Dry Cargo Chartering Markets

Dry cargo chartering takes place in many cities throughout the world but the London market still holds a dominant position, partly because of its geographical position. Brokers and traders in London could do business with Eastern countries during the morning and with the New World during the afternoon – and to some extent this still holds good. The steady improvement in communications systems over recent years has meant that chartering is no longer carried out “face to face” as it was in the past through institutions like London’s Baltic Exchange, where once brokers and traders met daily on the ‘floor’ to do business. Intelligence which was once gathered by brokers on the exchange is now reported through networked computer systems, internet – based information pages and of course from telephone conversations between brokers, who still depend on their ‘network’ of contacts to keep in touch with the market. Many practitioners regret the disappearance of face-to-face contact in the shipbroking world. The idea of personal contact tended to reinforce the sense of a business ’community’ and markets such as that presided over by the Baltic Exchange in London were regulated by a code of ethics. This code served as a guarantee of certain standards of commercial behaviour to all those whose business was transacted there. The Baltic Exchange still exists of course, even though its role as a marketplace is no longer pre-eminent, and the ethical code it represents is nonetheless important in today’s shipping business as it always was. Who then are the practitioners in the shipping communities of London and the other shipping centres of the world? We have already talked about Charterers and their agents, Owners and their brokers but the agents and brokers can have a variety of roles. At one end of the scale, the agent or broker may be a member of the charterer’s (or respectively owner’s) own staff. Most of the major grain ‘houses’ for example has
their own chartering departments as do many of the Greek shipowners who have their bases in London and New York as well as Piraeus. Next comes the ‘exclusive’ broker. A charterer or owner who selects one firm or
company through which to place all his business on the market could well have the best of both worlds. Such a broker may have several clients which enables him to acquire a wide range of market intelligence from which he is able to advise his
principal whilst ensuring that there is no conflict of interest to interfere with his loyalties to his principals. Finally there is the ‘competitive’ broker. Some principals are confident of their own ability to assess the market and instead of advice from their brokers, they want speed. To achieve this they place their business on the market through several brokers who are in competition with each other to bring suitable business to the principal. The advantage of this system is the ability to cover the market in the shortest possible time whilst the disadvantage is human nature. Even the most ethical broker will subconsciously shy away from, say, advising the principal to hold off while the market moves more in his favour if the risk is that this might mean the business being done by a competitor. The debate about the benefits of an exclusive versus a competitive broker will no doubt go on until the end of time. In the area of competitive broking one must not overlook the intermediate broker.
Markets such as London and New York may well be bringing together principals in two other countries each with his own local broker or agent. The intermediate broker must, of course, walk a very narrow path because he or she does not represent either of the parties and so must take care to be strictly even-handed.