Where Chartering Brokers Will Go in the Future?

In its latest report, BIMCO noted that in the longterm downturn of shipping market, the fragmented dry bulk fleet ownership cannot be maintained long. Since the newly-founded large shipping companies make direct deals concerning main trade routes with large customers, digitalization will substitute part of the service functions of chartering brokers. With the evolution of the market, where chartering brokers will go in the future?

Han Jun believed that the influence can be seen from several perspectives. First of all, large companies will control the main trade without broker mediation in the future. Secondly, elimination of broker and chartering will have influence on the Baltic exchange and similar institutions and the issuance of index. Thirdly, due to the continued downturn in the shipping market, the influence of brokers elimination will start from the bulk sector, and then gradually spread to the tanker, but will have little effect on containers.

Is it that the broker industry which has existed for a hundred years will vanish in the world? The experts believed that with the serious deterioration of the shipping market, the brokers face a big pressure of surviving space compression, but they will not leave the market in the short term, or disappear completely in the future. They have an irreplaceable role, and considering their knowledge of large amount of market information,their familiarity with the market environment, the ability of communication with both the upstream and downstream industry, the advantage of self-guarantee as well as the strong ability of resisting risks, although the shipowners are willing to try this role, they cannot push the brokers out of the industry in the short term.

However, with the condition of shipowners worrisome,and the impact of fast information transmission and the internet, the brokers cannot follow the old path. Seeking transformation is a good choice for the brokers since the future road for them will be definitely bumpy. Currently,the internet era has big influence on each industry,including the shipping industry. Many brokers are trying to do the Internet+. Zhang Yongfeng told the reporter that some broker companies are putting the offline business online, and are exploring a new profit model based on Internet+. First of all, making the offline business online can simplify the business process, reduce the communication link and coordination cost and improve the service quality and efficiency. Upgrading service based on the existing business is the first step, then comes promoting the deal and matching the resource of ships and cargoes.

But the core profit point of this service will be shifted from getting the commission to developing more value-added services, and in the future there may be no need for the ship party or cargo party to collect commission. This valueadded service is like the platform brokerage of Taobao,taking capital operation and financial services as the final profit. Based on the platform, the ship brokers realize the complete transparency between buyers and sellers,thus large number of ship parties and cargo parties will be attracted to make deals on the platform. The platform knows all the information about the deals, which provides the basis for ship brokers to transform to do consultancy,information analysis and financial service. It can be said that brokers have their unique advantages to engage in market analysis, in the past, ship brokers often did market analysis report based on their own trading, and the majority are based on single cases, if the brokers can rely on the platform brokerage, get more trading information and strong data analysis support, the market information they provide will be more valuable and shipowners will be willing to pay more for trading information. If ship brokers can provide the information, the company will reduce the cost on the strategic level, it is an optimization. BIMCO has also said:“in the future, the ship owner will trade with customers without broker mediation, but the brokers need to provide consultation service.”

It is worth noting that maybe a number of brokers are still collecting the commission, however, once there is one broker collecting“zero commission”, the bottom line will be broken, and a new business model will substitute the hundred-year-“convention”rapidly. Therefore, it is recommended that relevant organizations must be prepared to explore the road of transformation and upgrading.