What is Shipbroking/who are Shipbrokers?
Wikipedia, very aptly, defines Shipbroking/Shipbrokers – “Shipbroking is a financial service, which forms part of the global shipping industry. Shipbrokers are specialist intermediaries/negotiators (i.e. brokers) between shipowners and charterers who use ships to transport cargo, or between buyers and sellers of vessels.”
Categories of Shipbrokers
- Tanker Broker (Crude/CPP/Chemical etc)
- Dry Bulk Broker
- Gas Broker (LNG/LPG)
- Sale & Purchase Broker
- FFA Derivatives Broker
- Offshore Brokers
- Container Brokers
….and many more subdivisions depending on the aspect of business the broker covers. Note that the responsibility/job profile of a certain type of broker mentioned in one category above doesn’t exclude the broker from getting involved in another kind of broking.
At one’s early stages in broking, it is common to, for example, try one’s hand at tanker broking as well as LPG broking.
While most big broking houses globally have set brokers for certain sizes within the above categories (i.e. dedicated VLCC or Suezmax broker under the tanker broking category) as well as set brokers for a specific type of cargo, there is always room to try to experiment with different parcel sizes/cargo types in the earlier stages of one’s broking career before settling on one.
Educational and Experience Requirements and Procedure To Become A Ship Broker
Shipbroking is the kind of profession which does not seek out specific degrees and academic accolades. A high school grad can as easily get a job as someone with a Masters degree provided there is strong acumen for the sort of work a shipbroker ought to do.
That is not to say that prior knowledge of the maritime business is not helpful in making one’s candidature more valuable to the hiring entity.
For example, an individual with knowledge of someone who has been out at sea with a keen interest in the commercial aspect of shipping or someone who has been at the ship operations desk of an owner or charterer is certainly better poised to prove their candidature over and above someone without any exposure to broking.
The world’s biggest broking house, Clarksons, has a very sought after Trainee Broker Programme that allows fresh grads to a shot at shipbroking.
The Chartered Institute of Shipbrokers also conducts examination in order for individuals to receive recognition in the field and thereafter become members of the organization.
Shipbroking Firms (a few, well known, globally present firms)
- Clarksons Platou
- Simpson, Spence & Young
- Braemar ACM
- Poten & Partners
- Barry Rogliano Salles
- Howe Robinson
- EA Gibson
..these are the major ones that have offices globally. However, there are many other smaller, more boutique firms that also have clients across the world. Follow this link to read up on each of the firms in more detail.
Qualities A Ship Broker Must Have
- PR skills
- Time management
- Communication skills
- Proactive and initiative taker
- Keen interest and knowledge about the industry
A Day In The Life Of A Shipbroker
Irrespective of geography, shipbrokers always start early in the day. Why? This is a trade that this global in its truest sense. So a competitive broker that caters to clients across the whole world needs to cater to their time zones as well.
Typically, the day starts anywhere between 6-9 am depending on the firm/office. While it may vary depending on the broker’s style of working, usually the day begins with:
- Scanning the mails for any quotes from the charterers or requirement from the owners and promulgating the same if needed
ICE messenger notifications if any.
- Last done fixtures to gauge where the market is at with regard to a certain standard shipping route as laid out by the Baltic or otherwise
- Reports from other brokers that have a market commentary and their angle on where it’s going
- Making one’s own report/commentary on the market
Primarily, a broker’s job is to fix ships (i.e., match a cargo to a ship or vice versa, match a buyer/seller with a ship, so on and so forth depending on the nature of broking an individual specializes in) – hence the majority of a broker’s day thereafter is spent on seeking out prospective business for their clients while giving their clients the best service through market updates, flow of information and giving the client an edge over the rest in competing for a quote.
The aspect of information is paramount to broking since the best brokers have the power of information about the ongoings in the market that helps one achieve a fair advantage over the rest; mind you, we are not talking of any privileged information here but info that is gained through meticulous research and analysis which helps the broker place the market a couple of days further thereby helping their client.
For those not in the know, shipbrokers work on a commission structure wherein a percentage of the total worth of the deal (e.g. 1.25% on freight, dead-freight and demurrage in case of tankers, 1% in case of S&P) is what they take to the bank.
If working for a firm and not independently, the firm then keeps a portion of the spoils and disburses the rest as a payout (this, of course, is in addition to one’s salary; this differs from firm to firm).
Shipping is a very volatile market, ebbing and flowing with times. Being the backbone of global trade, shipping cannot truly come to a full standstill, since that would destroy commerce as we know it. In a down-market, broking firms operate on lower margins and therefore, hiring is bleak although not non-existent.
In an upmarket, firms do hire many brokers to cope up with the volume of business being conducted and also to be able to train the next generation of brokers.
It’s a very well paid niche skill, so if an individual can prove that they have what it takes, a firm will not hesitate in hiring irrespective of educational qualifications.
Seek out the firm’s website, Linkedin, Glassdoor for job adverts or whatever it takes to get the eagerness across to firms. Part of being a successful broker is one’s perseverance despite rejection; Being a persistent job seeker does help one’s case across industries.
Please do note that shipbroking is more of a lifestyle choice over being a standard job. There’s loads of hard work, late nights, time away from home – so you have to really enjoy what you do in order to sustain and thereafter, excel in this field.
Competition runs in the very being of every promising or successful broker and is something of a good indicator in choosing if the career is akin to an individual’s dreams and aspirations.
In return, you earn a very rewarding salary (provided you put in the work and bring in the business), lots of travel (since most entities are based across the world), the work isn’t too complicated in itself, the work is extremely interesting as you see the market move based on global events, can even be location independent eventually if you’re successful which helps you to tailor your life around as you wish, the prospect of interactions some of the most intelligent and wealthiest/influential people in the world and being able to build a very strong bond with said people through your dedication to work.
Salaries of Ship Broker
It is very hard to pinpoint a specific salary grade for broking it based on myriad factors such as experience, reputation, client base, location (based on the standard of living) and much more.
There’s a lot on the same on online forums already so a simple search will give the reader a fair idea as to the salary structure for shipbrokers.
Mind you the salary is just one aspect since brokers mostly work towards their commissions which can even be 2-3x their salary itself. As mentioned before, broking is a very competitive venture and rewards match the risk/effort.
According to some shipbrokers, the usual starting salary of shipbrokers can be between 3-10k USD per month (Without commission) depending on prior experience. Do note that this figure is minus the commissions which are usually way more than the salary.
The Baltic Exchange
Started in 1744, the Baltic Exchange is a London-based exchange that provides real-time maritime shipping information to traders for settling physical and derivative shipping contracts. The exchange has regional offices in Singapore, Shanghai, and Athens.
The Baltic Exchange was started at a coffee house, where shipowners and merchants gathered to transact business, in Threadneedle Street in London.
To bring order to informal trades, membership and rules of trades were devised in 1823. As England’s trading connections and prowess grew, the exchange also gained in the number of its members and transactions. It was acquired by the Singapore Exchange SGX in November 2016.
Currently, the Baltic Exchange provides the following set of services:
- Independent, high quality dry, wet and gas freight market information
- Self-regulated chartering, sale and purchase and freight derivatives markets
- Central forum for competing for freight market interests
- Framework ensuring high standards of business practice and co-operation
- London-based business facilities for members
Shipbroking Hubs (offices are across the world but below are the most important centres)
- New York
Feel free to let’s know in the comments below.
Related Reading: Top 10 Books On Ship Brokering And Chartering
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