It was a captivating final debate at the opening day of the inaugural Geneva Dry event a week ago, which saw panellists examine the future of fixing ships and the future of broking as a long-lasting integral part of the shipping industry.
Hosting the panel, Tim Huxley, head of Mandarin Shipping and one of the best known names in Hong Kong shipowning circles, tasked a stellar lineup of speakers with giving a rundown on how brokers can move forward and maintain their role in the industry against numerous emerging tech concepts for fixing.
Kicking the session off, Christoffer Svard, chief commercial officer at Clarksons-backed digital fixture platform Sea, explained how building the product was keeping the role of the shipbroker fundamental but also trying to bridge the gap of a very fragmented workflow.
There are some bloody awful shipbrokers out there
“I think the broker serves a very important role when it comes to facilitating the freight transaction, and I don’t think you’re going to see a platform or system that replaces that role,” Svard said.
Whether fixture platforms such as Sea pose a threat and trying to disintermediate brokers, Jeremy Palin chief executive at London-based shipbroking powerhouse Arrow said that that is not the case at this stage but noted that brokers should not be trying to take ownership of other people’s data in pursuit of monetisation.
“Broking is about facilitating transactions. It’s not, to my mind, about monetising data that doesn’t belong to us,” Palin said.
Niels Josefsen, the outgoing CEO of Danish handysize owner and operator Lauritzen Bulkers, said that fixing is definitely changing from what it used to be. However, he felt that in many people’s minds, the platform is one like booking.com, where one can go and book a hotel—but that there has to be a lot of things falling into place before the industry can get there.
Willem Vermaat, shipping director at Heidelberg Materials Trading, responsible for the shipping requirements for one of the world’s largest manufacturers of building materials, handling around 900 shipments per year, highlighted that shipping deals are negotiable and that individuals in the industry want to maintain that freedom, which should keep brokers in the business, maybe not forever, but for a long time to come.
“There is a human element and the amount of negotiation that can be done and that cannot be done through the portal,” he said.
Also from the owner’s perspective, Sarah Al Qahtani, chartering manager at Saudi Arabia’s flagship carrier Bahri, who also spent some time working at Clarksons in London, told the audience that technological transformation is still in a very nascent phase and that the industry is underestimating the power of humans holding strong strategic connections with potential clients.
“As humans, we have the ability to establish that connection that no digital tool can replace,” she said.
Al Qahtani noted that shipping segments are very siloed in information and that there’s no ecosystem that allows for cooperation to exist, adding that “tools cannot give you trust,” but also stressing that that can be achieved with a human.
“We have had great broker houses throughout these years, and they’ve given that trust that you cannot get from a tool. But what the tool can do is amplify the skills of the broker, and it can amplify the connection between the two,” she said.
Adding to this, Arrow’s Palin said shipbroking from the outside looks prehistoric, and if he parachuted in from Silicon Valley and looked at what this industry is, it looks like the Dark Ages in many ways.
“I can see how people arrive at the conclusion that an Expedia is required. But to understand the fabric of this market, particularly to understand the sell side, the owning side and how fragmented that is, see the depth of the sell side; the depth of supply on any specific position or any specific market is going to be impossible via platform,” he said.
Defending the Sea fixture platform, Svard agreed with Al Qahtani’s point on amplifying, saying that it is about equipping the broker with the right information at the right time and not about “being a post box”.
“This is about facilitating the workflow. It’s about ensuring that we know the terms we’re agreeing to. It’s about understanding. The contract we’re referring back to and understanding the nuances and the risks that are inherent in that contract that could be make it or break it for that deal,” he said.
Verbal wrestling continued with Palin stressing that technology should be here to assist brokers, not to disintermediate them.
“I’m absolutely not a believer that shipbroking can be disintermediated,” he said, adding, however, that some shipbrokers should be cut out as the middlemen.
“There are some bloody awful shipbrokers out there. There are some shipbrokers in London who still think drinking Beaujolais in dark alleys in the City is the way to do a deal, and it just doesn’t work like that anymore,” he said.
For Al Qahtani, it’s no longer enough to match a ship to a cargo. She pointed out that owners require a functional system that can use different economic indicators and then put together a range of offers and establish different scenarios of fixtures.
HMT’s Vermaat agreed with Palin that some brokers do add value and others don’t, and they need to differentiate, follow up, and see what is going on in the future. “If they are going to use maybe some of the input from Sea and then guide us that way, that would be something else to look at, but they need to develop and improve,” he said.
Lauritzen Bulkers’ Josefsen said he sees brokers playing a very important role for a long time, but reiterated that the future of fixing is changing and it’s up to brokers to follow that and be there and add value.
Sea’s Svard said using a platform is going to be advantageous for brokers and that it provides value today to service principles better and make much more informed decisions throughout the fixing journey.
Palin agreed shipbroking has to develop and embrace technology, but from his perspective, fixture platforms like Sea are removing the role of the broker if they are facilitating a transaction between an owner and a charterer.
Arrow invests heavily in data, but Palin stressed that what the company is not doing is trying to monetize it.
“What I don’t really understand with Sea, for example, is that to me it’s a recap tool, a charter party manager, a repository that owns the data that is inputted in there by whichever user, but I don’t see you’re saying it’s helping people fix ships, but who is it helping,” he rhetorically asked.
Svard nevertheless countered again, saying the company thinks there is a smarter way of fixing ships by consolidating and streamlining the workflow and giving the indications back to the principals in a structured format – which should make the job of the broker much easier.
He went on to say that it also means that at that point, one starts connecting it to the right terms to the right charter party to drive that whole process and give confidence in what is being agreed on, and at the end of it, one has a recap automated and can go on and clean fix.
“It’s not about removing the role of the broker; it’s about augmenting the whole experience,” Svard stressed – to which Palin disagreed, saying, “It sounds like you’re moving the role of the broker to me”.
The discussion then moved to the floor with a series of comments, one of which was that brokerage is a relationship business and raised questions on how technology can help a broker do a better job in that department.
“I’ve got some awful relationships with some of my clients. I don’t think you have to be everybody’s best friend. I think a principal looks to a broker for best execution, for delivering the deal, for knowing where to go and what for,” Palin noted.
“You don’t need to be friends with everybody, but you need to trust a certain handful of people because that’s the information and the relationship you rely on,” added Vermaat.
Lauritzen Bulkers’ Josefsen asked the panellists, how does a platform ruin the possibility of relationship? “You can go and meet your clients even if you are on a platform. I cannot see why not,” he said.
“The platform won’t ruin it. Maybe the platform will give the broker more information to give to us, but as much as we trust the broker, we need to trust the source of the data,” replied Vermaat.
Speaking from the audience, Philippe van den Abeele, founder and head of investments at Consortium Maritime Trading, said the dry bulk market is a very diversified environment and that there are “many bits and pieces” that are uncontrollable even with technology.
For him, the hybrid model with strong technology and a very, very professional shipbroker is the way forward.
Also from the floor, shipping consultant and Splash columnist Pierre Aury reminded the audience that fixing online is not a new thing but also voiced being a little annoyed by IT vendors pointing to inefficiencies in shipping.
“I’m sorry, shipping is very efficient. I’m not saying that it cannot be made more efficient, of course, and efficiency can be improved every day and we have a lot of margin there. The world economy hinges on shipping. The world economy has never stopped. We’ve always delivered the cargoes on time,” he said.
Commenting further, Aury touched upon AI being applied in shipping, pointing out that processes need to be revisited before that is applied. “You just slap that on existing processes and that will turn them into something fantastic… If you just put it on a shitty process, you’ll still get shit only faster,” he remarked.
Adding to the highly tense debate at the packed conference hall at the President Wilson Hotel in Geneva, Al Qahtani, as Switzerland between two differently opinionated sides, emphasised that the majority of processes can be digitalised, but that not everything has to be.
“It has to bring value because the last thing you want is to bring about a system that nobody is essentially going to be using. And if it’s not bringing real value, that kind of changes drastically how I do my business. Then why digitise it in the first place? It’s not about just transforming it into automation into a distinct technological tool; it’s about what is in it for me,” Bahri’s chartering manager said.
Sea’s Svard got the final word, saying, “It is absolutely crucial that when we develop technology, it has to be built with a purpose and it has to be with the purpose of improving the way we work, delivering value back and enhancing and allowing us to be more efficient in the way that we operate.”
Geneva Dry, the world’s premier commodities shipping conference returns on April 28 and 29 next year with delegate passes being limited to just 800. Tickets are now on sale here.
