The voyage estimator

Update to those of you who have shown be interest in the voyage estimator pack that I am trying to develop. I say trying because the process is more trying and complicated than I had imagined. But we are slowly getting there. Keep the questions coming. And Peter - you will be the first to know!

I am sure it will be extremely useful for some of you - mostly those already in shipbroking, shipowning and chartering but also for those wanting to use it as an advanced learning aid.

The best thing is that despite the cost and time taken even if no one else wants it...than nothing lost because I will be using it for my biz anyway! So its all good.

Almost the end of the week!!!!!!!!! Enjoy.

VS

TC vs VC part 2

Here is an interesting way to look at the TC vs VC decision making process.

Another tough one to get your head around - so bare with me.

Lets say you the charterers have a cargo of coal ready to fix on voyage charter to a shipowner. The shipowner will price this voyage as follows

Cost plus margin (expected profit) = total freight charged.

The point here is that the shipowner will only move the cargo if he sees a profit. Or put another way - you the cargo owner are paying someone a margin to move your goods.

So the other choice you have is to remove that margin by doing it yourself at cost. This means instead of Voyage Charter you decide to try Time charter.

The only problem with attempting to do this voyage at cost (time charter) is that now you have extra risks and responsilities. You also need more xpertise and manpower to execute the voyage.

This is where the margin (payable in a voyage charter) goes. In a voyage charter you are paying a slight premium because you are giving over risk and expertise to a shipowner.

The reason why I have been thinking about these concepts is because I am currently mentoring a very small group of students who are super keen to expand their shipbrokering and chartering knowledge.

This blog process helps get the concepts clear in my mind.

Hoping it helps you too..

Yours
VS

Time charter or Voyage charter?

Time charter or voyage charter? That is the question!

In "Inside shipbroking" and "shipbroker fast track" I discuss these concepts in some detail.

I delve into some of the differences and give explanations as to why a charterer would pick one over the other.

But after a few recent events in my neck of the woods, it got me thinking and that can never be good. It made me ponder for a moment too long about the decision faced by many charterers: Voyage charter or Time charter?

And following on from that restless stream of consciousness I began to think about shipping in the old days, when cargo owners were really cargo owners, shipowners were really shipowners and the English were good at Tennis. Back in those days (before colour tv, before Puskas, before David Hasselhoff) all we really needed was a voyage charter. Contractual parties knew exactly the roles they played and off we went to sea.

But soon thereafter, other creatures called ship operators begin to emerge from the gloomy seaway fog (as necessary as they are to provide competition and to spread risk) and TIME CHARTER became the drug of choice for those looking to make a "MARGIN" from the changing tides of international shipping and life has never been the same since.

Or maybe not.......

I charter therefore I am

VS

Shipbroker Translation

Hi All

I have added a translation tab on the right margin for those of you who cant read English. Come to think of it if you cant read English then you probably cannot read this post........

Anyway - if you know someone who cant speak English but has an interest in bulk shipping be a chap and let em' know about this new initiative!

It was either that or for me to learn 12 languages...........I struggle with one.....thanks to Google translations!

Thanks
VS

What is a Ballast Bonus?

"mmm - Ballast bonus" (say like Homer Simpson)..

One of those complicated chartering concepts that confuses many people.

This will help those of you interested in voyage estimation.

A ballast bonus is a time charter concept and it refers to a lumpsum payment 'sometimes' made to a shipowner (by the charterer) as compensation for delivering a ship in a loading region of the world!

Whats that in English VS?

Ok lets see of I can explain. Some regions of the world are NET loading regions and some are NET discharging regions (also described as importing regions and exporting regions).

In many cases for a ship to enter a loading region she needs to sail there empty (ballast leg) because there are no inbound cargoes. So who should pay for this empty leg? As discussed previously the charterer usually pays for this leg. The reason is that the shipowner probably has other alternatives that do not require such a long empty passage. So its a matter of user pays.

Question is this...What if the ship has already started the empty passage to a loading area without having yet secured an outbound cargo? This happens alot. Shipowners will take a risk and not fix their ships too early in expectations that the market will rise in the short term. So after discharging their last cargo they will up anchor and sail to a loading region. One example of a loading region is the USG. Many ships from Europe will take the 2 week empty trip across the Atlantic on spec hoping that something will come up over the next 2 weeks.

This is where a ballast bonus is often paid. The shipowner will rate his ship basis a market time charter rate plus he will add in a ballast bonus lumpsum rate as compensation for sailing empty from Europe. The Ballast bonus should reflect the cost of the empty ballast in terms of time and fuel.

A typical fixture that will involve a ballast bonus might look like this.

"Freight hire usd 20,000 per day plus a ballast bonus of USD 280,000 lump sum"

Riveting stuff. I would much prefer to talk about football........but everything has its place.

Any questions just shoot.

Yours
VS

Pirates!

Interesting the commercial costs of pirates. Anyone looking at sending ships into and out of pirate hotspots is currently paying huge freight premiums. Shipowners (and their insurers) are either slugging charterers huge safelty premiums, or in many cases downright refusing to send ships into those regions at all.

The refusal to send ships into a particular region has consequences on freight rates because a smaller pool of ships means less supply and thus higher prices (for that trade)!

Its a huge problem and as a global society our ability to deal with it in an effective manner continues to be tested.

In my opinion, the first logical step is to lobby the Hollywood heavyweights to immediatley cease creating pirate movies starring Johnny Depp! Everyone wants to be a pirate........

I am offcourse being flipant about a real problem. Lets see how the world deals with the pirate menace over the ensuing months.

Yours
VS

Awful Websites

Ive gotta say that gee there are some awful shipping websites out there.

The biggest problem seems to be the plethora of ship trading websites. Ive talked about them before. They are the ones that ask you to fill in cargo and ship postions and offer you access to 15,000 companies.

Here is what they do. Most of them have no idea about shipping. They merely set up a website, design a basic interface, import a directory of shipping company names and then illicit people to give up important marketing information. They offer the dream that in return you may have found the shiptrading eldorado and riches will be yours. The reality is that after one or two visits, you realise it is a scam and never return.

But that doesnt matter because the website owner has signed up google advertising to his/her site and will make USD 1.00 per day in advertising clicks from google. They may also onsell your company details to others willing to pay for the information.

There are now about 30 such portals out there - and probably 28 too many. Someone will get it right one day...