Who is?

Hi. I am a shipping company director, transport academic, author, family man and all round nice guy. I have worked as shipbroker, shipowner, freight trader and bulk charterer, in senior positions, with some of the largest and most disrespected (joke) companies in the world. Ask my advice on all things shipping and you will receive my blunt and always honest answer. Hang around to learn more about chartering and ship broker salaries, chartering and ship broker jobs, chartering and shipbroker recruitment agencies, cheap freight, maritime education, chartering and ship broker qualifications, become a ship broker, tips on how to be a successful bulk shipping executive, philosophy, Zen and the art of shipbroking, and much more. Yours The Virtual Shipbroker (NvdH) (recently proclaimed the guru of shipbroking) Copyright © 2020 by Virtualshipbroker Contact virtualshipbroker@yahoo.com

Thursday, April 30, 2009

Shipping economics - fronthaul / backhaul

Hi All

In this blog and also in the ebooks I have deliberately steered clear of shipping economics. How are freight rates determined and how do shipowners and charterers work within the varous market segments?

Having said that here is a brief elaboration on the idea of front haul and backhaul from a shipowners persepctive. I think its a great idea to try an explain the industry a little more.

In a basic sence ships will go where there is most money to be made. There are net import regions and countries and net export regions and countries. A shipowner will judge his success on the returns of his vessel achieves not on just one voyage but over a number of voyages.

Let me explain a bit more. Lets just say that the shipowner needs to see usd 10,000 per day return, over the next 12 months, for his new ship. This means approximatley usd 3.6 mill over the course of a year. His costs will be made up of finance, running costs and accounting stuff.

On the first shipment he decides to take some coal from Australia to Rotterdam and achieves 8,000 per day. This is not great news as it is usd 2,000 below his costs...

So what happens next? after he discharges his coal in Rotterdam he has more competition for his ship. He does a short ballast to the mediteranean to load some fertilizers back to the fareast. On this leg he accepts usd 14,000 per day for his ship, a usd 4,000 per day win against his budget.

And the the good news is that overall he is still up after 2 legs. Over a 12 month period he hopes he will make money! This is the role of the shipowner.

Backhaul usually refers to legs that generally lose money. Ie a shipowner needs to take a discount in order to reposition itself for a better paying cargo. Fronthaul usually refer to the legs where shipowners can make better returns but usually end up in a less favourable area.

The best shipowners use the commodity market cycles to predict when certian load areas will be busy and not so busy, and position ships accordingly. That is not always easy!

Any questions just let me know

Yours
VS

Saturday, April 25, 2009

Shipbroker commissions.

I have written previously about shipbroker commissions, especially for dry cargo specialists.

Shipbokers usually earn 1.25 percent of the total freight bill. So if 50,000 mt of steels from the black sea to china gets fixed at usd 35 per tonne the total freight bill = usd 1.75 million. 1.25 percent of 1.75 mill = usd 21,875 dollars in commission to the broker.

So the next question is how much does the average shipbroker earn for his / her company in a year?

Its very difficult to be specific because of the diverse nature of the industry and its particpants. A perfectly good broker in a small market segement may earn USD 150,000 for his firm over a 12 month period. In a more liquid segement of the market an average broker may earn 150,000 for his firm.

But I am prepared to make a few generalisations - why - because I can!

Here is what I think are the benchmarks for brokers in your major, liquid markets. For all those brokers out there who beg to differ send feel free to send me an email.

Young / junior / break even broker - generate bwteen usd 75,000 and 175,000 per year in revenues for the company.

Medium performer - generate between USD 175,000 and 350,000 per year.

Good performer - Genrate between USD 350 and 600,000 per year.

Star (fixing machine) - USD 600,000 plus!

Want to work out how much each shipbroker should be getting paid? For many years there was an unwitten rule. Take the brokers revenue and divide by three. This should roughly equate to the shipbrokers salary and commissions at the end of each financial year.

BTW - I am busy trying to write 'how to start your own shipbroking business'. Should be available over the next one or two weeks'. For those of you interested on starting a shipbroking business there are a few revelations in their that i am sure you will more than interesting.

So keep an eye out!

Yours
VS

Monday, April 20, 2009

An insightful post from a new reader

I just thought I would publish this post from David (a new reader of the blog)

He has some very good insights useful for anyone wanting to start their own business.

I have a few points to add though.

Apart from the publically listed shipbroker companies and some with active private investors - which make up 5-10 percent of the industry, I would guess that with the vast majority of players you would be very hard pressed to find even 10 percent that have any plan whatsoever - be that a business plan, a marketing plan, a strategic plan, budgets etc etc....strange but true.

Historicall speaking the modus operandi is as follows - Am broker, have customers, want my own business, register company, start making phone calls, fingers crossed, fix first ship....

This method has been extremely successful for many but also presents some problems for the unprepared. I think the major highlight of Davids post below is that their is lots of room in this industry to do things in new ways. Many ways to skin a cat as they say.. (also revealing that in shipbroking a PLAN is considered a new way of thinking)

I think the most important thing is to have somesort of real 'plan'. It might not necessarily look like a formal business plan but you need to be sure of your goals and how you intend to go about achieving them.

Anyway enjoy the post

quote

I think being an entrepeneur may be time consuming, frustrating and risky sometimes but is also rewarding. When you fail is your fault but when you have sucess is product of your effort too, so having your own company is not just about earning more money but to grow personally as your company does it. I agree totally that being a former employee in a larger company than your start up may be a good way or even the best to have sucess.

This way you will have not just the technical knowledge of the industry but also knowledge about how a company is organized inside. Sometimes small companies or sole traders tend to minimize the importance for them of writing a well organized business plan prior to start operations or quality management. A lot of people think those things are just for large companies, but all the companies whether big or not need to have an strategy finding its own place in the market and need to apply quality in its services to satisfy clients to have sucess.

I agree that outsourcing is very powerful and even desirable for the entrepeneur when starting. This way you can have your costs under control on an on-demand basis. You always have time later to hire skilled employees if demand for your services grow.

Best regards,David

Unquote

Thanks for the contribution David!

Brgds
VS

Sunday, April 19, 2009

Starting a shipbroker business - part 3

For the experienced shipbroker. Should you start your own business?

I think there has always been enormous potential for experienced shipping executives to start their own shops. But surprisingly, considering the the potential rewards and the relative ease by which this can be done, shipping executives seem to be surprisingly reluctant to move out of established comfort zones.

Why the reluctance? Possible reasons...

1. Broking different to running a bisiness

2. Happy earning a wage

3. General malaise and inertia.

4. Having a mindset that it is all too difficult.

++

So from above, what skills and traits should an already experienced shipping executive have before taking the plunge?

- An Entrepreneurial Spirit.

- A good reason!

- A willingness to work hard....especially in the early stages upto 12 months or 2 years.

- Time to build the business.

- Competent at your job and at establishing systems.

- For the sole proprietor - the ability to delegate, outsource and create a business that makes you money but allows you to have a life at the same time.

"Apart from the actual negotiation process just about every other service; operations, postfixture, secretarial, marketing, market reports; that other shipbroking companies offer, can be outsourced!"

Actually - even the negotiation process can be outsourced under certain circumstances!

- Some clients, preferably close clients (may even just be one),

So for those of you with experience and looking for a change, think about working for yourself.

Follow a process, do your homework, canvas support, be creative in the way you set up your business and then weigh up your chances for success.

Good Luck

The Virtual Shipbroker

Friday, April 17, 2009

Starting a shipbroking business - part 2

Can someone with no experience start a shipbroking business?

Yes! if they have even one of the following

1. Time
2. Money
3. Close contacts with potential customers.

If you answered yes to ANY one of the above then 'Yes' you can start a shipbroking business. If you ticked yes to all 3 then send me an email with a signed contract and I will happily sign as your business partner today! (im only half joking)

If you have all 3 - then give me a call!

Yours
VS

Thursday, April 16, 2009

Starting your own ship broking business

Hi All

Over the next little while I will be doing a number of posts regarding the topic: Starting a shipbroking business'.

Question: Can anyone start their own shipbroking business?
Answer: Yes

This is the beauty of shipbroking. Anyone can start a shipbroking business tomorrow if they so wish. As alluded to previously unlike other brokerage industries, shipbrokers do not need any formal qualifications nor do they need industry accreditation. Hence - low barriers to entry. I cant emphasise enough how important this is. A few other industries out there thay may proclaim low barriers for high rewards but they usually high risk ventures like online Forex trading (risking your own money).

Maybe the commodity broking business (although dont quote me as I am not overly familair with that industry)?

Big Word of caution though. This information does not necessarily mean YOU should drop everything, and dedicate your life to shipbroking.

Although barriers are low, there is a high probably that only a small proportion of you will be able to make a go of it by yourself. Why? Mainly because it is a competative industry. But there are other reasons aswell.

So begs the question - Who then in my opinion, and under what circumstances, are those well placed to start a shipbroking business?

I will try and answer those questions over the coming days.

Yours
The Virtual Shipbroker

Tuesday, April 14, 2009

A big thank you to all the readers of the e-books.

Great News - Since making the books available 3 weeks ago - Today sold my 30th book! 19 Inside Shiprbroking and 11 Fast Tracks.

Does anyone know how many I have to sell to make the NY times best seller list?

In all seriousness I am excited to have sold even one copy. The books allow a great outlet for my didactic nature, and the fact that 30 of you have purchased them is just a bonus.

Sofar the feedback has been overwhelmingly positive. I have beem amazed at the cross section of people who have taken the plunge.

Buyer of the books have been

2 Shipbrokers
3 Traineee shipbroker
Students from various backgrounds including the Chartered Institute of Shipbrokers exams, Law and Business.
A Shipowner employee
A Senior ship operations person from a major shipowner
Various people with family/friend connections within the resource and shipping industries looking to get into shipping
The owner of an large third party logisitcs company looking to branch out.
A Seaman
A CEO of a mining company
2 shipping and investment related entrepreneurs
A Banking and Finance exec
and others who are just names on the paypal website!

(from all corners of the globe)

Thanks again for your support and feedback.

Keep in touch

Yours
The Virtual Shipbroker

Friday, April 10, 2009

The Norwegian shipping Industry

I just thought I would post my answer to a question asked by GN from Oslo

Hi, I have a question regarding the following statement: "So if you are not from London or Norway or another major shipping area you need to have a think about what you can offer them."Does this mean that there is a general advantage in being from a country like Norway? Kind regards
GN, oslo

Good Question GN.

The answer is Yes and No. Being in Norway you will have great access to shipping spcific colleges and employment services who should be able to point you in the right direction. Norway also has interesting niche business such as off shore, oil an gas plus sale and purchase. Nothing quite beats being on the ground in a place where an Industry is a leader in the local communities.

Having said that you will still need to differentiate yourself from the pack. If you have read my E-book hopefully you will have a full set of armoury to help you do that.

The great thing about being Norwegian is that once you have your foot in the door the world opens up for you. Norwegians are well represented all around the globe as recognized professionals and experts in all things shipping.

After a short appreanticeship - head of overseas, maybe with the same company, get more experience, sow your seeds, boost your paypacket and bang! you are a successful shipping executive!

If you have any specific questions about the Norwegian market dont hesitate to contact me

Yours
VS

Tuesday, April 7, 2009

Shipbroker Recruitment Links

Hello everyone.

I am pleased to announce a new section of the website. Shipbroker job links. These are links to shipbroker recruitment agencies around the world. Good luck with the job hunting!

(bottom right hand corner to the webpage)

Yours
VS

Monday, April 6, 2009

Fast Track Testimonials

FYG - Since publication - there are one or two key concepts that i have since thought about that I will add to the book. For those of you who have already bought the book these add-ons will be onforwarded to you free of charge. Infact any future updates are available as free updates for those of you already with the book.


Dear VS,
I purchased Fast Track and read it. I liked it.

Is Fast Track easy to understand? It didn't look that way in the beginning. I tried skipping around but that was difficult (unlike "inside shipbroking").

I wanted to start with the dialogues, but couldnt fully understand them without reading "essential concepts."

Even more so for the negotiations portion. But when I read from start to finish, it made sense and seems helpful.

There's a necessary flow to it.

"What part of Fast Track did you find most useful? The ship broker dialogues. They seem like they give valuable insight. Looking forward to more.

Peter
(Houston)

++

I've gone through your training manual. It's an excellent insight to the shipbroking industry. Good work!

Adrian
(Singapore)

++

Hi. As a trainee shipbroker I think your fast track is easy to understand. The shipbroker conversations are very realistic. I am looking forward to reading more.

Peter
(Athens)

++

Your e-books Inside Shipbroking and Shipbroker Fast Track are well worth buying and reading. I am currently enrolled in the ASBA Shipbroking & Chartering Practice course and found your books to fill in the blanks very nicely. Some practical info to go along with the legal aspects of the industry.

Don Divine

(Minneapolis)

Saturday, April 4, 2009

Shipbroker trainee positions

Hi

Quite a few of you have asked about ship broker trainee positions. If you have done your research you will see that the pure shipbroking firms do on occassion offer cadetship type opportunities for aspiring shipbrokers. Most of these are offered out of London or greater Europe. If you come from these areas then this is all well and good but if you are from other parts of the world will you get a look in?

The answer is - it all depends. A shipbrokerage firm doesnt offer cadetships because of their naturally altruistic natures. In many cases they look at what candidates can offer them in terms of connections, background and the like. Having a good pedigree always helps. Then there is the academic record and more subjective concerns such as do you have the right personalty for the job etc.

Do you need a work visa? You will need to check this with your governments but I know of quite a few instances of shipbroking firms sponsoring cadets for a certain amount of time.

So if you are not from London or Norway or another major shipping area you need to have a think about what you can offer them.

Some key suggestions - Look for a cadetship, interniship, traineeship with a company that has a satelite office in your home country. That way the firm can see a long term plan for training you.

Many Greeks, Australian, Japanese and American nationals, for example, have trained as shipbrokers in London and then after a specific period are shunted back to the regional office.

This is a great outcome for both parties!

So the simple answer is YES you could land a cadetship in a large European shipbroking firm but you need to think carefully about what you can offer them in return and hence how you go about marketing yourself for that position.

relevant link
Yours
VS

Shipbroker salaries - update

Since I first began this blog, a few people have asked me if ship broker salaries are under pressure.

I mentioned previously that a junior shipbroker should be earning USD 80,000 within 3 years of starting in the Industry - if they play it smart.

I also alluded to various salary bandwidths for ship brokers of different levels of experience.

Reviewing those figures today I believe they still stack up fairly well. I think if the market remains in the doldrums then first we will see some layoffs and then salaries may slide a little. This has yet to happen to any major degree. And as discussed previously, with every contraction comes opportunities. We all need to be placed well in order to take advantage of these opportunities.

Yours
VS