Consignees

In the case of charterers it is probably more the rule than the exception for more than one entity to be involved; three different parties would not be at all unusual. A typical situation might be that the actual charter being arranged with a merchant who could have bought the cargo FOB from the producer who will then be the shipper; the merchant could then have sold the cargo to the consignees who would be the third element. One should also remember that the producers and the consignees could well have to employ terminal operating companies to do the physical loading and discharging of the material. The individuals or corporations who, acting as brokers in the middle of this market-place of Charterers, Shipowners and Operators of all corporate sizes and of many nationalities, identify supply and demand for ships and cargoes and thereby help the main-players to secure cargoes for their ships and ships for their cargoes. In other words, Shipbrokers provide the lubrication that enables the market mechanisms to function. A Shipbroker’s income is in the form of the reward of ‘commission’ (known also as ‘brokerage’) paid for a successful introduction and negotiation between Shipowner and Charterer – leading to a ‘fixture’. Even after much hard work and expense, a negotiation that does not lead to a fixture will normally result in no payment of any kind to the Shipbroker in the middle. Thus, Shipbrokers are naturally keen on ‘fixing’. Near misses, however, exciting, are not only profitless but a drain on resources, time and energy. (More information about commissions will be found in Lesson Five, under the heading “Financial Elements of Charterparties”).