Mr Prospector doesn’t mind taking a few cheap shots at the broking community, but admits their role in the industry is not going to be usurped by technology anytime soon.
I recently went to a leaving do for a spot tanker broker friend of mine. He did it for nearly a decade before finally deciding that this was not the intellectual challenge he’d dreamed of as a boy. He then went to night school for two years, passing all his exams about a month ago. We toasted his hard work as he nervously headed off to a bright new future as the mop and bucket man at an Amsterdam sex cinema. All of us are just hoping that the late nights of studying are enough to up his brain power sufficiently to cover a much more complex task than reading The Sun with his feet on the desk, long lunches and shouting out random numbers for 20 minutes once a week. He once told a client that Worldscale was about three foot six.
I’m aware that some tanker brokers might not be happy to hear this description of events, but as this won’t be published by Mailonline.com, I’m assuming that of those that actually can, none of them will ever get to read it for themselves. I know that almost all tanker brokers can read a menu at least.
Despite this being a cheap shot (and genuinely a joke before people get cross), I did want to mention something that happened to me about 20 years ago. I gave a presentation about supply and demand to a room full of post-grad students studying shipping at a London university. I was working for a shipbroker’s research department at the time, so you can imagine my embarrassment if any of the rubbish presentation ever found the light of day. But the most memorable thing was a question from a very young son of a Greek shipowner, who asked me if I was OK with the fact that shipbroking would be a piece of history pretty soon and that I’d be out of a job. It was a pretty ballsy question and certainly cocky and irritating. I think I said something like predicting the end of shipbroking was as outlandish as someone with all the ‘street’ cool and attitude of a teenage William Hague launching a hip hop career.
Since then, consistently over 20 years, while music tastes haven’t always been cruel to the clueless, there has always been somebody predicting the end of the world for shipbrokers. Do you remember LevelSeas? It didn’t work. At all. Ever. Introspection and chat about being ‘ahead of its time’ might still exist somewhere, but let’s face facts, we’re all struggling to remember much about it. You can’t miss something that you can’t even remember.
At some stage every FFA broker built a screen. I noted that one FFA screen recently appeared on the BBC’s Antiques Roadshow, brought along by a charming Belgian gentleman. The expert was amazed that it still worked, although the only price on it was a 5dpm Cal09 Capesize offer for $200k from Cargill. Despite it being a marvellous relic of history, the expert said that it had no actual value whatsoever. The avuncular owner smiled and said that he had no intention of selling it anyway. The FFA market has had more platforms that Grand Central, but now I get my prices via WhatsApp. So I get virtuoso interpretations of a market from one person in a way that I can’t save, manipulate or analyse, but it is free at least, and technically in an app.
Didn’t BHP launch a screen for their Western Australian iron ore shipments? I checked the BHP website (my only research I promise), which lauded it as a tool to improve productivity. Not sure how that works, but this was the end of broking as we knew it. The Greek student was right perhaps, albeit after 20 years. The first auction was a huge success of course. I heard nothing of the second, and even less since. A massively ill-informed friend of mine told me that it had been quietly shut down. Maybe, maybe not, but definitely nothing has changed for ship brokers. We email each other using telex terms.
And so it goes on. Just a reminder though. There may or may not be 5.5bn tonnes of dry cargo alone shipped each year. Let’s say average size is 70,000 tonnes per shipment. So that would be 78,500 dry fixtures alone in the simplest calculation possible. We have a physical market that we don’t understand. We have a derivatives market of an underlying market that we don’t understand. Even the most loose-lipped broker doesn’t know enough people to tell them everything they know and make the market genuinely move. ‘There are more ships appearing in the Pacific’ is something that is supposed to have meaning.
It might be that shipping could be transparent and therefore more digitised and efficient for sure. However, as an industry I sort of suspect that we may not understand our customers that well. I’m not sure that charterers, who trade in commodities that are worth a lot more than shipping costs and also have competitors, are too worried about shipping transparency. They want to know everything of course, but don’t want anyone else who charters a ship to know anything. Do charterers that trade on thin margins want shipping to be something that is a transparent market where everyone pays the same or we all share rate information? If we all got together and said a panamax is ten grand a day, wherever, whatever, however, who would benefit? How would it work? Could it even work?
The ‘Uber of shipping’ is often mentioned. Uber might be ‘the shipping of taxi driving’ and if Uber really took on the shipping model then taxi drivers would drive you to many places for the cost of the petrol alone and go home for months on end having lost money. There is line after line after line of details for a shipping fixture, albeit mostly irrelevant stuff. There are hundreds of commodities and ports, thousands of ships and charterers, billions of tonnes. Try designing that app.
Lastly (I promise!) have a think about shipbroking companies for a moment. They are full of passive people who ride the back of the beast with no idea where it is going right? Andi Case, Richard Fulford-Smith, Ricardo Ravanno – all very quiet types that accept their fate as middle men and the will of the market? An apt description of an old broking boss of mine was that the softest thing about him was his veneers. Good luck Mr Techie – you’ll need it.
Not come across Mr Prospector before? Here’s a selection of recent Tweets to give readers some idea of our new writer.
Nobu Su. Please for the love of God …. pic.twitter.com/rNLwtbbTkq
— Mr Prospector (@Prospectorship) April 5, 2019
China on Monday, Saudi on Thursday, sister-in-law’s on Sunday. Three hostile totalitarian regimes in a week.
— Mr Prospector (@Prospectorship) April 18, 2019
Congratulations. My wife of 15 years regularly questions my ‘passion for performance’ so I appreciate the achievement! https://t.co/Z9ELlfCtiA
— Mr Prospector (@Prospectorship) April 10, 2019