Sale and Purchase (S&P) Shipbrokers are most active in Second Hand Tonnage and shipbrokers tend to build up connections with potential buyers and sellers as well, of course, with other shipbrokers.
As with dry cargo chartering, it is more the rule than the exception for the buyers and the sellers to have their separate shipbrokers. Invariably, Sale and Purchase (S&P) Shipbroker produce and distribute to shipbrokers of potential buyers, particulars sheets.
The strength of any Sale and Purchase (S&P) Shipbroker’s office lies in the maintenance of records of all ships currently available for sale and a computerized system is ideal for this purpose. The advantage of a computer database over the old-fashioned paper systems lies in the variety of ways it can be ‘interrogated’. A carefully constructed database will allow for a number of different headings which can be electronically ‘flagged’. So that for example one could ask for all ships between 35,000 and 55,000 tons DWAT, between eight and ten years old with two decks and cranes at each hatch and only ships complying with those stipulations will be displayed.
Such a system will be only as good as the data fed into it. Dealing with the purely practical means by which a ship is sold, this is roughly as follows: Once the potential buyer’s requirements are known the particulars of ships within the category are submitted. These particulars are compiled from information supplied by the shipowners, or their shipbrokers, and augmented by details shown in Lloyds Register or the books of other Classification Societies, such as Bureau Veritas, Germanischer Lloyd, Det Norske Veritas or American Bureau.
The most important features are: dead-weight and draft, the year and place of building, dimensions, cubic capacities, cargo handling appliances, arrangements of decks, water ballast capacities, numbers of holds and hatches, details of machinery and its builders, horse power, speed and consumption, bunker capacity, Classification and Special Survey position. This will be followed as far as specialized ships are concerned, with matters such as numbers of passengers, details of refrigerating machinery, pumping capacity of tankers and container and car/trailer capacities.
In the case of ships that are being sold for breaking up it is desirable to give information regarding the light displacement, whether the propeller and spare propeller are of bronze or iron and whether there is a spare tail-shaft on board. Then come two very important features, the price and the position for inspection and delivery. Whether the details are sent electronically or in hard copy which shipbrokers normally use for supplying these details should always have on them some such wording as “These particulars are believed correct but no guarantee is given of their accuracy”.
If a ship has found favor in the eyes of a buyer he will normally ask for a capacity plan to see the arrangements for taking cargo and probably also a general arrangement plan giving such details as the accommodation, requirements for which vary from country to country. It is not the function of the broker to express an opinion regarding the condition of a ship except, of course, if he knows for a fact that something is the matter with her. In the ordinary way, either the buyer’s superintendent or possibly a firm of consulting surveyors deals with this subject on inspection.
One of the most important things to do when buying a ship is to have a look at her classification records, as these give the full history of the ship, during the time she was under construction and also give details of damage she may have suffered, together with Classification Surveyor’s requirements at her various periodical surveys. With a little experience it is very easy to see where the weak spots are and these will naturally be very carefully examined by whoever carries out the physical inspection of the ship.
Sometimes the inspection takes place before the negotiations and sometimes offers are made subject to the examination of the ship. It rarely happens that the ship is dry-docked at the time of this initial inspection. A firm offer for a ship for running purposes is normally made with a time limit on the following lines: – $X less commission, delivery at such and such a port on or about a certain date, with the buyer’s option to cancel the agreement if she is not delivered by a later date, the ship’s class at the time of delivery is to be maintained without qualification. In other words repairs, which have already been deferred for a specific period with the consent of the Classification Society, together with any further repairs that could be placed in the same category, are to be put right. Then there is the question of damage, which is not within the province of Classification Society.
Enough a ship’s class can be fully maintained even if her accommodation has been completely burned out and all her boats washed overboard. Formerly this matter was dealt with by using the words Free of Average, but owing to a decision a few years ago in the Commercial Court, it is now more usual to use some such words as “free of damage recovering from Underwriters” or words to that effect.
Another very important condition is that dealing with additional payment for stores on board and bunkers. It is also usual to stipulate that all the vessel’s trading certificates shall be valid at the time of delivery. Where it applies it is usual to insert a condition regarding Government permission either to buy or sell the ship.