WORLD SCALE &RESPONSIBILITIES OF A SHIPBROKER

 WORLD SCALE: This is used for tanker’s cargoes whereby freight rates are quoted with reference to an international scale called the new Worldwide Tanker Nominal Freight Scale or “World Scale” in short. This is used as a reference by the parties in the tanker market to easily compare and evaluate freight rate for all the different voyages and market levels.

            The basis of world scale is that the particulars of a standard tanker of 75000 tons DWT have been chosen for making round voyage calculation for practically all known tanker trades with the comparatively few. In these calculations specified figures have been used for all items involved, e.g. a distance of 15000 nautical miles, port cost, port time(hour/days) bunker cost, etc. and the additional fictional cost element of 12000 dollars/day. In this way the freight/MT required by the standard ship in each trade has been calculated and these freighted figures are printed in World Scale as a certain dollars/ton. These values are called world scale 100 or world scale in short. In practise, reference is made to these world scales in other freight negotiation and market reports. The prevailing market levels, the actual ship size, the type and quality of product to be supplied and also the loading place, then determine how for above or below the reference level of WS 100, the fixture will be calculated. In other words what percentage of the tabulated freight figure will be used for calculating the freight to be paid, e.g. in a fixture covering 10000 tons DWT from Gulf to Western Europe made at WS 80 means that the owner will be paid a freight equal to 80% of the freight per ton tabulated in the world scale table for the trade in question. The freight rates are normally negotiated on a fixture, using world scale for the basis of negotiations. It is called the world scale freight rate.

     Advantages:

1)    Simplified negotiations for tanker charterers.

2)    A simple reference covers all possible voyages within the agreed trading areas.

3)    Facilitate ready and quick comparison of fixture.

      Disadvantages:

1)    World Scale is not a substitute for voyage estimating

2)    It does not allow for income or freight tax etc.

3)    World Scale is only a method of comparison and tool for negotiation, not a substitute for risk management and/or business forecasting.

   

       Responsibilities of a ship broker: Ships are normally fixed on charters, between ship owners and charterers by shipbrokers acting as negotiator for the two parties. Many ship brokers are self employed, while others work in large firms active in several of above disciplines. Shipbrokers are remunerated by commissions called brokerage, payable by the ship owner to each broker involved in arranging a contract. In a voyage or time charter, the brokerage payable is stipulated in brokerage clause and is normally 1.25% of the ship owners gross receipts from hire, freight, dead freight and demurrage, payable to each broker involved.

                The professional body for ship brokers worldwide is the London based Institute of Chartered Shipbrokers. The institute sets and monitors professional standards for shipbrokers through annual examinations. Its tutorship correspondence courses enable shipbroking students (including mariners) to study for the institute’s annual exams(from which qualified mariners are granted some exemptions).

                London is still the hub of international ship broking community and many individual brokers and broking firms are members of Baltic Exchange, which is essentially a ship broking market place. Most shipbroking today is conducted via the international telecommunication network.

               Such specialists may be engaged by a shipowner are customarily referred to as chartering agents or chartering brokers and are paid a commission for their services (usually paid by shipowner unless otherwise stipulated) which customarily is 1.25% of the gross revenue and any demurrage. When two or more brokers are involved, duplicate (double) brokerage is normally paid. Shipbrokers include:-

1)    Owners brokers, who find and arrange employment for their principal ship.

2)    Charterers brokers, who fix ship to carry out their principal requirements.

           The principal functions performed by the shipbrokers are:-

1)    To determine the form of charter and special provisions that must closely meet the needs of particular transactions.

2)    To facilitate the negotiations of the terms and broker the charter on behalf of the principals

3)    To chart the vessels position and availability for loading and to coordinate delivery of cargo to shipside.

4)    To ensure that the required notices for readiness are given, that the election of loading or discharging parties or brokers are declared, and appropriate insurance coverage is obtained.

5)    To supervise the preparations of dispatch, demurrage and loading statement, payment of dues and customs at various ports and settlement in so far as possible of disputes arising in this connection.

6)    To obtain certification of freight invoices, arrange for surrender, bill of lading, facilitate collection of freight, etc.

7)    To arrange for appointment of port agents and to issue appropriate instructions.