Shipbroking as a stepping-stone to shipowning? Delusional

Shipbroking as a stepping-stone to shipowning? Delusional

Panos Patsadas, MD at Target Maritime Transport, reckons too many young men and women are becoming brokers for the wrong reasons.

This is a topic I have long been wanting to talk about as it is something I come across every single day. I get CVs every day with young people aspiring to be shipbrokers. Some go as far as saying it was the dream of a lifetime, although they have never tried it in a good market, let alone a bad one like the current one. Especially for the majority of the young Greeks, shipbroking seems to be implanted in their minds as the epitome of shipping. Apparently the only area that earns you respect, is associated with prestige, and a title you are proud to carry and boast about. No?

While we could easily dwell for hours on why many of the young people wanting to go into shipping are attracted to shipbroking like fish to water, I feel it is better to take it for granted and discuss its implications for the standards of the industry. Can you become a professional boxer without putting in the hours in the ring, the gym, the treadmill? So why should the same be true in shipping? I often ask the question to the young guys, “Why do you want to be a shipbroker? ” and get replies from 20-year-olds stating that they are really good with people, and have excellent negotiation skills. I will put the age factor aside here.

So, a big guy walks into a boxing gym, approaches the coach and tells him, “I have real good conditioning, I want to become the next world heavyweight champion.” –

“Have you boxed before, son?”

No! So how can you be sure you are cut out to be a boxer? Maybe you don’t have the chin, or the feet, or the heart for it.

In trying to reason with the young guys and girls, when I get such replies full of determination and enthusiasm, i often try to get out of them, what it is they really want out of shipping? I ask them, if you were given a chance and lots of money, what would you really want to do in this industry? Hesitating to start with, 9 out of 10 admit they would like to have their own ships one day. Become shipowners themselves. It is normal, that the likes of Onassis or Niarchos or a few other Greek shipping magnates, have inspired many young people to chase the dream. There is nothing more romantic or noble than wanting to go into a profession that your country is a world leader in, and one of the few remaining reasons to be proud of being a Greek these days. But how they go about it? That is where our flaws as a nation kick in.

We often, us Greeks, like to drink water, but don’t want to be the ones carrying it. We like to spend a lot, without earning as much. The same goes with shipbroking. We want to take pride in talking to the big owners or big charterers, but the only ship we’ve ever been on is the one going to the Cyclades in the summer. We like to be trusted with assets worth millions of dollars, when if fact we have no idea how these are built, or operated.

Someone might argue that we all have to start from somewhere. Yes, I fully agree. But starting in shipping as a shipbroker is a choice most young guys make, with few of them turning down operations or post fixture entry level jobs, enjoying the luxury of parental support.

Like doing anything other than chartering or shipbroking in shipping (which also is not clear in the young minds what is brokerage and what is chartering, they usually think it’s the same thing) is some sort of a failure. Well let me ask one question here. Pick any traditional Greek shipping company (not a listed one though as senior management background and skill set required may be somewhat different and more corporate) and find out who is the managing director. If it is not the owner himself, it is in 90% of cases someone with a seafaring or operations or part technical background. It is the odd exception if you find someone with a pure chartering or shipbroking background. It doesn’t happen. Why? Because shipping and shipowning have a very broad spectrum of functions, that shipbroking first, and chartering second just cannot capture well enough.

But okay, let’s assume you do choose to go into shipbroking. You are dealing with people and families who have had seamanship in their blood for generations. You are talking to young owners who would sail on their family vessels at the age of 18 in the summer, prior to disembarking for a normal holiday. You need to bring something to the table and smooth talk is not it. You will bring your exclusive account, the hot cargo to the owner. Sure! How many other brokers do you think are going to bring the exact same thing to the table? These days, I would say plenty. And because shipping is the art of anticipating what can go wrong, the owner will pick the one who will best protect his interests. The broker who has maybe been in operations and knows what the recap means. The broker who will spot the spelling error the owner made in his offer and will point it out to him prior to passing it on. Last but not least, the broker who will stand up for his principal when things go sour. The owner or the charterer does not need a post box. He can get an administrator with zero shipping knowledge to do that.

So if the ultimate prize in shipping is becoming a principal, given a chance or circumstances one day, would you not want to learn as much about it as possible? Would you buy a EUR250,000 car if you have never driven before? What I am trying to say here is that if you really have ambitions to excel in this industry and want to go for positions of seniority or becoming a principal, shipbroking is not the way. I would say you are probably selling your self short and don’t even know it, if you opt to start your shipping carrier in shipbroking given other opportunities in operations for example.

An operator can be trained to do a shipbroker’s job. The reverse however is not necessarily true. As you gain more experience, yes you can become a good broker, but going into bigger organisations, having an operational background will make you more valuable. Because you can do a broker’s job, but you can also do something else. Finally, you cannot climb to the top levels of an industry, if you don’t have a genuine love for the heart of it which in shipping is the sea and the ship. From what I have experienced, this genuine love for shipping is something that comes across more vividly in seafarers, operations or technical people, and much less with brokers. When a ship becomes the centre of your interest and not your business image, you will find your career taking unexpected turns for the better.

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8 Comments

  1. Jonathan Bawden
    March 8, 2016 at 9:27 am

    Great article. I would suggest the only way to become a good Shipbroker is to understand how your particular discipline works, whether it is offshore tankers, dry etc and of course the only way to do this is to work in the operations or technical department of an owner or manager. Only then will you be able to talk authoritatively on your field. That being said, once you experience working for an owner you may not want to become a broker and preferring the life of working for or being a principal. I am lucky in that I have worked as both an owner and broker but if I am honest I prefer working for an owner and maybe one day I may be a principal!

  2. Peter Terkildsen
    March 8, 2016 at 1:08 pm

    Good article and agree to the importance of kerping true to the core of the industry. I do however not agree that any operations person can do a brokers job – maybe they know a bit about it, however being a good broker is an ancient art requiring skills, knowledge snd experience. As Jonathan commented you need to know the industry, the market conditions, how the vessel type works and much more, combined with a vast legal and contractual knowledge – skills often acquired from working within the ship owning or sea going side.

  3. simon francis
    March 8, 2016 at 1:22 pm

    Interesting reading – I agree with Peter ref ops people don’t always make good brokers. Likewise I’d have to say there are many very successful brokers out there who are just very good ‘people’ characters. Can put a deal together but know little about the technicalities of the ops/voyage etc.. How many brokers know how to calculate the intake of a vessel on restricted draft? Not many in my view. An essential tool to any chartering person’s repertoire in perfuming voyage calculators…
    Although – my suspicion now is that – due to the voyage calculates doing this job for them now that the new recruits to shipping may not even know how to do this on a chartering desk…

  4. sanjay
    March 8, 2016 at 3:19 pm

    Excellent article and touches the essence of shipbroking. Been there and done that and this article touched the essence of all shipping. Agree with Panos that a broker does need some seafaring background, however there are successful brokers too who have never seen a ship (a paradox does exist). I started broking after sailing as master and it wasn’t easy initially as one tends to feel more technical about intakes etc , whereas I have worked with brokers who had no idea about lpg cargo and would pick up the phone and quote to tanker owner without any hesitation ! Confidence of youngsters does help at times as the only aim of brokers is to fix and earn commission. However Ship broking profession does need professionalism and if the young broker recruits are trained well – it will help the industry.

  5. Panos Patsadas
    March 9, 2016 at 11:26 am

    Thank you all for your comments. As a couple of you mentioned the operator does not necessarily make a good broker. I fully agree, and my exact words were, an operator can be trained to do a brokers job. Not necessarily be a good one. In fact , having worked a lot longer for principals and little as a competitive broker, i tend to be a bit biased and see things from a principals perspective. The fact actually is that the mindset of an operator and of a broker are outright opposites. A broker should see opportunities where as an operator should see threats. If you see threats as a broker, it is almost certain you will lack the aggression needed to succeed. There is a fine line between trying to protect your principals interest while pushing for a deal to happen. The ones who have a bit of both are the best brokers in my opinion

  6. Luis Bernat FICS
    March 9, 2016 at 8:34 pm

    Great article indeed.
    I would start by saying that I agree too many young guns were hand loaded back in the early 2000.
    They were given a portable computer and a mobile phone and just told FIX.
    The situation is comparable to buying a Gouda cheese and when you cut it discoveting it is an Emental cheese filled up with holes !!!
    Above all I consider our young generations very capable and well prepare. The main issue is that they all want to reach the top as quick and easy as possible.
    I have been in this business for 40 years. I was 17 years old and luckely managed to get a job in a Danish shipowning company in their office in Spain as agent, of course going through all their educational system.
    I personally consider the agency work as a very ground base to learn what is a ship and what it takes to take the challenge of living a shipping life !!! Not all of them do go all the way…
    Through the years i have been going from agent to broking, to supercargo, to commercial operator, to shipowner. The road has been bumpy with a lot of good memories and customers becoming life friends!!! One of the essence of broking is gaining trust from your customer, owner or charterer. This is something you do not lear at school, it is in your blood. Today I am besides runing (eventually better said sailing)my own business in a nightmare market, I am involved and forming part of the board of the Institute of Chartered Shipbrokers, London being the sole institution certifying shipping professionals. We are more than 100 years old and I personally took the full education more than 25 years ago.
    Educating and certifying young and less young students is a challenge as we need to keep up with a changing industry.
    Anybody can call himself or herself a broker but what makes the difference is to give your customer the security that he us talking to a professional and not just an ‘Emental subject’.
    Too many fixtures/voyages are ending up in arbitration and court due to a lack of understanding what a C/P represents/means. The present market nightmare has the tendency to even add gadoline ti this fire.
    If education is considered expensive you should try ignorance.
    There is in my own personal point of view only one way to enter and live a shipping life and thatius through education, no matter the position you are going for.
    Nobody will give you the command of a vessel without having been a certified Captain. The same goes for shore positions.
    Broking is a big part of shipping and same needs to be taken as seriously and not just given as a training ground that easely. There are consequences on broking. Broking just by thinking on commission only is as bad as saying ‘Fix and forget’ which is widely used unfirtunately.
    No doubt the broking world should be more regulated and specialy nowadays when the tendency from owners and charterers is to cut brokers but again, Shipping is a Maritime adventure and as such you are supposed to expect the unexpected.

  7. Rosen Kosturkov
    March 10, 2016 at 12:17 pm

    I totally agree that not everyone can be a successful shipbroker. You need the mindset of a dedicated person, who will not despair when you loose the subs after weeks of hard work, but pick yourself up and try another vessel / cargo.
    Of course on-board experience and education will help the right candidate. That is why we, at the ICS – Bulgaria branch recommend the Institute course be taken only after a student has been in the industry for a certain period. It is a good thing that here, in Varna, we have a lot of young , well educated people, with an officer’s on-board experience, who want to continue their careers ashore.
    On the other hand , with so many Owners and Operators closing offices, trying to be a competitive broker, can be path to survival, for a shipping professional with knowledge and experience, a way out, where the biggest initial investment is in your self ( and a laptop + smart phone ).
    I am writing this from my own experience and will not judge harshly anyone who is looking to create something, putting the effort and time.

  8. sorrel
    March 10, 2016 at 3:55 pm

    to keep this article and all the interesting comments alives…
    Nothing surprising for me in what Panos is experiencing. He is managing a broking house, so without any surprise, people applying to his company wants to become brokers.
    And to have a chance to raise Panos attention, better to declare this brokers job is The Dreamed job. Better to say while applying this company that all the candidate has the talents to bring added value to Panos’ company and thanks to the hardwork make the company more profitable.
    Probably same people is also applying to an port agency company, and same people will tell the same, ie “I know I have the talents to bring added value to your agency business and thanks to my hardwork make your company more profitable”.
    Probably same people who’s fed up sending his job applications to thousands of different shipping companies are also applying to become a bar tender and will also say and declare “I have the talents to bring added value to your bar and thanks to my hardwork make your bar more profitable’ and so on… the appliants are just playing the games rules.

    What I am trying to say here, young guns are looking for a job. They need a job and when they apply they believe they have more chances to get an appointment by saying they will be good at doing the job they are applying to. Panos would have been selling bikes, he would have received thousands of job applications from people being passionnated about bikes eventhough they don’t have the bike driving license.

    I personnally think Shipping is a business like any other. And like in any other traditional business, sales skills (which is a skill a broker need to have) are valued in a much better way than operational skills and expertise.
    The day administrative job payroll will be = to the brokers payroll no doubt Panos will be surrounded by people applying for Administrative job, being the job of his dreams… in which they have all the skills and the talents!