We were asked by Tug & OSV magazine to comment on the changing role of shipbroking in this increasingly digital age.
Navigating change in a digital age
Alec Laing, shipbroker and MD of London based specialist port tug and workboat brokers, ACL Shipbrokers Ltd, looks at how the broker/owner relationship is responding to changes and developments in the industry as we approach a new decade.
Recently, I moved house and during this process, the benefits of using an intermediary were really highlighted to me. We were letting our property and renting elsewhere. Within only a few days, we had 12 interested tenants lined up to view our house and a week later, the place was let. These benefits can be seen with shipbrokers: we find and pool interest in vessels, helping to make markets and close sales or charters.
As with vessel sale and purchase or chartering, shipbrokers act as facilitators who can in effect create competition and drive a marker for the asset in question, and its sale or use. And shipbrokers, unlike estate agents, have more flexibility to sell or charter these movable assets in different markets and regions.
Over the past decade, these has been much debate in the industry around the relevance of intermediaries as the digital revolution picks up pace. For the simpler “vanilla” transitions, intermediaries’ usefulness may well be in question. However, in a more specialist and dynamic environment, the human elements is still paramount.
More information than ever is available online but this is generally common knowledge by the time it reaches the internet. Some listings are really just advertising, seeking to raise brand awareness and catch the attention of readers or search engine spiders. Returning to the property analogy, real estate portals that advertise properties from multiple sources undoubtedly play a vital part in any search but these tend merely to facilitate an introduction of the buyer or tenant to a go-between. They do not replace the intermediary.
If you have ever had to look really hard for detailed specialist knowledge online, you will know how often you can be disappointed. This is particularly true for tugs and workboats, both of which are very niche markets. Every owner or operator is different. Each works in a unique environment with local market forces driven by cultural and geographical conditions. While an algorithm may able to speed up the process of identifying an owner who has a particular vessel type in their fleet, it is only through human interaction that the subtleties of each specific situation are understood. Trust is paramount in a broker/owner relationship and is a currency which takes time and effort to build and maintain.
“Trust is paramount in a broker/owner relationship and is a currency which takes time and effort to build and maintain”
The abundance of information allows your broker to spread their net more widely, enabling them to bring to bear the more discerning research and analysis: they can cut through the “noise” in the market. This is, again, where the personal element comes in. Making and maintaining contact, gathering information, assessing and discussing: this is where the human element really comes into its own.
Shipbrokers’ commission is almost always paid on a “no cure, no pay” basis, which ensures the alignment of a broker’s interests with their client’s. This is true for sale, purchase or charter. As market makers, the saving made by using a broker almost always outweighs any commission paid to them for their work.
As the broker is not directly linked to vessel(s) in a deal, this distance allows them to create competition in the market and assist with the negotiations. They are often called upon to guide their client on the specific market rates and trends – which can be dynamic, to say the least. Many of these features of a broker’s role have not been changed by digitalization.
In sale and purchase, owners who do not buy and sell regularly could be completely out of touch with the market, from current price levels to the latest developments in technology above and below deck. Even owners who trade vessels can benefit from an additional perspective on the market or introduction outside their network.
Likewise, a charterer who has a trusted broker can reply on them to be their eyes and ears in the market, guiding them on rates, and looking for opportunities on their behalf in home markets or further afield.
As a tug and workboat broker, we see “the twenties” as a time of real opportunity. There are a number of regulatory changes which will have a direct impact on the tug and workboat markets. Emphasis on the environmental impact of operating will also shape the industry in the coming decade. Brokers can help navigate through these times of change, especially in niche markets.
An owner, operator or end user who chooses not to utilize the services of a high-quality shipbroker is missing an opportunity, even in this increasingly digital age.
Here’s a link to the Tug & Osv online magazine publication: