Shipbroking became a recognized shipping service in the early 20th century. Shipbroking was first established in London. In the early 20th century, London was considered a maritime and shipping center.
Later on, shipbroking service spread into other 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 ships’ availability for sale and charter. Word of Mouth negotiating became the mode of business between shipbrokers who endeavored to establish an ethical affinity to keep the motto our word, our bond.
Later on, several reputable shipbroking organizations have been established such as Clarksons, Braemar, AMORBULK, Howe Robinson, Simpson Spence Young (SSY), Galbraith, Barry among others. Shiprokers specialize in one or more categories of the business:
Types of Shipbrokers
- Shipowner’s Shipbroker: are appointed by shipowners to secure charters (ships or cargo) for their tonnage. Their main interest is to favor and protect the shipowner by negotiating the best terms and revenue
- Charterer’s Shipbroker: Under instruction from the charterer, shipbroker is expected to widely circulate the order for tonnage in an effort to secure a most favorable fixture for the cargo interests
- Intermediate Shipbroker (Competitive Shipbroker): Having neither shipowners’ tonnage to represent nor an order direct from a charterer, intermediate shipbrokers endeavor to insert themselves as middlemen into a shipping transaction
- Sale & Purchase (S&P) Shipbroker: requires the 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 shipbrokers include:
- Newbuilding Shipbroker
- Specialized Shipbroker (like Ro-Ro, MPP)
- Cargo Shipbroker (like grain, timber)
- Bunkers Shipbroker
- Demolition Shipbroker
Shipowners use shipbrokers’ services in order to cover all the market and to get the highest prices for their ships. Charterers utilizing shipbrokers to protect their interests receive a service paid for by shipowners.
Usually, shipbrokers are paid commission for their service that is calculated as 1.25% of the freight or daily hire. Depending on the charterer requirements, shipowner also may pay a fee to the charterer called the Address Commission (ADDCOM) which covers the charterer’s in-house chartering department costs. As a result, the total fees incurred by the charterer are reduced by the amount of the Address Commission (ADDCOM).
Sale and Purchase (S&P) Shipbrokers commission is usually approximately 1% percent of ship sale price.
Shipbrokers incur high communication costs in order to keep their clients equally well informed. High communication costs can only be offset by consummating fixtures or sale transactions. Experienced shipowners and charterers take full advantage of competent brokers. Relationships between shipbrokers and clients take considerable time to develop.
Shipbroker’s Role includes:
- Monitor and circulate a list of open cargoes (orders) and open tonnage (positions)
- Match open cargoes (orders) with open tonnage (positions) and maintain a database of ships, positions, and orders
- Consolidate market intelligence and information in order to support their customers and help them make informed decisions
- Handle and assist communications between parties effectively and in strict confidence
- Deal with amendments to negotiations
- Draw up the charter party according to what has been agreed by both parties
- Deal with financial transactions such as freight payments, voyage balances, hires, off-hires, demurrages
Role and the experience of a shipbroker is of great importance in negotiations. Shipbrokers’ task is to guide their principals properly during negotiations. Shipbrokers always act within their authority and avoid misrepresentation. Shipbrokers avoid offering the same ship or cargo firm to more than one party at the same time.
Mere indication is not an offer. Indication is not binding on the party, which means several indications may be made for various cargoes or ships at
the same time.
What is Shipbroking?
Shipbroking is a service provided within the shipping industry by brokers who act as intermediaries between individuals or companies who need to transport goods and the shipowners or operators who have the capacity to provide this transport.
Shipbrokers are deeply embedded in the chartering process, negotiating between the charterer, who is the cargo owner and the shipowner. They are involved in the commercial transactions of buying, selling and chartering ships. They also handle contracts and other details related to the journey, including the type of ship required, its speed, loading and unloading ports, and other important details.
There are different types of shipbrokers, including:
- Chartering Brokers: They work on behalf of the charterer or shipowner to arrange charters.
- Sale and Purchase Brokers: They deal with the buying and selling of ships.
- Demolition Brokers: They are involved when a shipowner decides to sell their vessel for scrap.
In the field of shipbroking, brokers must have an extensive knowledge of the shipping industry, current market conditions, and legal and safety regulations. Their role is vital for facilitating global trade, as they ensure the efficient and effective movement of goods across the world’s oceans.
A shipbroker’s role isn’t limited to just facilitating transactions. They often act as advisors, providing clients with market intelligence, insights, and predictions that can impact future shipping decisions. The brokers follow market trends, supply and demand balances, political situations, and even weather conditions that could affect the shipping industry. The importance of these inputs underlines why trust and reputation are crucial in shipbroking.
One of the key services a shipbroker offers is contract negotiation. This includes ensuring the charter party agreement – a legally binding contract between the owner of a vessel and the charterer – is fair and covers all potential issues. These issues could range from fuel costs (bunker clauses) to what happens if the ship is damaged or late (off-hire clauses). The broker’s role is to safeguard their client’s interests during these negotiations.
Brokers often specialize in different types of vessels such as tankers, dry cargo carriers, container ships, or offshore vessels. Each of these specializations requires a unique understanding of the goods being transported and the specific considerations for each type of vessel. For example, a broker specializing in oil tankers needs a deep understanding of the oil market and the technical specifics of various tanker sizes and types.
Shipbroking is a complex and integral part of the global shipping industry. The shipbroker’s role as an intermediary, negotiator, and advisor makes them a vital player in global commerce, enabling the efficient movement of goods across the world. While the profession can be demanding and requires a broad set of skills, it’s also rewarding and directly connected to the pulse of global trade.
Shipbrokers, along with the entire shipping industry, are increasingly having to grapple with a number of changes and challenges. Some of these are emerging from broader global trends, while others are specific to the industry.
- Digitalization: Technological advancements are changing the way the shipping industry operates. From digital freight marketplaces to blockchain-based supply chain solutions, these changes have the potential to streamline operations and increase transparency. For shipbrokers, this can mean adapting to new ways of doing business and potentially developing new skills.
- Environmental Regulations: Increasing awareness about the environmental impact of shipping has led to new regulations. These include limits on sulfur emissions and potential future regulations around carbon emissions. Shipbrokers need to understand these regulations and their impacts on the industry in order to advise their clients effectively.
- Market Fluctuations: The shipping industry is deeply influenced by fluctuations in global economies. Whether it’s a surge in demand for consumer goods or a decrease in oil consumption, these fluctuations can greatly impact shipping rates and demand for different types of vessels. Shipbrokers must keep a close eye on these trends to provide the best advice to their clients.
- Geopolitical Events: Changes in trade policies, political instability, or conflict in key regions can significantly disrupt shipping routes and the global supply chain. As intermediaries, shipbrokers need to be aware of these events and able to respond quickly.
- COVID-19 and Future Pandemics: The recent COVID-19 pandemic demonstrated the shipping industry’s vulnerability to global health crises. Shipbrokers had to navigate numerous challenges, from port closures and crew changes to a surge in demand for certain goods.
In conclusion, being a shipbroker today requires a wide-ranging knowledge not only of the shipping industry itself, but also of the wider world in which it operates. Despite the complexity of this profession, it remains a critical component of our globalized economy, facilitating the movement of goods and services around the world.
What is Shipbroking and Chartering?
Shipbroking and chartering are integral aspects of the maritime industry, dealing with the sale, lease, and negotiation of ships and shipping contracts.
Shipbroking involves the facilitation of transactions between shipowners and charterers who use ships to transport cargo, or between buyers and sellers of vessels. Shipbrokers can be specialized in different types of ships and trades, such as dry cargo, tankers, or offshore vessels. They play an important role in the maritime industry by matching supply with demand in the chartering and sale & purchase markets. Additionally, shipbrokers can provide market intelligence and risk management services, advising clients on market trends, shipping cycles, and other factors that may affect their business.
A few types of shipbrokers include:
- Chartering brokers – They assist in securing ships for charterers or finding cargo for ship owners.
- Sale and purchase brokers – They help to negotiate the buying and selling of ships, possibly for scrapping or further use.
- Demolition brokers – They specifically help in the sale of ships for scrapping.
Chartering, on the other hand, refers to the practice of hiring a ship for a specific voyage or a particular period. There are mainly three types of charters:
- Voyage Charter – The charterer hires the ship for a single voyage. The charterer pays the shipowner on a per-ton basis. The shipowner is responsible for covering the vessel’s running costs, including fuel.
- Time Charter – The charterer hires the ship for a specific period. The shipowner manages the technical operation of the ship, including supplying the crew, while the charterer chooses the ports and directs the ship where to go. The charterer pays for the fuel and port charges.
- Bareboat Charter – Also known as a demise charter, the charterer takes over full control of the vessel for the agreed period, including providing the crew and covering all operating expenses.
In all cases, a charter party agreement, a legal document, is drawn up to stipulate the terms of the charter, specifying details like the cargo to be carried, the chosen route, the rate of freight, and the duration or intended purpose of the charter.
It’s important to note that shipbroking and chartering involve numerous technical, financial, legal, and contractual aspects that require deep industry knowledge and expertise.
What is the difference between Chartering and Shipbroking?
Chartering and shipbroking are two key elements in the maritime shipping industry, but they serve different roles and functions.
- Chartering: This refers to the practice of hiring a ship or part of its space for transporting goods. It’s a contract between the shipowner and the charterer who wants to utilize the vessel for their cargo. There are different types of charter agreements, including:
- Bareboat Charter: The charterer takes over full control of the vessel, including responsibilities for operations and legalities.
- Time Charter: The ship is chartered for a specific period. The shipowner maintains responsibility for the vessel but the charterer decides the ports and routes.
- Voyage Charter: The charterer hires the vessel for a single voyage. The shipowner manages the vessel’s operations but the route and cargo are decided by the charterer.
- Shipbroking: This is more like the role of a middleman or broker between the charterers (those who need to transport goods) and the shipowners (those who own the vessels). Shipbrokers are essential to the shipping industry as they negotiate contracts, assist in arranging charters, and provide a variety of services such as market intelligence and advice. They essentially facilitate the process of chartering.
In simple terms, chartering involves the leasing of a ship for cargo transportation, while shipbroking involves the facilitation and negotiation of these leasing transactions. Shipbroking requires a deep understanding of the market, cargo, and ships, while chartering requires the capacity to operate a vessel and transport cargo. Shipbrokers earn their income from a commission on the charter fee once a deal is completed.
What is the difference between a Ship Agent and a Shipbroker?
- Ship Agent: A ship agent, often simply referred to as an agent, is a representative of the shipowner in a particular port. The agent acts as a liaison between the ship, its owner, and the various service providers at the port. The agent is responsible for coordinating a range of services such as customs paperwork, arranging for the loading and unloading of cargo, arranging for the provision of supplies and services to the ship, dealing with the crew (such as arranging shore leave, medical care, etc.), and more. Essentially, a ship agent’s role is to ensure that all necessary arrangements have been made for a ship when it arrives at a port, and that it can depart for its next voyage as quickly and smoothly as possible.
- Shipbroker: A shipbroker, on the other hand, is a specialist intermediary or negotiator between shipowners and charterers who use ships to transport cargo, or between buyers and sellers of ships. The shipbroker’s role is more commercial and involves activities such as securing contracts for the transportation of cargo (chartering), buying and selling ships, and even arranging for the construction of new ships. A shipbroker may work on behalf of the charterer, looking for suitable ships to carry cargo, or they may represent the shipowner, looking for cargo to fill their ships. They work on a commission basis, earning a fee for each successful transaction.
A ship agent is concerned with the operational aspect of a ship’s visit to a port, while a shipbroker is involved with the commercial aspect of shipping, dealing with the chartering of ships, or their buying and selling.
Who pays Shipbroker Commission?
In most cases, the shipbroker’s commission is paid by the shipowner. However, this can vary depending on the specific agreement between the parties involved.
A shipbroker acts as an intermediary between the shipowner and the charterer (the person or company that hires the ship). They facilitate transactions related to the chartering of ships or the buying and selling of ships. The shipbroker’s commission is usually a percentage of the total value of the charter or sale. This commission is often included in the freight rate or the sale price.
Typically, the shipowner pays the commission because the shipbroker is providing a service to them by finding a charterer or buyer for their ship. However, in some cases, the charterer or buyer may agree to pay the commission, or the commission may be split between the shipowner and the charterer/buyer.
Also, it’s important to note that there may be multiple brokers involved in a transaction (e.g., a broker representing the shipowner and a broker representing the charterer), and the commission may be divided among them according to the specific agreement.
As with many business transactions, the details of who pays the shipbroker’s commission can be negotiated and may depend on various factors, including market conditions, the specific details of the transaction, and the relationship between the parties involved.
What is the difference between a Shipbroker and a Freight Forwarder?
Both shipbrokers and freight forwarders play crucial roles in international shipping and logistics, but they have different roles and responsibilities. Here are the key differences:
A shipbroker acts as an intermediary between ship owners and charterers (those who wish to hire a vessel). Their primary task is to ensure that ships are being used to their full capacity by managing their transactions. This includes finding and negotiating with potential cargo interests, arranging contracts or agreements between the ship owners and charterers, and sometimes also handling administrative and operational aspects of the voyage.
Shipbrokers specialize in specific types of vessels and markets, like tankers, dry cargo ships, and container ships. They also need to have comprehensive knowledge about shipping markets, contracts, maritime law, and shipping routes. Their income is usually based on commission, which they get a percentage of the cargo’s value or the chartering fee.
A freight forwarder, on the other hand, is essentially a travel agent for cargo. They organize and facilitate the movement of goods from one point to another, taking care of all the logistics involved in the shipping process. This can involve a variety of tasks, such as arranging storage and shipping of merchandise, consolidating smaller shipments into a single large shipment, negotiating freight charges, booking cargo space, preparing and checking bills of lading, customs documentation, and insurance matters.
Freight forwarders do not typically own any transportation equipment or vessels; they lease cargo space on ships, aircraft, trucks, and trains. They operate within a vast network of agents, shipping lines, and other freight forwarders, enabling them to provide door-to-door delivery services globally. They are usually paid by the shippers per shipment, and their cost depends on the type, weight, and size of the cargo, as well as the journey it needs to take.
A shipbroker primarily acts as a negotiator between the ship owners and charterers, while a freight forwarder manages the actual logistics and operations of shipping goods from one place to another.
What are the duties of a Shipbroker?
A shipbroker is a specialist intermediary or negotiator between shipowners and charterers who use ships to transport cargo, or between buyers and sellers of vessels. The shipbroker’s role involves a variety of duties and responsibilities, including:
- Chartering: The shipbroker acts as an intermediary between shipowners and the charterers who want to hire a ship. They need to find a ship that matches the charterer’s requirements in terms of size, type, and availability at the desired time and place.
- Negotiating Contracts: Shipbrokers play a crucial role in negotiating contracts and agreements between shipowners and charterers. They work out details such as rental rates, timeframes, and the specific obligations of each party.
- Market Research: Shipbrokers need to keep abreast of the latest trends and developments in the shipping industry. This includes monitoring fluctuations in freight rates, understanding supply and demand dynamics, tracking international trade movements, and keeping an eye on various economic and political factors that might influence the industry.
- Sales and Purchase: In addition to chartering ships, some shipbrokers also deal with the buying and selling of ships. They match sellers with interested buyers, help negotiate the sales price, and manage the necessary documentation.
- Documentation: Shipbrokers assist with the paperwork required for chartering a vessel. This includes drafting and managing contracts, insurance documents, bills of lading, and other necessary documentation.
- Voyage Planning: They sometimes also assist in planning the voyage. This includes determining the optimal route, considering factors such as weather conditions and ports of call.
- Communication: Shipbrokers act as a liaison between the different parties involved in a ship’s voyage. They communicate with shipowners, charterers, port agents, and sometimes even with the ship’s captain.
- Post-fixture Operations: After a charter agreement is reached, shipbrokers may still be involved in post-fixture operations, including handling disputes, demurrage claims, and other issues that may arise during the execution of the voyage.
A shipbroker’s ultimate aim is to provide a service that satisfies the needs of both the shipowner and the charterer, ensuring that the ship is earning revenue and that cargo is being transported effectively and efficiently.
How to become a Shipbroker?
Requirements and Procedures for Becoming a Ship Broker:
Shipbroking is a vocation that does not exclusively demand specific educational qualifications or academic accomplishments. An individual who has completed high school can secure a job just as easily as someone holding a Master’s degree, provided they possess a profound aptitude for the tasks that a shipbroker is expected to undertake.
However, it should be noted that possessing prior knowledge of the maritime industry can greatly enhance one’s desirability to potential employers.
For instance, an individual who possesses insights into the experiences of those who have traversed the seas, coupled with a keen interest in the commercial aspects of shipping, or someone who has worked at the ship operations desk of an owner or charterer, is undoubtedly better positioned to establish their candidacy compared to someone lacking any exposure to broking.
One notable institution in the field is Clarksons, the largest broking house in the world, which offers a highly sought-after Trainee Broker Programme, providing fresh graduates with an opportunity to embark on a career in shipbroking.
Furthermore, the Institute of Chartered Shipbrokers conducts examinations to grant recognition to individuals in this domain, enabling them to become esteemed members of the organization thereafter.
We kindly suggest that you visit the web page of Institute of Chartered Shipbrokers to learn more about shipbroking. www.ics.org.uk
What qualifications do you need to be a Shipbroker? and How can I embark on a career in Shipbroking?
- Acquire a Bachelor’s degree in a field related to maritime studies.
- Garner practical experience by working for a reputable shipping company.
- Successfully clear the rigorous examinations administered by the esteemed Institute of Chartered Shipbrokers (ICS). www.ics.org.uk
- Attain a distinguished Certificate of Competency (COC).
- Align yourself with a recognized professional organization within the industry.
Shipbrokers Job Prospects
The maritime industry exhibits a remarkable volatility, oscillating and undulating with the passage of time. As the lifeblood of global commerce, shipping cannot afford a complete cessation, for such an occurrence would dismantle the very foundations of trade. During a downturn, brokerage firms operate within narrower profit margins, leading to a rather subdued employment scenario, albeit not entirely nonexistent.
During an upturn, however, firms actively recruit a multitude of brokers to handle the surge in business activities and also to groom the next generation of brokers.
This specialized skill commands generous remuneration, so if an individual can substantiate their aptitude, firms will readily embrace them regardless of their formal educational qualifications.
Vigorously explore the firm’s official website, scour LinkedIn, and scrutinize Glassdoor for job postings, employing every means necessary to convey your earnestness to potential employers. Being a triumphant broker entails unwavering perseverance in the face of rejection; persistent pursuit of employment indeed enhances one’s prospects across various industries.
Please be aware that shipbroking transcends the realm of conventional employment and veers more towards a lifestyle choice. It demands an abundance of toil, late nights, and prolonged separation from one’s abode. Therefore, a genuine passion for the profession is paramount to both endure and excel in this field.
Competition is intrinsic to the essence of every promising or accomplished broker and serves as a litmus test in determining whether this career aligns with an individual’s dreams and aspirations.
In return, you shall reap a bountiful salary, commensurate with your dedication and ability to generate business. The occupation affords ample travel opportunities, considering that most entities are dispersed across the globe. Furthermore, the intricacies of the work itself are not overly complex. It enthralls with its capacity to observe the market’s dynamic responses to global events. Eventually, success may even grant you the freedom to work from anywhere, allowing you to shape your life according to your desires. Additionally, the prospect of engaging with some of the most astute, affluent, and influential individuals in the world, forging strong bonds through your unwavering commitment to your craft, adds an unparalleled allure to this profession.
How much do shipbrokers get paid?
Pinpointing a precise remuneration bracket for the art of brokering is a formidable task, as it hinges upon a multitude of factors, encompassing experience, reputation, client base, geographic location, tethered to the standard of living, and a plethora of others.
Numerous discussions on this topic abound in online forums, rendering a simple search sufficient to grant the reader a discernible notion of the salary structure prevailing among shipbrokers.
It is imperative to bear in mind that salary merely constitutes one facet of compensation, as brokers predominantly strive for their commissions, which can even exceed twofold or threefold their base salary. As aforementioned, brokering stands as a fiercely competitive pursuit, with rewards commensurate with the risks and exertion involved.
According to testimonials by select shipbrokers, novice practitioners can expect a starting salary ranging between $3,000 and $20,000 per month, exclusive of commissions, contingent upon their previous exposure. It is worth noting that this amount excludes commissions, which often surpass the base salary by a significant margin.
What is Shipbroking in Ship Chartering?
Shipbroking is a financial service that forms part of the global shipping industry. Shipbrokers act as specialist intermediaries/negotiators between those who want to charter (hire) a ship and those who have a ship available to be chartered. The key roles of a shipbroker are to facilitate the contract negotiation process and to arrange the charter.
What are the different types of Shipbroking?
Shipbroking is a specialist profession within the global shipping industry. It can be categorized into several types based on the specific services that they offer:
- Dry Cargo Broking: This is a type of shipbroking focused on bulk cargo that is shipped without any sort of packaging other than the hull of the ship. Dry cargo typically includes things like grains, coal, ore, and steel. Brokers in this field connect cargo owners and ship owners to arrange transportation of these goods.
- Tanker Broking: Tanker brokers specialize in the oil and gas industry. They deal with ships that are designed to transport large volumes of oil, gas, or other liquid cargo. They mediate contracts between the owners of these ships and the companies that need to transport these substances.
- Sale and Purchase (S&P) Broking: These brokers are involved in the buying and selling of ships. S&P brokers must have a deep understanding of the current market values of ships and the technical details about ship construction and operation. They also need to be aware of current laws and regulations that might impact the sale or purchase of ships.
- Container Broking: Container brokers deal with ships that carry containerized cargo. They usually work with shippers and carriers to find the best and most cost-effective way to transport goods. They often work with other logistics companies to arrange for the transportation of goods from the ship to the final destination.
- Chartering Broking: Chartering brokers arrange for the rental of ships. This can be for a single voyage (voyage charter), for a specific period (time charter), or for a particular trade route (contract of affreightment). They connect the shipowners with the charterers who wish to hire the ships.
- Demolition Broking: These brokers specialize in selling ships for scrap. They must be knowledgeable about the current scrap metal market, as well as laws and regulations regarding the environmentally safe disposal of ships.
- Offshore Broking: Offshore brokers work with ships and structures used in offshore industries like oil drilling and wind farms. These brokers need specialized knowledge about the technical requirements and regulations of these industries.
Each type of shipbroking requires a specific set of skills and knowledge. As a whole, shipbroking is a complex and important part of the global shipping industry.
Top 10 Shipbroking Companies
Currently, some of the leading shipbroking companies:
- Clarksons Platou: The London-based company is one of the world’s leading providers of integrated shipping services, including shipbroking.
- Simpson Spence Young (SSY): SSY is one of the largest independent shipbroking groups in the world.
- Braemar ACM Shipbroking: Another London-based company, Braemar ACM provides a range of shipbroking services.
- BRS Group: BRS Group provides shipbroking services, and is based in France.
- Howe Robinson Partners: Founded in 1883, Howe Robinson is one of the world’s largest shipbroking houses.
- New York Shipbrokers: New York Shipbrokers is an independent shipbroker with a global footprint.
- Arrow Shipbroking Group: Arrow Shipbroking Group offers a variety of shipbroking services worldwide.
- Gibson Shipbrokers: Gibson has been a leader in shipbroking for over a century, based in London.
- Maersk Broker: Maersk Broker provides a wide range of services and has a large presence worldwide.
- Lorentzen & Stemoco: A global shipbroking company based in Norway, offering various shipping services.
The dynamics of the industry can change rapidly due to factors such as company mergers, acquisitions, and overall market conditions.