A third of cape brokers worldwide face the chop
Should capesize brokers be mulling a new career? Up to a third of them could be replaced by online platforms, suggests analysts at Alphabulk in their most recent weekly report.
The future of shipbroking in the digital era has been the source of much conjecture and many articles on this site this year, much of it stemming from news that miner BHP Billiton has from this January been booking iron ore freight via its own new platform, eschewing the need for brokers.
Alphabulk reports BHP Billiton is close to sealing its 100th iron ore cargo, and has just concluded its first coal cargo deal
“Many other initiatives are underway, so suddenly there is a sombre mood percolating through the rank and file in ship brokerage. Is a massive cull on its way?” Alphabulk analysts mused.
Alphabulk reckons a third of capesize charter deals will end up being done online in the coming three to five years, theoretically making a third of the world’s capesize brokers potentially redundant.
Alphabulk said the damage would be most felt in the six cities where together 35% of all shipbrokers live and work: London, Singapore, Oslo, Geneva, Copenhagen and Paris.
Alphabulk’s analysis is based on a false premise. Whilst there may be a finite amount of cape cargos there aren’t a finite amount of cape fixtures; in a firming market Vessels may typically be re-let several times to the extent that the same operator’s name may feature more than once in a chain. Additionally those that control the tonnage will typically hold back from fixing in a hot market until the last possible moment. An inert non-proactive web platform trying to hosting a ‘Dutch auction’ in times where demand for tonnage exceeds supply will inevitably play 2nd fiddle to a broker seeking to cover the requirement.
A broker speaks! Thanks, Martin!
excellent comment by Martin Rowe – with the cape size index now going north of USD 20,000 per day the web platform may be a tool of the past (the very low market) – When capes are in short supply (remember when they hit USD 200,000 per day ) owners will fix the traditional way – as long as the owners make good money they don’t usually mind the brokers earning a good commission – what BHP seems to forget is that they are not the ones paying the commission , the owner pays the commission and in a high market the shipowner will decide how his ships are fixed
sincerely Hans in Montreal
Whilst I am not too familiar with the cape markets, I remember that some 20 years ago Cargill tried
the same, ie. asking owners to go into “auctions” on their website. I think that idea was put to rest.
Having operated and chartered ships out in all kinds of sizes I felt it was too much of a hassle,
if all trading houses would implement this. Everyday to log on to each trading house website is a bit
too much.
petra