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Shipbroking is a
financial service Financial services are the economic services provided by the finance Finance is a term for the management, creation, and study of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contra ...
, which forms part of the global
shipping industry Maritime transport (or ocean transport) and hydrolyc effluvial transport, or more generally waterborne transport, is the transport Transport (in British English British English (BrE) is the standard dialect A standard languag ...
. Shipbrokers are specialist intermediaries/negotiators (i.e. brokers) between
shipowner A ship-owner is the owner of a merchant vessel (commercial ship) and is involved in the sea_transport, shipping industry. In the commercial sense of the term, a shipowner is someone who equips and exploits a ship, usually for delivering cargo at a ...

shipowner
s and charterers who use ships to transport cargo, or between buyers and sellers of vessels.


History

In the 19th century, it was the work of ship-brokers to procure goods on freight or a charter for ships outward bound. They also went through the formalities of entering and clearing vessels at the customs-house. They collected the freight on vessels brought into port and took an active hand in the management of all business matters between ship-owners and merchants, whether shippers or
consignee {{Admiralty law In a contract of carriage A contract of carriage is a contract A contract is a legally binding document between at least two parties that defines and governs the rights and duties of the parties to an agreement. A contract is l ...
s, for which they were paid a fee. In major British ports, ship-brokers were also usually insurance-brokers.


Modern shipbroking

Some brokerage firms have developed into large companies, incorporating departments specialising in shipping's various sectors, ''e.g.'' Dry Cargo Chartering, Tanker Chartering, Container Chartering, Sale & Purchase, Demolition, Futures and Research; other "
boutique A boutique () is "a small store that sells stylish clothing, jewellery, or other usually luxury goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics ...

boutique
" shipbroking firms concentrate on specific sectors of the shipping market. The principal shipping and shipbroking centres worldwide are London, New York City, Singapore, and Tokyo, as well as where many shipowners are based such as Oslo and Athens. Other places continue to develop in international shipping services, such as Hong Kong and Shanghai, Delhi and Mumbai, Copenhagen, Geneva, Genoa, Hamburg and Paris in Europe; and in North America, Connecticut, Houston, and Montreal are important shipbroking centres. Until the late 20th century, it was commonplace for shipbrokers to cover more than one discipline, although nowadays the vast majority of shipbrokers specialize in a specific sector. Like many financial services, historically shipbroking grew out of the
City A city is a large human settlement.Goodall, B. (1987) ''The Penguin Dictionary of Human Geography''. London: Penguin.Kuper, A. and Kuper, J., eds (1996) ''The Social Science Encyclopedia''. 2nd edition. London: Routledge. It can be defined as a ...

City
coffee houses, becoming established at the Baltic Exchange; among its most famous members being
Ernest Simpson Ernest Aldrich Simpson (6 May 1897 – 30 November 1958) was an United States, American-born British people, British Freight transport, shipbroker, best known as the second husband of Wallis Simpson, later wife of the former King Edward VIII. S ...
, ex-husband of The Duchess of Windsor (died 1972), and Alderman the Lord Mountevans. The
Institute of Chartered Shipbrokers The Institute of Chartered Shipbrokers (ICS) is a Professional association, professional and learned society for all members of the commercial shipping industry worldwide. After being founded in 1911 in London, the Institute, ICS was granted a R ...
sets educational standards throughout the industry worldwide, whose
Fellow A fellow is a broad concept whose exact meaning depends on context. In learned Learning is the process of acquiring new understanding, knowledge, behaviors, skills, value (personal and cultural), values, attitudes, and preferences. The abil ...
s are accorded the privilege of using the post-nominal letters FICS.


Sale and purchase

Sale & Purchase ("S&P") brokers handle the buying and selling of existing vessels in the secondhand market or contract new ships (called
newbuildings Newbuildings or New Buildings is a large village in County Londonderry, Northern Ireland. It lies about 1 km (0.6 mi) from the banks of the River Foyle and 5 km (3 mi) south of the city of Derry. It had a population of 3,381 i ...
in industry ''parlance'') from shipbuilding yards. S&P brokers promote opportunities and discuss market trends with shipowners, charterers, investors and bankers, as well as reporting on market sales, vessel values, market trends and activity. When a shipowner has a vessel to sell or is looking for a vessel to acquire, the shipbroker will scour the market for buyers, or for suitable sales candidates, discuss with potential counterparties or their broker the main points of the sale transaction and eventually negotiate all of the details, usually based on a standard contract. During such proceedings, shipbrokers not only negotiate the price of the vessel on behalf of their principals but also all the logistical details for the transfer of the title and the vessel itself to the buyers (new owners), including the banking arrangements. During any negotiation, minor disputes may occur, which are to be handled in accordance with market fluctuation, ''i.e.'' the market may be moving in favor of the buyer (vessel price is softening) or in favor of the seller (vessel price is strengthening) giving each party a potential reason to cancel the transaction. When shipbrokers act on behalf of passive investors or financial buyers, they may also have to find time charter employment for the vessel and assist with practical arrangements such as the appointment of ship managers. Some S&P brokers specialize in the sale of ships for
scrap Scrap consists of recyclable Recycling is the process of converting waste materials into new materials and objects. The recovery of energy from waste materials is often included in this concept. The recyclability of a material depe ...
, requiring a different set of skills and contacts.


Dry cargo broking

Dry Cargo brokers are typically specialists in the chartering of
Bulk carrier A bulk carrier, bulker is a merchant ship A merchant ship, merchant vessel, trading vessel, or merchantman is a watercraft that transports cargo or carries passengers for hire. This is in contrast to pleasure craft, which are used for pers ...
s, and are engaged to act either for a shipowner looking for employment for a ship, or a charterer with a cargo to be shipped. Dry Cargo brokers maintain large
database In computing Computing is any goal-oriented activity requiring, benefiting from, or creating computing machinery. It includes the study and experimentation of algorithmic processes and development of both computer hardware , hardware and sof ...

database
s of vessel positions, cargoes, and rates, paying constant attention to the direction of the
market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films *Market (1965 film), ''Market'' (1965 ...
s so as to advise their clients accurately as to how to maximize profits or minimize expenses. Dry Cargo shipping can, in general terms, be categorized by Vessel size: namely, Bulkers such as
Capesize Capesize ships are the largest dry cargo ship A cargo ship or freighter is a merchant ship that carries cargo, goods, and materials from one port to another. Thousands of cargo carriers ply the world's seas and oceans each year, handling the ...
s,
Panamax Panamax and New Panamax (or Neopanamax) are terms for the size limits for ships travelling through the Panama Canal The Panama Canal ( es, Canal de Panamá, link=no) is an artificial waterway in Panama Panama ( , ; es, link= ...
es, and
Handysize Handysize is a naval architecture '' in Tórshavn, Faroe Islands, August 2009 File:Naval Architecture Course of Study.png, alt=Curriculum of Naval Architecture , 256x256px, General Course of Study leading to Naval Architecture degree Naval ar ...
. Each size of vessel suits different types of cargo and trade routes/ports. Many owners, charterers, and brokers tend to specialize in one or other of these sectors.


Tanker broking

Tanker brokers specialize in the chartering of tankers, which requires a different set of skills, knowledge and contacts from dry cargo broking. Tanker brokers may specialize in crude oil, gas, oil products or chemical tankers. Tanker brokers similarly negotiate maritime contracts, known as charter parties. The main terms of negotiation are
freight In economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the ...

freight
/
hire
hire
and
demurrage The term "demurrage" from Old French ''demeurage'', from ''demeurer'' – to linger, tarry – originated in vessel chartering and referred to the period when the charterer remained in possession of the vessel after the period normally allowed ...
. Oil being a fast moving trade, freight rates for crude oil tanker charters are most commonly based on the
Worldscale Worldscale is a unified system of establishing payment of freight rate for a given oil tanker's cargo. Worldscale was established in November 1952 by London Tanker Brokers’ Panel on the request of British Petroleum and Royal Dutch Shell, Shell as ...
Index Index may refer to: Arts, entertainment, and media Fictional entities * Index (''A Certain Magical Index''), a character in the light novel series ''A Certain Magical Index'' * The Index, an item on a Halo megastructure in the ''Halo'' series ...
; the Worldscale Association publishes flat rates annually.www.worldscale.co.uk
/ref> For some specific voyages, such as named voyages (''i.e.'' from A to B) and for specialist ships, like
LNG Liquefied natural gas (LNG) is natural gas Natural gas (also called fossil gas; sometimes just gas) is a naturally occurring hydrocarbon gas mixture consisting of methane and commonly including varying amounts of other higher alkanes, and s ...
tankers (a highly specialized sector of the tanker market), freight rates can be agreed on a lumpsum (or dollar per ton) fixed rate between both parties.


Container vessel broking

Container brokers specialize in the chartering of
container ship A container ship (also called boxship or spelled containership) is a cargo ship A cargo ship or freighter is a merchant ship that carries cargo, goods, and materials from one port to another. Thousands of cargo carriers ply the world's seas an ...

container ship
s and provide container shipowners and charterers with market-related information and opportunities.


Futures broking

Shipping Futures brokers specialise in negotiating
maritime Maritime may refer to: Geography * Maritime Alps, a mountain range in the southwestern part of the Alps * Maritime Region, a region in Togo * Maritime Southeast Asia * The Maritimes, the Canadian provinces of Nova Scotia, New Brunswick, and Princ ...
futures contract In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creation and management of money and investments. Savers and investors have money availabl ...
s.


See also

* Worshipful Company of Shipwrights *
Baltic Exchange The Baltic Exchange (incorporated as The Baltic Exchange Limited) is a membership organisation for the maritime industry, and freight market information provider for the trading and settlement of physical and derivative In mathematics, th ...


References


Sources

* * *


External links


The Institute of Chartered Shipbrokers

Association of Shipbrokers and Agents
{{Ship chartering Ship management Merchant navy Shipbroking companies Ship chartering Water transport Livery companies Service companies of the United Kingdom Financial services