Responsible for matching ships with cargoes, arranging the sale and purchase of vessels as well as broking freight derivatives, UK shipbrokers continue to dominate the international shipping sector. An estimated 30-40% of dry bulk and 50% of tanker fixtures are transacted by UK-based shipbroking firms (source: the Baltic Exchange).
Above: Baltic Dry Index 2005 – 2015. Figures from the Baltic Exchange show the volatility of dry bulk freight rates
Ranging in size from niche sole traders to large publicly listed companies, independent shipbroking firms employ around 5,000 staff and provide services to the dry bulk, tanker, container, gas and offshore sectors. Many international shipping companies and trading houses choose to base their chartering teams in and around London not only because of the advantages of the UK timezone, but also to be at the heart of the international chartering scene.
Most UK shipbroking firms are members of the Baltic Exchange and operate within its framework of strict business ethics encapsulated in its 260 year old motto “our word our bond.” In an otherwise unregulated market, trust in the shipbroker is crucial.
UK shipbrokers are able to not only match vessels with cargoes, but also provide crucial market analysis and intelligence as well as risk management services. The past few years has seen a boom in the trading of Forward Freight Agreements (FFAs). FFAs are derivative based products, which enable owners, operators, charterers and traders a means of trading freight as a commodity.
The Baltic Exchange provides independent daily shipping indices, fixture lists and forward curve data, which are used internationally to settle freight derivative and physical contracts and benchmark freight market performance.
Shipbroking is not only about matching ships with cargoes. A significant amount of the world’s sale & purchase (S&P) brokerage occurs in London. Covering all types of vessels and for the whole life of the ship, a new ship being built in Asia, a ship trading at the peak or trough of a market or heading for its final voyage to the breakers yard, S&P brokers in the UK are playing a part.
The UK is home to the Institute of Chartered Shipbrokers, which provides professional qualifications not only to shipbrokers and ship’s agents, but to all sectors of the shipping community worldwide.
