positions as guides to Shipbrokers and Charterers, aiming to spark interest and proposals for the next charter employment of the listed ships. An example of a position list is as follows:

PLSE PROPOSE MV HANDY HANDAN BUILT 2025 ABT 63,369 DWT ON ABT 13.30M SSW 199,90M LOA / 32.26M BEAM 5 HOLDS / 5 HATCHES ABT 78.642CBM GRAIN / ABT 73.680CBM BALE 4 CRANES, EACH OF 30MTON (4 GRABS 12CBM) OPEN TURKIYE – BEG. JUNE PREFERS DIRECTION US Gulf (USG)

This Ship Position List seeks the next charter for an ultramax bulk carrier, detailing the ship’s specifics and noting that it will be “open” at Turkiye at the beginning of June, with a preference for moving towards the US Gulf (USG).

INDICATIONS

Indications are preliminary signals of the intentions, terms, and conditions under which the Shipowner or the Charterer is prepared to commence Chartering Negotiations. This term is utilized by Chartering Shipbrokers and includes information such as the quantity of cargo, availability dates for a ship or cargo, and the Freight rate a Charterer is ready to pay or a Shipowner is willing to accept.

CHARTERING OFFERS/COUNTER-OFFERS

Offers/Counter-Offers form the most crucial pieces of information exchanged during Chartering Negotiations among the involved parties. Shipowners, Charterers, and their Shipbrokers play a role in shaping the Freight Market, with the information shared about the business at hand being as crucial as the agreements reached. For assessing the state of the Chartering Market and its impact on market trends, this information is vital, regardless of whether a Fixture is finalized or not. The essential components of Chartering Negotiation are the Offers and Counter-offers made between the negotiating parties, leading to a Charter Agreement (Charter Party).

 

 

GENERAL SOURCES OF CHARTERING INFORMATION

Additional vital information includes cost-related aspects of operating and dispatching ships, such as expenses for handling specific cargoes in various ports, port dues, charges linked to the ship's call, canal passage costs, notes on bunker (fuel) prices, etc. Information on port congestion, ice hindrances, opening and closing of canals and other significant passages, maximum draught (draft) allowances in ports, ships' cargo-handling capacities for different commodities, and labor availability for loading/unloading a ship are other crucial data points. Additionally, various abrupt geopolitical events and broad economic and social conditions invariably influence the international shipping market's progression. Such information can be sourced either directly from Shipowners, Charterers, Shipbrokers, and Ship Agents, typically through private communications, or through public circulations on the internet or via membership by major organizations such as BIMCO (Baltic and International Maritime Council).

Examples of other sources of Chartering Information include:

• Shipbroking and Agency Network: Chartering Information from the global network of Shipbrokers is paramount, and details about ports like Port Restrictions, dues, costs, fees, etc., are often sourced from local Ship Agents.
• Databases: Maritime organizations such as BIMCO (Baltic and International Maritime Council), Intertanko (International Association of Independent Tanker Owners), and maritime research experts like Lloyd’s List Intelligence, Clarksons’ Shipping Intelligence Network, etc., provide databases and reports on a membership, subscription, or free basis with crucial Chartering Information about shipping companies, ships, Freight Rates, ship values, cargo volumes, trade routes, ports, costs, etc.
• Commodity Reports: International organizations release reports on global trade developments, such as the monthly Grain Market Report by the IGC (International Grains Council), the Bunker Report by the Baltic Exchange, the Statistical Review of World Energy by BP, and Market Reports by Clarksons for oil and energy topics issued by the International Energy Agency or the US Energy Information Administration.
• Commodity Price Bulletins & Handbook on International Trade and Development Statistics: UNCTAD (United Nations Conference on Trade and Development) publishes a monthly newsletter with commodity prices and an annual handbook with statistical data on international trade development.
• Country Reports: Economic conditions of various countries are studied by embassies, ministries, and other state agencies, as well as by UNCTAD (United Nations Conference on Trade and Development) in cooperation with OECD (Organisation for Economic Co-operation and Development).
• Reports on the Global Economy: The IMF (International Monetary Fund) publishes research on global economic developments.
• Lloyd’s Publications and Informa Group Services: Specialized Chartering Information is provided to shipping market practitioners worldwide through publications (books, reports, magazines, newspapers), events (conferences, seminars), training, market research, and consulting (in-house training, distance learning courses). From a Chartering and Shipbroking perspective, the most valuable resources are Lloyd’s List electronic newspaper, Lloyd’s Law Reports, Lloyd’s Shipping Economist, and especially Lloyd’s List Intelligence electronic database network, along with various shipping book titles.
• Internet network: Websites are a major source of Chartering Information, such as HandyBulk (www.handybulk.com), where Shipbrokers can find a list of widely recognized Chartering Information for further research.

 

CHARTERING INFORMATION CENTRES

London, Athens, New York, and Singapore stand out as primary Chartering Information centres. However, Oslo, Hamburg, Copenhagen, Geneva, and Paris also significantly contribute to the dissemination of Chartering Information. In recent decades, with the expansion of Asian economies, cities like Singapore, Hong Kong, Shanghai, Seoul, and Taipei have rapidly gained prominence. Additionally, other notable shipping locations include Vancouver, Houston, Istanbul, Antwerp, Rio de Janeiro, and Mumbai. Shipowners who manage their fleets on a global scale maintain regular communications with shipping centres across various countries. At this juncture, it is important to highlight certain Maritime Organisations that influence global Chartering practices in one way or another.

 

CHARTERING INFORMATION NETWORK

For Shipowners, Charterers, Shipbrokers, and Ship Agents, establishing a network of contacts that captures all relevant business opportunities and efficiently transmits Chartering Information is crucial. Different Shipbrokers specialize in various markets or market segments. By connecting with Shipbrokers who are experts in Chartering items like grain, coal, and iron ore, and who maintain strong direct relationships with major commodity traders in cities such as London, Paris, Geneva, Hamburg, or New York, a Shipowner can stay well-informed about cargo availability worldwide. Through these Shipbrokers, Shipowners also receive updates on Freight Rates of interest to potential Charterers, while Charterers learn about the rates requested by competing ships.

This continuous exchange ensures that Shipowners are up-to-date with all shipping market sectors of interest, and Charterers gather their information similarly by communicating with Shipbrokers connected to all relevant Shipowners.

The description above primarily applies to ships operating in the Open Market (Open Freight Market). However, the Chartering Information network for Liner Shipping operates differently. A Liner Shipping Company or a Liner Alliance, which services specific trade routes, incorporates several Liner Agents. These agents segment the cargo-generating areas into geographical zones, maintaining contact with local customers (Shippers), directly or via Freight Forwarders. Liner Agents and the Liner Shipping Company typically enter an Exclusivity Agreement, securing certain rights for the Agents while preventing them from booking cargo for competing lines. In this model, the Liner Operator cannot book cargo from the area under the Exclusivity Agreement without compensating the Liner Agent.

 

CHARTERING INFORMATION COVERAGE

From a Shipowner’s perspective, direct contact with Charterers might seem preferable to using a Shipbroker as an intermediary. While such direct contacts exist, they are often limited to a narrow Chartering Market manageable through few connections. This is not feasible in larger markets like dry cargo or tankers, where crucial Chartering Market Information might be missed without Shipbrokers.

To minimize staffing and inquiry costs, a Shipowner might choose to funnel all Chartering Information through one or two Shipbrokers. These Shipbrokers effectively become the exclusive sources for Chartering Information, tasked with collecting, processing, and evaluating data for the Shipowner. However, this can lead to filtered information, with critical decisions being made by the Shipbroker instead of the Shipowner.

Conversely, a Shipowner working with a broad array of Shipbrokers without favoring any could theoretically access most market orders, though this may lead to inefficiencies and overburdened internal processes. This approach also risks diminished effort from any single Shipbroker, unlike what might be expected from an appointed Exclusive Shipbroker.

For Charterers, the scenario is slightly different yet similar principles apply. They often monitor available ships and Freight Rates through their Shipbrokers for key commodities. Some Charterers might separate their shipping operations from their main business, designating an Exclusive Agent to handle and fix cargoes. Furthermore, a Charterer or Shipper needing to move cargoes that can be transported as bulk or general cargo must liaise both with Liner Agents in the relevant trade and with Shipbrokers who handle appropriate ships in the Open Chartering Market to determine the best shipping method.

 

 

MARITIME ORGANISATIONS

Baltic Exchange (www.balticexchange.com)

The Baltic Exchange is an ancient and unique institution dedicated to the exchange of shipping information, headquartered in London with regional offices in Athens, Singapore, and Shanghai. Historically, Shipowners, Charterers, and Shipbrokers would gather there for a few hours around noon to circulate cargo circulars and share information with utmost confidentiality and trust. Discussions about the current state of the Chartering Market were common, and formal Freight Negotiations and Fixtures occasionally took place on the Floor. Today, most of the Baltic Exchange's functions are conducted via telephone, email, and the internet. Nevertheless, the Baltic Exchange remains crucial. Membership at the Baltic Exchange extends beyond Shipbrokers, Charterers, and Shipowners to include financial institutions, maritime lawyers, insurers, and related associations.

The international community of the Baltic Exchange represents a substantial segment of global shipping interests and adheres to a code of business conduct summarized by the motto “Our Word Our Bond”. Members are heavily involved in a majority of dry cargo and tanker Fixtures as well as most of the global merchant ship sales and purchases.

Members benefit from Chartering Market Information derived from assessments by a global panel of esteemed Shipbrokers. Daily reports on Freight Rates across over 50 trade routes are provided, alongside market insights on second-hand ship values, ship demolition prices, and Fixtures. The Baltic Exchange offers independent, high-quality information on dry, tanker, and gas Freight Markets, covering Forward Freight Agreements (FFAs) as well. It also organizes training courses on Chartering and Freight Derivatives.

The Baltic Exchange’s impact on international Chartering matters is significant, especially through its publication of various shipping and Freight Indexes. These indexes serve as general indicators of Freight Market performance, benchmarks for physical charter contracts, and settlement tools for Forward Freight Agreement (FFA) trades. Additionally, the Baltic Exchange is one of four organizations that developed the “Laytime Definitions for Charter Parties 2013”, along with BIMCO (Baltic and International Maritime Council), FONASBA (Federation of National Associations of Shipbrokers and Agents), and CMI.

BIMCO (www.bimco.org)

BIMCO (Baltic and International Maritime Council) in Copenhagen is a premier Maritime Organisation, comprising members such as Shipowners, Ship Operators, Ship Managers, Shipbrokers, and Ship Agents globally. The primary aim of BIMCO (Baltic and International Maritime Council) is to support the commercial activities of its members by creating Standard Charter Parties and Clauses, offering a document editing tool known as BIMCO Idea, and providing quality Chartering Information, advice, and education. BIMCO advocates for fair business practices, free trade, and open access to Chartering Markets, committed to the harmonization and standardization of all shipping-related activities.

BIMCO’s documentary committee focuses on crafting and updating shipping documents. Today, BIMCO (Baltic and International Maritime Council) maintains a catalogue of printed Standard Charter Party Forms and Standard Clauses, all sanctioned in some manner by BIMCO. Given its extensive membership and global influence, BIMCO (Baltic and International Maritime Council) might also provide insights on, for instance, port congestion, required port dues and charges, and local port regulations. If any party in shipping repeatedly breaches trade rules or engages in misconduct, such as slow settlement of dues, they can be reported to BIMCO, which can then exert pressure to rectify the situation. Shipowners and Charterers often seek BIMCO’s consultancy on dispute resolutions.

From a Chartering and Shipbroking perspective, BIMCO’s impact is profound and comprehensive. Nearly all pertinent standard shipping documents globally, such as Charter Parties, Bills of Lading (B/Ls), Booking Notes, Timesheets, Statements of Facts (SOF) used in Laytime calculations, or even Ship Agency Agreements, Ship Management, or S&P (Sale and Purchase) Charter Parties are either issued or endorsed by BIMCO (Baltic and International Maritime Council). BIMCO’s role is similarly significant in drafting balanced Bills of Lading (B/Ls) and wording for Charter Party Clauses. Notably, BIMCO is a primary entity behind the publication of Laytime Definitions.

INTERCARGO (www.intercargo.org)

INTERCARGO’s (International Association of Dry Cargo Shipowners) members primarily manage bulk carriers within the international dry bulk sector. INTERCARGO’s chief role is to collaborate with its members, regulators, and other shipping associations to ensure the dry bulk industry operates safely, efficiently, profitably, and sustainably. To this end, INTERCARGO (International Association of Dry Cargo Shipowners) actively participates in crafting global legislation via the International Maritime Organisation (IMO) and similar bodies. Publications from INTERCARGO, like the annual Benchmarking Bulk Carriers Report, offer essential statistical and benchmarking data to stakeholders including Shipowners, Port State Control (PSC) authorities, Flag States, financiers, terminal operators, Charterers, and others in the shipping industry.

 

INTERTANKO (www.intertanko.com)

Since 1970, INTERTANKO (International Association of Independent Tanker Owners) has represented the interests of independent tanker owners, ensuring that oil is transported by sea safely, responsibly, and competitively. INTERTANKO (International Association of Independent Tanker Owners) serves as a critical forum where tanker industry stakeholders convene to discuss policies and create statements. It's a pivotal source of firsthand information, opinions, and guidance on tanker and oil-related issues. INTERTANKO’s membership includes independent Tanker Owners and Operators, excluding oil companies and state-controlled entities, who meet the association's membership criteria.

INTERTANKO (International Association of Independent Tanker Owners) maintains offices in Singapore and Washington DC, alongside its main offices in Oslo and London. It participates in discussions at the International Maritime Organisation (IMO), where it holds non-governmental status, and the International Oil Pollution Compensation Fund (IOPC), and has consultative status at the United Nations Conference on Trade and Development. INTERTANKO is deeply involved in a wide array of tanker-related subjects, including commercial, technical, legal, operational, environmental, documentary, and Tanker Market issues. Through direct contact with its members and original sources, INTERTANKO selects and disseminates critical information to the tanker industry. Its offerings include the INTERTANKO Weekly News, various courses and seminars, free access to web-based services, and numerous publications. Members and Associate Members also benefit from direct expert opinions from experienced lawyers, mariners, naval architects, marine engineers, economists, and other specialists within the association.

In Tanker Chartering matters, in a market typically dominated by Charterers (Oil Majors) using their own Standard Charter Party Forms, INTERTANKO (International Association of Independent Tanker Owners) has historically played a crucial role in forming more balanced Standard Charter Parties for various charter types, including the TANKERVOY 87 for Tanker Voyage Charters, the INTERCONSEC 76 for consecutive tanker Voyage Charters, and the INTERTANKETIME 80 for tanker Time Charters.

 

FONASBA (www.fonasba.com)

FONASBA (Federation of National Associations of Shipbrokers & Agents) serves as the global voice for Shipbrokers and Ship Agents. This federation consists of national associations of Shipbrokers and Ship Agents from 49 countries, including 43 full members and six additional countries represented by associate or candidate members. Individual companies can also become members of FONASBA. All members of these national associations are encouraged to acquire the FONASBA Quality Standard, which attests to their financial integrity and dedication to quality. Established in 1969, FONASBA (Federation of National Associations of Shipbrokers & Agents) champions fair and equitable practices and ensures that the interests of its members are represented both to governments and throughout the maritime industry. FONASBA’s primary focus areas include liner and tramp agency matters, Chartering and Shipbroking, S&P (Sale and Purchase), and documentary affairs across various shipping markets. FONASBA is headquartered at London’s Baltic Exchange.

FONASBA (Federation of National Associations of Shipbrokers & Agents) holds consultative status with the International Maritime Organisation (IMO), the United Nations Conference on Trade & Development (UNCTAD), and the World Customs Organisation (WCO). It also collaborates closely with shipowning bodies such as BIMCO, INTERCARGO, and INTERTANKO.

FONASBA’s dealings with the European Union (EU) are managed through its subcommittee, the European Community Association of Ship Brokers & Agents (ECASBA), established in 1990 to advocate for European Shipbrokers and Agents. ECASBA plays a crucial role in discussions related to European seaports and their services, short-sea shipping, shipping safety, EDI policies, customs, and administrative procedures. Notably, FONASBA was one of four organizations that collaborated on the Laytime Definitions 2013. Additionally, FONASBA has issued the Time Charter Interpretation Code 2000 to aid in resolving disputes that often arise from Time Charters.

ICS (www.ics.org.uk)

The Institute of Chartered Shipbrokers (ICS) is a globally recognized professional body that represents Shipbrokers, Ship Managers, and Ship Agents. Founded in 1911 and granted a British Royal Charter in 1920, the ICS (Institute of Chartered Shipbrokers) sets a high professional standard within the shipping industry, especially in Chartering and Shipbroking. As a leading provider of shipping-related education, the ICS offers its principal educational program—tutorship—directly from its London headquarters and through its distance learning centers worldwide.

ASBA (www.asba.org)

ASBA (Association of Ship Brokers and Agents), founded in 1934, is an independent membership trade association with offices in the USA and Canada. ASBA (Association of Ship Brokers and Agents) brings together its members, including Shipbrokers and Ship Agents, as well as affiliate members like Shipowners, Ship Operators, and Charterers, all of whom must operate in the USA or Canada for at least one year. ASBA promotes and upholds the ideals and standards of professional conduct and serves as a forum for members with shared interests.

ASBA (Association of Ship Brokers and Agents) organizes conferences and provides distance learning courses and live seminars designed to offer a thorough understanding of the shipping industry’s latest developments. ASBA (Association of Ship Brokers and Agents) is renowned for publishing the widely recognized and balanced standard form of Time Charter Party, titled NYPE (New York Produce Exchange). Additionally, ASBA offers its Charter Party Editor Software, a licensed product renewed annually, designed to streamline Chartering Negotiations, Charter Party drafting, and finalization. This system supports a variety of documents, including dry cargo and tanker Voyage Charter Parties and Time Charter Parties, and provides benefits to Shipbrokers, Shipowners, and Ship Agents.

 

 

CHARTERING INFORMATION HANDLERS

In today's business environment, managing Chartering Information effectively is critical. Although many individuals may possess the same Chartering Information, only a select few can add value through its strategic use. In the realm of Chartering and Shipbroking, the roles of Shipbrokers and Ship Agents are essential. Chartering Shipbrokers and Port Agents significantly influence the Chartering Process, from negotiation through to the execution of a charter, while Liner Agents and Freight Forwarders (FF) play a vital role in the cargo booking procedures of the Liner Shipping Industry. It is widely acknowledged that the role of Shipbrokers is paramount, and hence, is explored in further detail below.

SHIPBROKERS (CHARTERING SHIPBROKERS)

In the Open Ship Chartering Market, which includes bulk shipping, tramp operations, and liner market charters, Shipowners and Charterers typically connect through Shipbrokers (Chartering Shipbrokers). Although the traditional role of the Shipbroker has evolved with the advent of electronic communications, with Chartering Negotiations often conducted via email. Shipbrokers perform informative, intermediary, consultative, and coordinating roles along the transportation chain. A Shipbroker might specialize in Chartering, referred to as a Chartering Shipbroker, or in Ship S&P (Sale and Purchase) transactions, known as an S&P Shipbroker. Here, "Shipbroker" refers specifically to the Chartering Shipbroker.

A Chartering Shipbroker acts on behalf of, and for the account of, one principal—either a Shipowner or a Charterer—and discloses this affiliation to all parties at the beginning of discussions. The Shipbroker facilitates contact between a Shipowner and a Charterer, negotiates the contract of carriage, provides advice on offers and proposals, drafts the Charter Party, oversees contractual and financial matters, and assists in dispute resolution. Typically, a Shipbroker does not have the authority to conclude a Charter Party but is limited to negotiation. However, a Shipbroker might occasionally enter into a Charter Party under his own name on behalf of an Undisclosed Principal, a situation fraught with risks.

Chartering Shipbrokers usually specialize in a particular market or sector. Both Shipowners and Charterers value a Shipbroker’s access to Chartering Information, expertise, and negotiation skills. Generally, each party employs its own Shipbroker—Shipowner’s Shipbroker and Charterer’s Shipbroker—to safeguard their interests. While Shipbrokers may sometimes have authority to bind their principals, negotiations typically involve close collaboration between the Principal, the Shipbroker, and the respective counterparts.

Once a deal is agreed upon, a Shipbroker might receive specific authority to sign a Recap or Charter Party, either as Agent Only or As Agent for X. In cases where the Shipbroker signs “As Agent Only,” legal issues may arise concerning the actual parties to the agreement. A Shipowner might choose to conduct business through a single Confidential Shipbroker or Exclusive Shipbroker or may opt to work with multiple Shipbrokers, providing them equal opportunities to secure business.

At times, a Shipbroker might introduce a First-Class Charterer (FCC) or First-Class Carrier (FCC) without specifying a name. If it later emerges that the Charterer or Carrier does not meet these high standards, the Shipbroker could be held liable for the misrepresentation. Both Charterers and Shipowners have legitimate reasons to verify the credibility of their counterparts. For instance, several years ago, a Carrier (Shipowner) believed it had entered into a Charter Party with an entity named “Indian Shippers.” After the voyage, when seeking to claim Deadfreight (DF), the Shipowner discovered that “Indian Shippers” was merely a collective term for a group of Shippers, highlighting the importance of accurately identifying contracting parties.

Chartering Shipbrokers are categorized based on several factors, including the Principal they represent, the Chartering Market they operate in, and their personality and demeanor. Here are more specific distinctions:

• Shipbrokers who represent Shipowners looking for cargoes (Chartering Shipbrokers seeking cargoes) and those who represent Charterers in need of ships (Chartering Shipbrokers seeking ships).
• Based on personality and temper, distinctions include the Freight Shipbroker who consistently secures contracts slightly above the Chartering Market rate but avoids risking business over Charter Party clause details, and the Charter Party Shipbroker who negotiates at market rate but strives to draft every Charter Party Clause to greatly benefit their Principal. It's important to note that an improperly drafted Charter Party can lead to significant losses, and the true outcome of a business is only clear after Post-Fixture calculations and final settlements.
• Dry Cargo Shipbroker specializes in the dry cargo sector of the Chartering Market, whereas a Tanker Shipbroker focuses on the liquid cargo or tanker market sectors.
• Competitive Shipbroker operates independently within the Chartering Market, whereas an In-house Shipbroker works exclusively for either a Shipowner or a Charterer. Large shipping firms often have dedicated departments or subsidiaries that act as their in-house Shipbrokers. It's worth mentioning that an in-house Shipbroker within a shipping group doesn’t guarantee that all orders will be exposed to the Open Chartering Market; some may be reserved for the company’s own fleet.
• To persuade a Shipowner to favor a particular deal, a Charterer’s Shipbroker might draft the order to suggest a special or close relationship with the Charterer. The term Exclusive in this context means that the Shipbroker is the sole representative on that order, appointed directly and preferentially by the Charterer. Similarly, exclusivity applies when describing the Shipbroker's relationship with the Shipowner. “Local Shipowners” or “Local Charterers” suggest a geographical proximity of the Shipbrokers to their clients. In the Chartering Market, the term “Friends” might be used by Shipbrokers to denote a special connection under various circumstances.

A Shipbroker typically does not have complete freedom to take an order to the Chartering Market with the directive to Fix Best Possible. Rather, they are generally given authority to negotiate within a specified set of terms and conditions. If these are not accepted by the counter-party, the Shipbroker must seek further instructions, continuing until both Shipowners and Charterers reach an agreement and sign a Charter Party.

When a Shipowner or Charterer, upon receiving an Order or Position, asks for more details or wants to explore a charter more thoroughly, they are considered Committed to that Shipbroker. It is seen as proper practice to continue Chartering Negotiations through the Shipbroker to whom the Principal is already committed. Occasionally, Shipbrokers attempt to commit a Principal over the phone by advancing the Order while simultaneously discussing its potential—this method, however, is not viewed as best practice.

Typically, the choice of Shipbroker is considered a privilege of the Shipowner. However, several factors should be considered such as: Who first presented the Order or Position? Who maintains the most “Direct” connection? Which Shipbroker has the most comprehensive and relevant Chartering Information? Who possesses greater bargaining power? There’s often consideration for whether there has been a previous engagement with the same customer through a specific Shipbroker for similar charters. Additionally, personal relationships also play a significant role.

At times, after concluding an initial agreement through a Shipbroker, the Shipowner and Charterer might engage directly in subsequent transactions, potentially to avoid Shipbroker commissions. There might be instances where a Competitive Shipbroker introduces an Order that the Shipowner’s Exclusive Shipbroker didn’t receive or notice. In such cases, the Shipowner might choose to inform his Exclusive Shipbroker about the Order, effectively committing himself through this channel rather than giving the Competitive Shipbroker an opportunity. Employing such tactics is generally viewed as unethical.

Who drafts the Charter Party?

It's the duty of the Charterer’s Shipbroker to draft the Original Charter Party immediately after the Chartering Negotiations conclude, based on the agreed terms. Another crucial role for both the Shipowner’s Shipbroker and the Charterer’s Shipbroker is to monitor the transportation process, ensuring continuous information flow, correct notifications, and timely payments of Freight or Hire.

Many Standard Charterparty Forms have a clause about Shipbrokerage, which outlines the Shipbroker’s compensation but requires the parties to specify the percentage, such as in GENCON part II, Clause 15 “Shipbrokerage”:

A Shipbrokerage commission at the rate stated in Box 24 on the Freight (F), Dead Freight (DF), and Demurrage (D) earned is due to the party mentioned in Box 24. If the Shipbrokerage isn’t executed on the estimated amount of Freight, the party responsible must compensate the Shipbrokers for their efforts and expenses. For multiple voyages, the indemnity amount is negotiated.

Unlike Ship Agency Fees, which are typically fixed, Shipbrokers usually earn a percentage of the Gross Freight. This commission is only payable once the Charter Party is signed or related contracts are finalized, thus linking the Shipbroker’s income to the Freight Market and the size of the deal, which could be measured by cargo quantity or charter duration. Typically, each involved Shipbroker receives 1.25% of the Gross Freight or Hire. The total commission for a deal, referred to as the Total Commission (TTL COM), is often stipulated in every order presented to the Shipowner. Shipbrokerage is meant to cover the Shipbroker’s costs and yield a profit. In dry cargo sectors, commissions usually range from 2.5% to 3.75%, depending on the number of Shipbrokers involved.

Moreover, the Total Commission (TTL COM) can be higher if an Address Commission (ADDCOM) is included, usually 3.75% ADDCOM. This practice often reflects the need of Charterers’ shipping departments to demonstrate income, especially in state trading scenarios. Additionally, a Charterer’s Shipbroker working exclusively might be entitled to 2.5% Shipbrokerage. Since Shipowners bear these costs, they might seek to offset them with corresponding increases in Freight or Hire.

Recent structural changes in the shipping industry have led to a rise in disputes involving intermediaries such as Shipbrokers and Port Agents. This has increased the necessity for insurance, and Protection and Indemnity Clubs (P&I Clubs) for these intermediaries are becoming essential. Shipbrokers should consider professional liability insurance like ITIC (www.itic-insure.com), which covers various potential errors that can occur in fast-paced electronic communications. Examples of insurable mistakes include misdirected demurrage statements, incorrect cargo descriptions, negotiation mishaps, and errors like sending offers to the wrong email or acting on behalf of a non-existent principal. These errors highlight the critical need for thorough verification processes, even under time pressures.

 

PORT AGENTS

In bulk shipping, a Port Agent represents the Shipowner and assists the ship on behalf of the Shipowner, ensuring the ship receives optimal dispatch during port calls. It's crucial for the Shipowner to hire a competent and proactive Port Agent. The Port Agent is compensated through a fixed Agency Fee, which can vary significantly between different ports and is also dependent on the ship’s tonnage. The Port Agent must support the Ship Master in dealings with all local authorities, including harbor authorities, and also handle tasks such as Cash to Master (CTM), provisioning, medical assistance, crew changes, coordinating ship repairs and maintenance, and relaying orders and messages from the Shipowners.

In scenarios where Loading and Discharging are under the Charterer’s Account, such as in Time Charters or when Free In Out Terms (FIO Terms) or similar arrangements are specified in the Voyage Charter Party, the Charterer typically prefers to Nominate the Port Agent to protect their interests. The choice of Appointing a Port Agent can be a critical detail in Chartering Negotiations, as it determines whether the Charter Party specifies Owner’s Agents (OA), Charterer’s Agents (CA), or Charterer’s Agents Both Ends (CABE). If the Charterer’s Agent is to be appointed by the Shipowner, the clause might state, “Charterer’s Agent to be Nominated, but if actually Appointed by the Shipowner, the latter will do so only by authority of and for the account of the Charterer.” If the Shipowner must accept the Charterer’s Agent, they can still safeguard their interests by appointing a Husbandry Agent or Protective Agent to support the Ship Master and ensure the Charterer’s Agent does not disadvantage the Shipowner or the ship.

“VOYAGE CHARTERERS NOMINATE PORT AGENT, OWNERS APPOINT PORT AGENT”

Port Agent’s responsibilities on behalf of the Shipowner include:

1. Allocating the ship’s berthing space for loading and/or unloading and ensuring the Ship Master is fully aware of port requirements and vice versa.
2. Arranging pilot and tug boat services.
3. Organizing the efficient and safe loading or unloading of cargo.
4. Coordinating with stevedores (for dry cargo) or jetty management (for liquid cargo) involved in the actual loading or discharging process.
5. Preparing the Cargo Manifest, which details the cargo handled; occasionally, the Port Agent may sign the Bill of Lading (B/L) on behalf of the Ship Master.
6. Advising import/export cargo owners and informing the Customs Office of the ship’s arrival while reporting the cargo on board.
7. Ensuring compliance with international and local regulations for the ship’s documentation, inspected by Port State Control (PSC), customs, classification societies, or other authorities.
8. Providing crew and passenger details to the Department of Immigration and Citizenship.
9. Organizing ship repairs and maintenance.
10. Arranging delivery of stores, supplies, charts, and spares to the ship.
11. Managing crew changes, including immigration documentation and arrangements like flight bookings and medical treatment for crew members.
12. Handling crew mail (less common today) and managing Cash to Master (CTM).
13. Preparing the Statement of Facts (SOF), a record of events during the ship’s port call that affects Laytime calculation, and submitting it to the Shipowner upon departure.
14. Handling port expenses, preparing the Disbursements Account (D/A), and submitting it to the Shipowner.

 

 

LINER AGENTS

Liner Agents are a crucial group of intermediaries in Liner Shipping. Unlike Shipbrokers and Port Agents, who rarely formalize their agreements with Principals in writing, Liner Agents often enter into long-term contractual arrangements. Some Standard Liner Agency Contracts are commonly used in market practice.

Liner Agents may function as a Liner Operator’s Branch Office at a port-of-call, soliciting cargoes on behalf of the shipping line, typically within a designated geographical area. While some Liner Agents operate independently and represent multiple principals, many are closely affiliated with or are subsidiaries of a single principal. Generally, a Liner Agent involved in a booking transaction receives a commission ranging between 3–5% of the Gross Freight.

Liner Agents manage various services on behalf of the Liner Operator, including:

1. Securing cargo for the Liner Operator – The Liner Agent must maintain close contact with local Shippers, providing information on ship schedules, competitive rates, and terms of carriage. Bookings are typically made without special negotiations, following the standard pricing structure. Once a Liner Booking is recorded and confirmed by the Liner Agent, an agreement for the carriage of goods is established, and a Booking Note is usually issued.
2. Booking cargo with or without the Liner Operator’s authorization – Liner Agents are often allocated cargo space in advance for each loading occasion, allowing them to confirm bookings without further approval. However, for special cargo, such as heavy lifts or hazardous goods, explicit approval from the Liner Operator is required.
3. Ensuring timely cargo handling – The Liner Agent is responsible for ensuring that cargo is available at the designated time and place for loading. In the case of an inbound ship, the Liner Agent ensures proper cargo delivery to the intended consignees. They coordinate the delivery of inbound shipments and receipt of outbound shipments, liaising closely with the Liner Operator, terminal operators, port vendors, and other transportation providers such as trucking and rail services. Additionally, Liner Agents work to expedite port dispatch so that the ship remains on schedule.
4. Checking Documentation – Since every shipment involves extensive paperwork, the Liner Agent is responsible for verifying the correctness of documents such as the Booking Note and Bill of Lading (B/L).
5. Container tracking and control – A key responsibility of the Liner Agent is monitoring the status and location of all containers within their territory. Container tracking involves keeping a record of each container's movement, while container control ensures that containers are available where needed, in coordination with the Liner Operator.
6. Managing container-related operations – The Liner Agent oversees the supply of container seals, labels, numbering, and documentation. They also handle container maintenance according to the Liner Operator’s guidelines.
7. Handling inland transportation and customs clearance – The Liner Agent arranges inland transport, facilitates customs clearance, and manages other related services.
8. Updating Shippers on ship schedules and cargo status – The Liner Agent ensures that Shippers are regularly informed about the ship’s expected arrivals and departures, as well as updates on cargo movements.
9. Marketing and sales – The Liner Agent is responsible for customer relations and expanding the client base. This often involves traveling to meet customers, conducting marketing research, performing periodic market analysis, and placing advertisements in trade magazines and newspapers. Large-scale advertising campaigns may also be carried out when needed.
10. Handling financial matters – Liner Agents manage financial transactions, including collecting payments from Shippers and settling expenses on behalf of the ship.
11. Managing operational tasks – The Liner Agent arranges ship repairs, provisioning of stores, spares, lubricants, and bunkering. They also coordinate crew changes and handle medical matters for crew members.
12. Settling claims – The Liner Agent processes various claims in accordance with the Liner Operator’s instructions.

Finally, when chartered ships are deployed to operate within a shipping line, they may also utilize the Liner Agency Network for operational support, even though the Liner Agents are officially appointed by the Liner Operator.

 

FREIGHT FORWARDERS (FF)

In the Liner Market, Freight Forwarders (Forwarding Agents) play a vital role in facilitating the contract of carriage between the Carrier and the Cargo Owner. A Freight Forwarder (FF) is an individual or company that arranges shipments for businesses or individuals, ensuring that cargo is transported from the manufacturer or producer to a market, customer, or final distribution point. While a Freight Forwarder (FF) does not physically move the cargo, they act as logistics specialists. In essence, the Freight Forwarder (FF) coordinates the transport of cargo and related formalities on behalf of a Shipper, which includes booking space onboard the ship, handling necessary documentation, and arranging Customs Clearance.

The evolution of modern Liner Shipping has led to increased collaboration among various Carriers and transport providers, including ships, airplanes, trucks, and railways, facilitating cargo movement from seller to buyer. As a result, large Freight Forwarder (FF) companies now frequently offer Through Carriage services and issue a Through Bill of Lading (B/L), effectively acting as Carriers throughout the entire cargo transit. A Through Bill of Lading (B/L) allows goods to be transported seamlessly from origin to final destination, utilizing multiple modes of transport when necessary. In Liner traffic, Freight Forwarders (FF) are increasingly positioning themselves as logistics companies, taking responsibility for all their customers’ transportation needs, including warehousing and other ancillary services. International Freight Forwarders (FF) specialize in global shipments and have expertise in customs documentation and procedures.

 

 

MEANS OF COMMUNICATION IN SHIP CHARTERING

Individuals involved in Chartering operations rely on a variety of technical communication tools in their daily work. While the shipping industry has readily adopted modern IT solutions, the telephone remains the most widely used communication method. Telex, once a secure mode of exchanging information, has been largely replaced by chat platforms and social media. Though the internet, Skype, and email are now standard in daily shipping communications, as well as in marketing through websites, concerns regarding security and legal implications remain unresolved.

In a Shipowner’s Chartering and marketing departments, as well as in Shipbrokers’ offices, discussions regarding new Chartering opportunities, market conditions, and industry trends are driven by a constant flow of Chartering Information. Face-to-face interactions remain essential, leading professionals within the same or related market sectors to work in close proximity despite the often noisy office environments.

As previously mentioned, the telephone is the primary tool for discussions with Shipbrokers and Principals, and Chartering Negotiations are frequently conducted over calls. Meanwhile, Chartering Information such as Orders, Position Lists, and Market Reports is primarily received via email, which is also extensively used in negotiations. Shipping documents, letters, and signed Charter Parties are traditionally distributed via postal mail.

It is also worth noting that various electronic trade systems have been integrated into multiple shipping operations, including Chartering Negotiations, Charter Party Editing Software such as BIMCO Idea, electronic issuance of shipping documents like Bill of Lading (B/L) through EDI systems in Liner Shipping, tracking ship movements, facilitating communication between the ship and Ship Managers, Shipowners, and Charterers, streamlining information flow, promoting sea transport services, supporting Shipowners, Carriers, Charterers, Shippers, and Freight Forwarders, and even enabling electronic payments.

Regardless of technological advancements, the fundamental principle remains the same: the quality of input determines the quality of output in all information systems.

 

CHARTERING INFORMATION FLOW AND TIME FACTOR

For a shipping company operating ships worldwide, Chartering work often continues around the clock due to time zone differences. Given the high level of competition, both Shipowners and Charterers usually have multiple business partners to choose from, who may be located in completely different parts of the world.

During Chartering Negotiations, every offer and counter-offer is submitted with a strict time limit for response. If the counter-party fails to respond within the allocated time, the offering party is free to initiate Firm Negotiations with another party. The response time is typically brief, ranging from an immediate reply to a few hours.

Parties usually aim to avoid remaining committed overnight or over weekends. Once Firm Chartering Negotiations begin, they often proceed without interruption until at least the main terms are finalized.

In bulk shipping, predicting the Ship Position and alternative Chartering opportunities months in advance is challenging. As a result, Chartering processes often include notice period renewals that may extend up to six months after the Fixture.

In Liner Shipping, pricing tables are generally not modified without advance notice. However, when Freight Quotations are issued far ahead of shipment, they may include a clause reserving the right to adjust prices at short notice in response to unforeseen circumstances.