It’s carnage out there for the dry bulk shipping market. Anyone and everyone connected to this market are bleeding profusely with freight for moving dry commodities offering negative returns for over a decent period of time now.
While it’s a matter of life and death for the dry bulk shipowners, who are struggling to cover even their operational expenses, the current crisis is pushing shipbrokers to the edge.
Almost gone are the days when shipbrokers used to pride themselves as “CEOs,” a pun-intended acronym in the shipping world for “chief entertainment officer.”
With incomes from commissions drying up due to rock-bottom freight levels, which is just three digits in some cases, shipbrokers are now asking for a lump sum amount as commission, instead of a percentage-based brokerage rate from shipowners.
So is the entertainment spree by the shipbrokers for their clients, that’s almost non-existent these days.
Shipbrokers are a vital cog in the commercial shipping market. They not only help match a shipowner’s vessel with a charterer’s cargo, but also provide their clients a wide range of market intelligence and constructive advice.
The massive slowdown in the dry bulk market has brought in a do-or-die situation for the shipbrokers. They are earning a pittance from commissions received for fixing ships.
The practice of asking a lump sum amount as commission has been prevalent for a few months now with a broker commission based on 1.25% of the total freight bill offering a paltry sum as brokerage, according to a few shipowners and ship-operators.
While this is not a shipping industry norm yet, it is practiced on a case-by-case basis and depends largely on the relationship between the shipbrokers and the shipowner as well as the trade route.
“Sometimes when we fix a short voyage, we offer to pay on a lump sum basis. So far, only seeing it on voluntary basis, but wouldn’t be a surprised if brokers start insisting for a minimum lump sum going forward,” said a shipowner source.
The fact is that the volume of business that brokers are doing is shrinking.
“Owners are mostly looking to place their own vessels for own cargoes,” said a shipowner, adding that there was very little margin to pass on to anyone in this market.
A shipbroker summed up the current situation by saying that the dry bulk shipping industry will change after the present crisis not because of ship charterers or the shipowners, but due to the slim chances of shipbrokers surviving the depressed market conditions.