BROKERING and Chartering 1 Brokers skills Price negotiation

BROKERING and Chartering 1

Broker’s skills �Price negotiation, and trade disputes �Decisive, complex Problem Solving - Identifying complex problems and reviewing related information to develop and evaluate options and implement solutions �Effective communication, both written & spoken �Time Management - Managing one's own time and the time of others/prioritizing. 2

Broker’s skills �Active Listening - Giving full attention to what other people are saying, taking time to understand the points being made, asking questions as appropriate, and not interrupting at inappropriate times. �Critical Thinking - Using logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions or approaches to problems. 3

Broker’s skills � Ability to influence and persuade - Persuading others to change their minds or behavior. � Social Perceptiveness - Being aware of others' reactions and understanding why they react as they do. � Service Orientation - Actively looking for ways to help people. � Computer proficiency…. . databanks � Multitasking abilities � Highly organized 4

Understanding Opportunities and Market Trends �Geopolitics, finance, economic, technology, and demography trends �US hegemony/ foreign policy role in shaping future geopolitical events-fight against terrorism, political hotspots… Afghanistan/Pakistan, North Korea/China/Japan territorial claims, Malaysia, Philippines/China/Vietnam on Spratly Islands, Middle East/North Africa, Piracy. . Somalia �Currently, ASIA is the engine of growth, triggered by export and robust domestic consumption 5

Understanding Opportunities and Market Trends �Access to new markets and strategic assets opportunity challenge by slow progress and stiff competition…. Nafta, Doha round, US power play… US FTAs �Asean buyers leads acquisition of upstream oil assets (E&P) in Asia, Middle East and Africa…. power hungry, coal, O&G �Different player, different strategy 6

Brokering/Chartering �Marketing and securing of cargoes are generally done by shipowner through the charterers or cargo brokers �Cargo are normally fixed ether on spot charter or contract of Affreightment (COA) �COA benefit the charterer as shipping space are guaranteed at their disposal at regular intervals and charterer can sell forward with freight idea in hand. �COA freight is fixed for the period of a contract (2 -3 yrs) or may be adjusted annually as agreed. 7

Brokering/Chartering…. cont �Spot fixture exposes the shipowner to the uncertainties of the market. At the same time , he is competing for the same cargo with other shipowners whose vessels are open on or about the same place and period. �Normally, the shipowner will advise broker the position of the vessel, i. e date and place vessel will be open and ready for loading �Broker will then heck the market to see whether vessel position can match any cargo available 8

Brokering/Chartering…. cont �Reverse is also possible where charterer put their cargo in the market to match against any ship available at that time and location. �Usually ships that fit the laycan and offering the most competitive rate would be able to secure the cargo. Those that fail the bid will have to find alternative employment elsewhere. �Negotiation then begin……. . �Offer to charterers will include. . e. g the case of shipowner position 9

Offer to Charterer Include: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Name of vessel Laycan, where the vessel is open Description of a cargo and quantity Freight rates Load and discharge port Laytime clauses…. e. g time permitted, rate i. e mt/hr Description of a vessel Demurrage clause e. g USD 16, 000 per day, pro-rata Commission level Time limit the offer is valid Freight payment clause (freight prepaid, or as per CP) 10

Cfm by Broker: �From Raffles Shipbroker…. . We are pleased to confirm the following clean fixtures concluded today 08 March 2016 Charterparty dated : 06 th June 2016 Charterer : Azreen Cleo MJ Amin Sdn Bhd Owner : Faiz Daneil Shipping Line Sdn Bhd Vessel : Bunga Sree Nor Hazirah Last Cargo : Palm Oil Itinerary : Bintulu 11/12 therafter Lahad Datu 11

Cfm by Broker: For : 30, 000 mt, loading/berth Bintulu, discharging/Rotterdam, Laycan: Freight: USD 888 k Demurrage: USD 2500/day Heating : As per CP/shipper instruction Full cleaning: Owner’s agent: Khoo Shipping Agency Ptd Ltd Immediately upon completion of cargo, freight is payable to owner’s designated bank account within 3 working days of releasing bill of lading. 12

Calculation of Rate/Day…cont �Factors/items to be considered: 1. The voyage… Pt A to Pt B, the distance, the number of days at sea…. 2. The laycan… (time allowed during gassing degasing…. demurrage and despatch) 3. Bunker price 4. Bunker consumed during voyage bunker r. o. b 5. Port charges at loading/unloading ports 13

Calculation of Rate/Day…cont � Contracted Rate…. on long term charter… e. g between shipowner and charterer …e. g MISC Bhd/PETRONAS � Factors to be considered: 1. As (1 -5) plus a) crew cost(salary/allowance/bonus/leave pay), medical, outfit, crew joining repatriation , b) vessel operating cost such as maintenance, drydock, spares, surveys, 2. Capital cost/depreciation, interest/coc, amortization, taxation, dividend 3. Plus shore expenses/overhead 4. Plus MARGIN (say 20%)…………. . That is the charter rate/day 14

THANK YOU 15