Market commentary

As many of you know I occasionally provide a bit of market commentary for various market participants and for news agencies like Reuters.

I am currently putting together a report for some clients summing up my thoughts for the remainder of the year.

Thought I would share a few of these observations

Overall the market in my opinion isnt going anywhere too fast or too soon. The biggest stumbling blocks for the shipping industry and pretty large ones. Namely the still large forward order book for new ships which is still outpacing ship scrappings 2 to 1...(in general although this varies a some when we look at specific sizes)

This will change but not just yet..2014 will see closer parity between ships coming in and ships going out!

The other issue is that much of the world is still an economic basket case. Sure Cyprus and Greece have millenia's of great contributions to the world - but in more ways than one it seems that the credit has run out.

And the economic problems in Spain have finally caught up with Barcelona and Real Madrid who have succumbed to the relentless efficiencies of the Germans giants Bayern and Dortmund...WOW 3 NIL at home.....And Messi isnt even Spanish!

Dont get me wrong I love Spain and even intend to live there for a few months next year...and in all honesty and with the greatest regard to my German friends - I dont really want to live there....hang on....good football, fast cars, schnitzel (is this Austrian?) and beer....

Actually a little known fact is that I once did live in Germany...In a place called ULM...between Stuttgart and Munich....3 of the greatest months of my life....but many moons ago...

Then theres America (USA OF) and China - out two superpowers. Mixed reports out of both in terms of the economies....but I reckon things will improve for both....

What does this all mean for the rest of 2013.....treading water...unfortunately...

Keep rocking

VS

Sign of the times

It made me laugh when a potential new recruit to the industry let me know that many of the largest shipbroking companies require trainees to have a minimum honours degree in something - most likely commerce, trade, law etc.

The funny thing about that is that many of the directors at these companies barely passed high school (not that there is anything wrong with that). You see entry into shipping (chartering) was for hundreds of years the domain of how can i say this without offending??? Ok I can't....Rich kids who were crap at high school.

Rich kids who are smart = Medical Doctor or Lawyer.
Rich kids who are less academic = Shipbroker, Stockbroker, Finance broker etc

(Being academic doesnt necessarily translate into shipping success. Streetsmarts, personablity, and the ability to influence people continue to be he main traits companies look for)

I admit that this old school approach has been changing for 20 or so years.....so requiring a degree, even a higher degree to enter a highly lucrative vocation should not be much of a surprise to anyone....except off course those of us who have enough grey hair to remember when a degree was viewed with suspicion...lol. BTW I have 1 undergrad degree and 2 post grad degrees...so dont shoot the messenger..........

Lots of fun and good luck with your studies

Yours VS

General Stuff

With the markets still at historical lows (despite the occasional upward flutter) shipowners and shipyards continue to struggle, some even going out of business.

So what happens to those ships when the companies controlling them go belly up?

They can be scrapped (if they are old), sold if the market permits or ownership is transferred to the financiers who then have the headaches of working out how to generate income with these behemoths of the sea.

The net result is that prices for ships drop (sale prices) and the markets consolidate. Once again the reputable larger companies are picking up bargains left right and center. Reputable shipping pools are being inundated with poorly clients desperate for help..

++

Interesting to see that TMT (today makes tomorrow) head honcho Nobu Su is stepping down after what can only be described as an incredible career. i can remember 10-15 years ago when his name first emerged linked to deals that seemed unbelievable in timing, scale and audacity. What a ride it has been.

And let me be the first to quash those rumours that the Virtual Shipbroker has been personally handpicked by Nabu himself to take over at TMT...

I asked my tarot card guru and he said - "VS my son keepeth doing not much as not much is plenty under the sun"

Wise words...

Yours VS

Disaster - the Ships running late!

Ok - maybe 'disaster' is a slight overreaction. Having said that no-one likes a late ship..

So how does this play out in the real, cut and thrust, take no prisoners world of international shipping?

Charterers first - they need to give as wide a laycan (window for the ship to arrive) as possible. This needs to be negotiated in the sales contract and also with the port authorities and shippers in question. the greater the flexibility the less chance that a late ship will cause problems. Charterers also should insist on regular updates regarding the ships itinerary so that they can plan for the lateness (contingency planning). Sometimes shipowners are economical with the truth when there ship is running late. Charterers need to play hardball and even be in contact with ship agents at the previous ports in order to get a real idea as to the ships itinerary.

Shipowners - Need to be careful not to agree laycans that they know will be tough to meet. When it becomes obvious that a ship will be late - shipowners get scared. very scared....because the charterers now have lots of power. They can make the ship arrive at the port and then cancel the shipment if they so wish. So YES a late ship is ground for cancellation. Nothing worse for a shipowner to have a ship open Spot with no employment and the probability of no quick fix. I have seen ships miss a laycan, get cancelled and then wait 20 days (at 50 k per day thats ONE MILLION bucks) for a new cargo....Not nice!

So this is why you find that some shipowners tend to be economical with the truth when a ship is running late. They will tell you that everything is fine and then at the last moment drop the bomb that an 'unexpected' delay has occurred at the last possible moment and hence the ship is now running late.

They do this because the later it becomes apparent that a ship is running late - the less the time for the charterer to find a substitute vessel....leaving the charterer stuck and the shipowner still with a contract despite there being grounds for cancellation.

So there you have it - when a ship runs late charterers would like to know asap and shipowners just dont wanna tell them! Fun hey?

Shipowners aren't always the bad guys. i have seen charterers use 'selective' information for evil as well.

Your VS

Bulk carrier smashes into a smaller ship in Singapore

OUCH!

By request!

By request

Very Limited Spaces (im not joking either)

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1st day - Essential Shipbroking and Chartering (Dry Cargo)
2nd day - Fixing Machine - Shipbroking and Chartering Best Practice..

Where: Dubai and London (Venue TBA)
When: May 2013

Who for?

Trainee shipbrokers and operations department staff

Managers already in shipping and chartering to refresh on fundamentals

Ship brokers, owners, charterers, government bodies, lenders and insurers

Shipping Lawyers, Bulk commodity traders, purchasing officers for bulk commodities

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Expressions of interest to virtualshipbroker@yahoo.com

The Virtual Shipbroker

What happens when a ship is late?

This is quite an interesting topic in the world of tramp (dry bulk) shipping because you know what ?? Ships are always dam late! Arghhhhhhhhh...

Being late in itself is ok. I am occasionally fashionably late to dinner parties - its expected. But in shipping the world of fashion (unless you are a broker from Scandinavia) has very little to do with anything.

Just on that topic - has anyone ever noticed when surfing the websites of various shipbroking firms - the ones from Scandinavia and parts of continental Europe with accompanying photos of the employees, look to have been shot by HELLO magazine. Hair and make up (tick), Tilt of head (tick) - I dont wanna name names but you know who you are!

A bit like this

Perhaps a more accurate representation would be

Director, Senior Vice President, Partner (owner of stilettos - Trixi)

Anyway

When ships are late this can cause a myriad of problems. Charterers have a laycan (a window for a ship to be delivered) for a reason. And this reason is usually because it says so in the sales contract between the buyer and the seller. So if the ship is late not only is the shipping contract put at risk but so is the sales contract.

Organising the cargo for a ship is not easy. One needs to arrange for the cargo to arrive at the port just in time (JIT) for the ship to arrive, then stevedores need to be arranged, as do the services of other ports infrastructure groups like grain elevators and the like. Permits need to arranged and all the paperwork must also be ticked off. So you can see if a ship is late - quite a few people have quite a lot to lose.

This issue is exacerbated in a very busy port that handles many ships in one day. Imagine then if this port experiences delays due to an accident or bad weather or a strike and then all of a sudden this 'late ship' has to then wait in line for 5 days before it gets loaded....

At the peak of the markets this five day wait could cost someone a million smackeroonies! not so much these days more like 50 grand....but that would still feed a small American village.

So how does this 'problem' play out in the real life cut and thrust of everyday shipping. How do charterers and shipowners alike navigate this thorny issue when it appears apparent that a ship will be late?

That will be my next post....

Yours
VS

Great news from some ex students

This from two close friends of the blog

I have changed some details to protect the identities - lots of people read this blog you know!

Quote

VS/SA

 

I hope you have been doing great.

 

It is just to let you know that last month I started as a junior broker at (name withheld but one of the larger firms) European dry cargo desk. This is the opportunity I have been fighting for. This would not have been possible without having kept fresh in my mind what I read from your e-books and learned from your great advice; therefore, I thank you.

 

Notwithstanding getting this opportunity was quite a challenge in itself, the real challenge starts now. Therefore, what I have learned from you will remain of great help and guide me forward.

Once again, thank you.

Best regards,

SA

unquote

and

quote


VS/NL

 

Hi VS! Hope all is well. So it has been almost a year since I have ended the VS course and I figured I would just let you know where I am at.

If you recall, I was able to enter the industry by getting an internship at (name with held but one of the worlds largest shipbroking firms). Well, that went well and was a great experience, but it ended up being a dead end. I No bitterness as I was fully aware some of these shops work in political ways, so when it came time to move on, I did.

I had a little bit of difficulty re-entering the industry once I left. It took some time but I barked up every single door until two great opportunities came my way.  Both offers were about equal, but I decided that I would take up the role with (name with held but one of the biggies). There were many reasons but the primary reason was that I believe to have found a mentorship type relationship with the individual who hired me.  I hope I made the right decision but I will only know in a few months. 

 

And all of this wouldn’t be possible if I hadn’t taking your course. Thanks for everything VS. I hope to be fixing soon. So be ready to receive another email once I get my first fixture.

Regards,

NL

 

unquote

 

Two very wise dudes on the path to shipping greatness....and very nice people too!

 

Those emails make this blog worthwhile

 

Yours

the Virtual Shipbroker