The Role of the Ship Agent

The shipment of dry bulk commodities makes up approximately 38% of all international seaborne trade, according to the latest Review of Maritime Transport report, including as it does major cargoes of coal, iron ore and grain, and minor shipments such as fertilisers and minerals, cement and wood pulp. We are hugely dependent on the dry bulk trade for the essential raw materials that support our individual lives, our societies and our economies. Within this complex global industry, which relies upon seaborne trade and is subject to the fluctuating pressures of international commodities markets, the ship agent has an important role to play.

The Gulf Agency Company (GAC) combines ship agency services with additional services including hub agency and customs clearance services, stevedoring, freight forwarding by barge, road or rail, storage, equipment supply, bunkering, port intelligence and more, to ensure that the transport of dry bulk cargoes is controlled centrally, delivered globally and handled efficiently across the supply chain.

A truly effective ship agent for dry bulk operations must have a detailed understanding of global bulk markets and insight into the opportunities and challenges its customers face. Only by combining that inside knowledge with their professional skills and experience, they can provide the necessary services and support to facilitate the timely and cost efficient transportation of cargoes.

China continues to play an influential role across commodity markets, and a look at the nation’s dry bulk trade patterns gives us a snapshot of the interconnectivity of those markets worldwide.

Recent months have seen a glut of steel production in China, leading to stockpiling. As that oversupply has outstripped global demand, steel prices have fallen and the market weakened. Now, as China slows production, demand for the import of component products in steel production – namely iron ore and metallurgical coal from countries such as Australia and Brazil – is also decreasing. With China representing over 50% of the global market for these component products, the knock-on effect is considerable. However, maturing Far East markets, such as Japan, South Korea and Taiwan, will likely benefit.

China also imports more coal when the price gap between its domestic thermal coal and imported coal is at its greatest. When imported coal is cheaper, China buys it in bulk. This makes economic sense but has a significant impact on the global coal market and transportation patterns. Not only has global demand been subject to an eastward shift, the supply side of the equation has also been affected by the opening up of new reserves in Africa and Central Asia.

In the Mediterranean, a complex pattern of cargo flows is witnessed – whether it is iron ore from the Black Sea to the Far East, grain movements in transit from Russia and the United Kingdom, or fertilisers from the Black Sea to Europe. Greece, for example, both imports and exports cement in significant quantities.

Such insight into the dynamic nature of dry bulk markets illustrates the importance of building supply chains that are strong, streamlined, efficient and agile enough to accommodate these fluctuations in trade, route-by-route and port-by-port. And that is where a good shipping agent can really earn their salt, particularly one with the global presence and resources to observe and respond to changing trade patterns.

Dry bulk operations present specific challenges, so it is important to work with a ship agent that has the expertise, experience and equipment to properly handle your cargoes. Aspects to be considered range from monitoring the correct Transportable Moisture Limit (TML) and actual moisture content (fundamental to the safe transport of multi-million dollar cargoes) to working with the ship’s Master to oversee the proper handling of dust and debris to ensure there is no contamination of or damage to the cargo, the vessel or the surrounding environment. There are also very detailed provisions in place when it comes to decontaminating cargo holds for grain that previously held coal or iron ore.

The transportation of dry bulk cargoes is a highly fragmented business. There is no end-to-end control like that seen in the movement of liquid cargoes. More than 40 professions can be involved in the loading or discharge a dry bulk cargo, so it is important that the vessel and its cargo is entrusted to an agent that has the knowledge, experience, resources and financial stability to oversee the process, provide advance warnings of potential problems and respond to any issues that arise. Dry bulk operations are subject to potential disruption due to a wide range of factors including adverse weather, port congestion, legal and administrative delays, pollution, damages, non-availability of cargo, shortages of receiving trucks or equipment and load contamination.

Dry bulk cargoes vary greatly and, with many carriers often swapping product loads, ensuring that a comprehensive cleaning and disinfection of cargo loads is imperative. This extends beyond vessels to the network of logistics operators and third parties involved in the onward transportation of cargoes, joining the already complex supply chain.

Controlling the chain

As a leading global provider of shipping, logistics and marine services, GAC has the resources to have full control throughout the entire supply chain, from engaging our fully-owned ship operator BroBulk Ltd or providing value added services from freight forwarding and warehousing, through to bunkering, stevedoring and vessel spares supplies.

By using a global agent, all aspects of your dry bulk operations can be discussed, coordinated, managed and billed by a single source in the organisation, offering a ‘total arrangement’, planned and scheduled before a vessel reaches each destination.

Guidelines, policies and regulations

Some dry bulk commodities – such as fertilisers and other chemical shipments – can be hazardous and require special handling. Ensuring that all parties involved in such cargoes operate professionally and in accordance with the latest operational, safety and environmental policies is vital. Whilst the Federation of National Associations of Ship Brokers and Agents (FONASBA) sets best practice guidelines and represents the interests of ship agents on a global level, regional member bodies can stipulate their own quality objectives. That means that service standards may vary widely from region to region or even from port to port.

Similarly, the rigour with which environmental standards are implemented and enforced varies between – and indeed, within – individual countries.

Australia, for example, sets out its own very clear guidelines, over and above those outlined in MARPOL V, with particular sensitivity to the environment and the potential impact that the dry bulk trade has on the same. With dry bulk trade accounting for around 60% of Australia’s coastal shipping, such environmental regulations are well legislated. However, in countries where dry bulk shipments are less common, the legislative framework, infrastructure, handling equipment and presence of trained personnel may not be so well developed, if at all.

Agents also need to be aware of other environmental measures, such as port-specific instructions on the handling of dry bulk cargoes, including loading/unloading, cleaning the facility and dealing with wash-down residues. Some ports may even ask for an Environmental Management Plan in advance from parties intending to handle dry cargoes. Other measures include restrictions on vehicle emissions, which can affect the class of lorries permitted to enter a port area for onward freight movements, or ship regulations, such as the new North American Emissions Control Area effective from 1 August this year, which will have a major impact on bunker procurement.

In a complex world, with burgeoning information flows, ever-tightening regulations, a fragile global economy and a constant search for efficiencies across the supply chain, the role of the ship agent is more important and challenging than ever. Owners and operators are well advised to select an agent with the specialist dry bulk expertise, local know-how, global resources and breadth of services to ensure the safe, secure and efficient onward movements of their cargoes.