Shipbroker: why you must hire one

  • 26/12/2018
  • 11 minutes

Have you ever heard of a shipbroker? An important figure in the chartering scenario, he or she acts as an intermediary between charterers and shipowners. In short, it’s through these professionals that the other players can obtain strategic information about the market.

You can also listen to this article in the audio version.

Considering the relevance of the subject, we’ve prepared this article to explain the matter in further detail. Throughout the text, you’ll understand the reasons why you must hire a shipbroker, where to find them, how to hire them, and so on. Enjoy!

Shipbroker: understand who that professional is

In order to get a more in-depth view on the subject, we’ve talked to Drausio Pereira, from Realta, who has been acting on the market for a long time. For him, the reality of a shipbroker is similar to that of any other broker.

“The goal is to help the clients who don’t have all the information about maritime transport and need support. It’s like looking for a real estate agent when you want to buy or rent a house, or a stockbroker when you want to know what are the best investments and the return they can result in”, he explains.

The specialist considers that looking for a shipbroker is something that happens when someone doesn’t have much knowledge or many contacts that can explain more about the sector. “I always say that, as a shipbroker, our products are information. We are gossipy by nature and we bring on shipping, vessels, or cargo, depending on the needs of the client”, points out Drausio Pereira.

Why should you hire a shipbroker?

All in all, Brazil has very specific characteristics in relation to the search for cargo ships. According to Pereira, “companies don’t keep touch with all the shipowners available on the market, besides not being aware of the positioning of the ships on a certain date. Therefore, they look for shipbrokers with the intention of making that connection, so they can gain a wider range of opportunities and possibilities of access”.

Imagine, for example, that you plan on exporting cargo two months from now. However, you don’t fully access the market and don’t have professional connections in all the areas involved in this operation. Shipbrokers, on the other hand, can play that part — and that’s the great advantage in hiring them. Besides, they are able to:

  • filter the quality of the shipowner;
  • know the real position of the vessel;
  • budget exportation.

Where and how to hire this professional?

Hiring shipbrokers usually happens through an indication. “Companies generally look for a colleague in another company. The big English offices are a great example of that, since they are coming to Brazil and hiring local professionals. I believe that practice will change the scenario in a few years — small brokers are prone to fading off the market in the short and in the medium term. Therefore, this conjecture becomes a little bit altered, opening up space for a market even more promising and professional”, highlights Drausio.

Keep in mind that, in your area, not carrying on some processes can lead to serious financial trouble for those involved. So, when it’s hiring time, make sure to count on specialists in which you and other parties fully trust: shipbroker, charterer, and shipowner must be on the same page.

Cost-benefit: is it actually worth it to hire a shipbroker?

Now that you already know the shipbroker’s activities and the advantages of hiring that professional, you must also comprehend if the cost-benefit relation makes this option the best choice.

Before all else, it’s fundamental to ensure the global standard is charging 1.25% on the shipping’s gross value. It’s considered a standard because there is no official rule stating that percentage. It’s what usually happens, because that price has been practiced approximately since the 19th century.

As Pereira explains, the most recommended course of acting is hiring “when you don’t have immediate access or internal personnel to filter messages, track ship positions and know which shipowner has the vessel on a given date and destiny. Therefore, the shipbroker can help filtering instead of wasting your staff’s time, since they need to consult many people and that takes a long time, especially considering questions that need to be answered right away.”

In which segment is hiring a shipbroker more advantageous?

Counting on the services of a shipbroker can usually be advantageous when cargo is:

  • in bulk;
  • of steel and of aluminum;
  • of ore;
  • of grain;
  • not put on containers.

“For the container positions or that already have a shipment standard, such as cellulose, there are few shipowners available. In that case, there’s more freedom for you to get in direct touch with the shipowners. However, in grain and ore, for example, there’s a wide range of operators, thus making it very advantageous for you to look for a shipowner”.

Still according to the specialist, “there are many operators, the shipowners without a ship,  who hire a vessel and take big risks for anything. If the market goes through a drastic re-evaluation — which happens from time to time, because of high and lows on oil prices and speculations from the shipping market — the broker can select from a list and recommend only shipowners or operators in who he or she trusts”.

What problems can the lack of a broker bring about?

As mentioned previously, the lack of a good shipbroker may damage a series of steps in the sea freight shipping process. After all, he or she is specially designated to intermediate the relation between the parties and amend possible disagreements after the deal’s closed.

“When the interested parties are ‘fighting’ amongst themselves, the shipbroker can greatly lessen that wear, which can also help a lot in relation to time, calculations in Brazilian companies’ overstay, the interpretation of the lead times and the infrastructure in general. The large majority of Brazilian companies have few people in the chartering department, but they don’t always exhibit the best qualifications. The shipbroker adds to your experience, interpreting all the different rules and jurisprudence, besides counseling their clients about how to navigate eventual disputes”, clears up Pereira.

All in all, hiring a shipbroker can be essential to avoid bigger problems in your future. The collaboration of the professional tends to be useful in a series of relevant aspects for the success of your exports and imports.

Now that you know more about the profession, don’t miss out on the chance of voicing your opinions and doubts by leaving a comment below!