As shipping expanded and the industry became more internationalized, shipbroking became a recognized service in the early twentieth century. Shipbroking originated and was first established in London, which at the time was considered a maritime and shipping center. However, the shipbroking service spread into other smaller but equally
important maritime centers such as Oslo, Paris, Hamburg, Madrid,
New York, Tokyo, and Hong Kong.
The advent of modern telex and automatic telephone services worldwide has allowed for a better flow of information about vessels’ availability for sale and charter. “Word of Mouth” negotiating became
the mode of business between brokers who endeavored to establish an ethical affinity to keep the motto “His word is his bond.”
Over the years, several reputable shipbroking organizations have
been established. Some of these include Clarksons (www.clarksons. net), Braemar Seascope (www.seascope.co.uk), Howe Robinson (www. shipbroking.com), Simpson Spence Young (www.ssyonline.com),
Galbraith (www.galbraiths.co.uk), and Barry Rogliano Salles (www.
brs-paris.com), New York Shipbrokers (www.newyorkshipbrokers.com) among others. Brokers specialize in one or more categories of the business, the most common of which include:
The Owner’s Broker. These brokers are appointed by owners to secure charters (vessel or cargo) for their tonnage. Their main
interest is to favor and protect the owner by negotiating the
best terms and revenue.
The Charterer s Broker. Under instruction from the charterer,
the broker is expected to widely circulate his order for tonnage
in an effort to secure a most favorable fixture for the cargo
interests (i.e., the lowest cost).
The Intermediate Broker. Having neither an owners’ tonnage
to represent nor an order direct from a charterer, these brokers endeavor to insert themselves as “middlemen” into a shipping
The Sale & Purchase Broker. The S&P broker requires knowledge of ships (technical and classification) as well as a broader
base of ships’ valuation, ranging from newbuilding costs, second-hand market values, and demolition prices worldwide. As above, the S&P broker usually works to represent one party
(either buyer or seller) in a deal.
Other categories of ship brokers include the newbuilding broker,
the specialized broker (i.e., Ro-Ro, MPP), the cargoes broker (i.e., grain,
timber), bunkers broker, and demolition broker.
Owners use brokers to get the highest prices for their ships. Charterers utilizing the brokers to protect their interests receive a service paid for by the owners. Brokers’ receive a charter commission that is usually calculated as 1.25 percent of the daily hire. The owner also pays a fee to the charterer called the address commission. This fee varies depending upon charterer requirements. As a result, the total fees incurred by the charterer are reduced by the amount of the address commission.
The Sale & Purchase commission is usually approximately 1 percent of the sale price. In order for brokers to be well informed and to
keep their clients equally well informed, they must incur high communication costs, which can only be offset by consummating fixtures or sale transactions. Experienced owners and charterers take full advantage of competent brokers. Relationships between brokers and clients take considerable time to develop.
The broker s role includes:
• Match orders with positions and maintain a database of ships, positions, and orders
• Monitor and circulate a list of open cargoes (orders) and open tonnage (positions)
• Consolidate market intelligence and information in order to support their customers and help them make informed
• Handle and assist communications between parties effectively and in strict confidence
• Draw up the charter party according to what has been agreed by both parties
• Deal with amendments to negotiations
• Deal with financial transactions (e.g., freight payments, voyage balances, hires, off-hires, demurrages, etc.)
The role and the experience of a broker is of great importance in negotiations. The brokers’ task is to guide their principals properly during negotiations, always acting within their authority and avoiding misrepresentation or offering the same ship/cargo FIRM to more than one party at the same time.
An indication is not an offer. It is not binding on the party, which means several indications may be made for various cargoes or ships at
the same time. The negotiations must be conducted with care, taking
into consideration the requirements of chartering.