02/08/2016
8 MOST COMMON SHIPBROKER’S MISTAKES & HOW TO AVOID THEM
Today we will take a closer look at the most widespread mistakes happening among professionals of the ship chartering market, but especially broker’s.
#1 Mistake — Open circulation list
It seems to be just an annoyance but, what can be a threat here?! But actually it creates the following problems:
1) colleagues will evaluate "the length of your arms" — the longer your list is the more professional you appear;
2) recipients evaluate competitors - looking at who else has received your offer, as everyone wants to get exclusives and doesn’t want to be just a part of a crowd;
3) your precious mailing list becomes a part of «their list», especially if it includes other brokers.
Solution: use correct & pre-formatted mailing template. Use special software or web-applications. Put that in your pipe and smoke it: before pressing “send” button - read again and check blind copy!
#2 Mistake — High commission
Usually it means that the shipbroker is either greedy or too self-confident, or that he/she isn’t the only intermediary. The higher the commission is, the less attractive is your offer. Especially if you aren’t the exclusive one.
Solution: Avoid offers with address commission more than 2,5%. Besides, you can try to explain that Principal’s address commission ultimately affects the freight rate.
#3 Mistake — Too frequent circulation
For example, more than once a day or more than 3 times per week. Even if your offer was not the worst, the recipient understands that you might really be in trouble and so he can negotiate the best conditions. And yet it can mean that your proposal is not that good. And with each new circulation it loses its attractiveness, and you - the opportunity to get fair conditions.
Solution: If you see no reaction - simply call them. Talk to everyone on your mailing list. Begin with the closest friends. Once it was the only way of fixing, the old-timers should remember.
#4 Mistake — Few distribution channels (broker’s recirculation)
Once your exclusive offer has gone from hand to hand to other brokers, most of your recipients will have received a similar offer, realizing that you really have a problem. And as a result they either completely lose interest in your offer or begin the game for a fall, which you are lost in advance...
Solution: Professionals don’t use third-party services, because they are ineffective. Otherwise, you should state in your email "not for recirculation". The best solution is to remove other brokers from main list and group them into a separate one.
#5 Mistake — Several firm offers at the same time (and it was found)
It happens that you get several offers that, at first glance, are equally attractive. But the "Code of Honor" recommends to conduct firm negotiations with one partner only. However, not all and not always follow it. In this case, one of your counterparts suddenly may find out that you have started working with someone else. The most innocuous that might happen is that you will be called a scoundrel. You can also be permanently deleted from the list of trustworthy. But what if, even worse, the story becomes public, not even official.
Solution: Honesty is the best policy! Do not play a double game. Be honest and say that you already have an offer. You can always get back to another offer, as soon as you feel it is more profitable and get out of the current negotiations.
#6 Mistake — Inadequate price offer (overstated/understated)
This happens if the broker has incorrectly assessed the current state of the market. In the first case - overstated, your client will simply lose part of the profit. In the second - your offer will become unattractive, because competitors do pay more.
Solution: There is only in the second case and that is to improve rates fast. However, you have to explain to the client why suddenly he/she will have to fork out. The sooner you do it - the better for all.
#7 Mistake — Back-trading
This is the most unpleasant, but often it is objectively a necessary evil. Because it occurs most often during the sharp fluctuations in the market. Although this can be caused by someone's mistakes in the terms of the deal, which must somehow be resolved. The minimum negative outcome in this case is loss of reputation. Or maybe next time you'll be treated the same way.
Solution: Check all important terms and conditions twice. If you or your client really missed something, try to win back the balance in another term. Or discuss possible compensation options with the partner. Any mistake can be corrected in a normal, honest way. After all, even a defeat can be skilfully transformed into victory.
#8 Mistake — Didn’t verified the client's reputation
It is one of broker’s main obligations to check the client’s reputation, history and background, before entering the market with a new client. And if your client happens to be a "bad one", you will be as "bad" in the eyes of colleagues. However, you always have a choice - to stay on the right side or on the side of your client.
These are far not all the problems occurring with beginners as well as with professionals. The main thing that you always need to decide in any difficult situation — what is in the priority for you: your dignity and reputation or momentary profit.
