The commercial shipping market has split into two tiers in recent years, according to Spinnaker Consulting. Sharon O'Ryan, Manager of the Maritime HR Forum run by Spinnaker said that salaries and bonuses paid to freight traders and charterers have diverged to reflect the different levels of risks to which they are exposed.
"The job description and possibly even the job title may be the same," she explained "but when one analyses the trading strategies of the companies employing chartering and freight trading staff, it soon becomes clear why the traditional charterer earns a mid-tier salary and bonus structure compared with the true freight trader's upper quartile salary and market-beating bonus structure."
The job title "freight trader" didn't exist 20 years ago. Spinnaker says it was first instructed on a "freight trader" vacancy by Cargill in about 2000. Spinnaker's Chairman Phil Parry said that "In the past, everyone was a "charterer" and then came along the commodity groups where everyone is a trader of one sort or another. And so it was inevitable that the staff in their shipping or freight divisions became known as freight traders."
Of course, members of the trading community have always been voyage charterers but the boom in world trade and the rise in popularity of CIF sales elevated the importance of the shipping division. Once a support function, possibly even a necessary evil, many commodity groups now tell us that their freight trading division is the most profitable in the business.
"So, we now have this two tier commercial market in shipping," said Sharon O'Ryan. "As well as the commodity groups, operating companies have exploded onto the scene in the last decade hungry for staff with the intellect and resolve to take on both freight and cargo risks, whether they own ships themselves or not. The staff employed by both of these types of organisations are impressive individuals who must juggle multiple exposures and who can make or lose huge amounts of money for their companies."
"Those who are good at it earn the higher end of the commercial market bonuses we hear about nowadays and they probably deserve it," according to Amy Travell, Principal Consultant in Spinnaker's Commercial Division.
Spinnaker and the Maritime HR Forum are often asked what the salary and bonus level are for chartering staff but it is not a simple answer nowadays. Employers and employees need to understand which organisations they should be comparing themselves against or risk vastly under or over estimating what they should be paying. In addition to the chartering versus freight trading dynamic, there is the issue of corporate versus private entrepreneurial business culture in terms of how staff are rewarded and overlaying all of that is sector performance.
For example, whereas 20% of commercial staff in the dry bulk market received bonuses in excess of 50% in 2010, only a lucky 7% did so in the tanker sector.
Getting pay and reward strategy right is about having access to good numbers and about the company and its HR department having a clear salary policy and understanding where they should be sitting in the market ranges for both base pay and bonus. Nowadays, the shipping industry is much more sophisticated in this regard and some 50 shipping and trading employers both benchmark salaries and bonuses via The Maritime HR Forum and meet annually to discuss and share best practice.
Spinnaker's Parry explained that associations such as these are heavily regulated by anti-trust rules to ensure that employers use them for the right reasons and that "the suspicion has gone out of shipping as professional HR managers have entered the industry. There's a lot less finger in the air and a lot more effort to reward performance using competitive benchmarks and to use long term incentives to encourage retention and loyalty. It was really noticeable during this downturn how companies tried much harder to retain staff rather than slash and burn. We seem to have matured!"