Chartering, Freight Trading & Shipbroking
Charterers and freight traders find cargo to put on ships and find ships to carry cargo.
Shipowners charter other owners’ ships and commodity groups charter ships to carry other commodity groups’ cargoes. Charterers have the market knowledge and contacts which enable them to hire in a ship for less than they can hire it out.
This can be risky. Make the wrong decision, take on an obligation you can’t fulfil, pay more than you can earn and you can lose millions.
Freight trading, as distinct from chartering, is a high-risk and potentially high-reward business. It exposes the trader to the freight risks faced by both shipowners and charterers and requires a deep understanding of the risks involved. Freight trading is often thought of as a tougher job than chartering. Some freight traders have clients who give them long-term cargo commitments, they have great broking relationships, and they understand where profit can be made from a ship or a cargo and where a poorly timed or poorly negotiated contract can lose it for them.
Shipbrokers are commercial staff who are the intermediaries between shipowners and the charterers who hire their ships.
Known as chartering brokers (not to be confused with charterers) or competitive shipbrokers, these brokers earn a commission on the ‘freight’ paid per tonne to carry the cargo from A to B or on the daily ‘hire’ paid to hire the ship for a certain period.
Shipbrokers can also be the intermediaries between the buyers and sellers of ships, this is known as Sale & Purchase (S&P). These brokers earn a commission on the sale price of the ship.
A shipbroker’s clients are the shipowners, charterers or the buyers & sellers of ships.
The majority of shipbrokers specialise in particular vessel types and sizes and even in certain geographical trades. E.g. tanker, dry bulk, LNG, containers, chemicals/products, Handysize, Panamax, Atlantic, Pacific, etc.
Example job descriptions
Chartering staff negotiate charterparties and find cargoes for your ships, or find ships for your cargoes, or execute orders given to them by freight trading colleagues.
Freight traders are found in many shipowners, pure operators, commodity companies and oil companies. If you charter-in ships and operate them for profit, you employ freight traders as well as charterers. Freight traders are more than just ‘executors’ or ‘order-takers’. They are ‘developers’, ‘tonnage managers’, etc. Freight traders have the authority to go out and commit the company to cargo-carrying business even if the company does not own enough ships.
Shipbrokers are the intermediaries between shipowners and charterer. Typical responsibilities would involve setting up and negotiating deals, including presenting the business to potential clients, negotiating the main terms of a contract, seeing it through to its conclusion and any follow-up.
Example job titles
Charterer, Chartering Broker, Chartering Manager, Competitive Broker, Freight Trader, In-house Broker, Owner’s Broker, Principal Broker, S&P Broker.
Where can I work as a charterer or freight trader?
- Ship operators
- Chartering houses
- Trading groups
Where can I work as a shipbroker?
In addition to the above, shipbrokers can be found in oil companies, power companies, commodity groups, mining groups, banks and of course shipbroking firms. Globally but major locations include Connecticut (USA), Copenhagen (Denmark), Geneva (Switzerland), Hong Kong, Houston (USA), London (UK), Oslo (Norway), and Singapore.
Key skills and experience
- Degrees in either business, maths, shipping or economics are seen as advantageous.
- People skills, networking skills and negotiating skills.
- Nowadays, most employers look for graduates, but some of the best brokers and charterers have no qualifications at all!
- The Institute of Chartered Shipbrokers (ICS) qualifications are highly regarded as on-the-job training and as a route into shipbroking and chartering.