Thursday, June 10, 2010

What is the role of a ship broker in food aid?

There is so much to say about the US Government-sponsored food aid market: so many great things about it, so many things that need improving. It is a 3 million metric ton/$2 billion per year export market. It is a unique blend of government agencies (USDA, USAID, MarAd), NGO's, the World Food Programme, food commodity suppliers, ocean carriers, ports, stevedores, academics, etc, etc, etc.

Before getting into some of these more heady subjects, I want to step back and describe the role of the ship broker in the food aid market. What do we do? What qualifies us to comment on the workings of this intricate and complex supply chain?

Ship brokers (in this market) are, in a nutshell, commission-based sales agents for ocean carriers. We help the ocean carriers:

1. Find cargo opportunities that fit with their market interests, vessel capabilities, and growth strategies.
2. Help evaluate the current market conditions for our client's proposals. Specifically, the appropriate pricing levels, competitive landscape, contractual terms, and optimal bid strategy.
3. Act as an intermediary between the ocean carrier and the cargo interest. This usually means writing and submitting freight offers, negotiating contractual terms, and providing shipment and vessel updates.
4. Assisting the ocean carrier with understanding and performing the operational requirements of the contract. US Gov't-sponsored food aid has a unique set of requirements that don't always resemble those of the commercial world.
5. Considering the impact of regulatory and policy changes on the ocean carrier's operation, advising them on a well thought out position, and representing their voice to the policy-making community.

Most of us have a nearly singular focus on the government markets whereas the ocean carrier is by and large engrossed in the aggregately larger commercial marketplace. Ship brokers are the eyes, ears, nose, taste buds, etc. of the ocean carrier in this unique and highly specialized market.

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