Before fixing a voyage, nominating a vessel, and even before making a commodity trade or sale, decision makers like charterers and freight traders work to evaluate the supply and demand of marine bulk freight in the market. For commodities producers and traders, marine freight represents a significant portion of overall costs. In the pre-trade process, therefore, these stakeholders must compare as many potential options as possible in order to meet their nuanced requirements while containing costs.

However, current pre-fixture analysis and decision-making processes are mired by decentralized, disconnected workflows. Disintegrated processes and piecemeal visibility make it very difficult to perform market research and examine open opportunities at the same time.

Many stakeholders are reliant on disjointed emails with carriers or third-party tools to give them some semblance of visibility into vessel availability. That visibility is complicated by the fact that the roster of potential vessels is enormous. As of 2020, the world merchant fleet had more than 17,000 ships in operation, more than 12,000 of which were bulk carriers, 8,000 were crude oil tankers, almost 6,000 were chemical tankers, and more than 2,000 for LNG.

No matter the type of ship a charterer requires or where the commodity is ultimately going, this is not a simple decision. Today, decision makers have to get this vital and time-sensitive information from disconnected AIS data, vetting systems, position lists, and, yes, broker emails.

In this blog post, we will uncover three key challenges that stakeholders face when it comes to engaging in efficient and effective pre-trade analyses, and how a centralized digital workspace for pre-trade market analysis and opportunity assessment can empower decision makers to overcome these obstacles.

1. Understanding Vessel Availability

The first challenge is vessel availability. It sounds simple, but decision makers need to rapidly discern which vessels are actually open and available, and where on earth they’re located.

Unfortunately, the position list alone does not really ensure a vessel is open for the job. That requires further validation. In addition, it does not provide any of the meaningful contextual information that will impact costs and timelines.

To comprehensively evaluate availability amidst the thousands of vessel positions being updated every day, information coming from AIS data, position lists, broker emails, and more should be integrated into one workspace within the context of the organization’s fixture data to help identify the best available options in an accurate and timely manner.

2. Narrowing Trade Options for Best Fit

Once they know which vessels are open, charterers, freight traders, and other stakeholders then have to consider even more variables as part of the vetting process. For instance, they need to examine the possibilities against specific business and cargo requirements:

Is the vessel in close proximity to the cargo?

Can it satisfy the specified tonnage?

Can it meet the laycan?

Are there other material requirements that would preclude it from satisfying the parameters of the voyage? 

And then there’s the question of market rates. Evaluating rates requires insight into the larger market. And the more systems a decision maker must consult during the process, the longer it takes. The longer it takes, the more likely it is that this information will be out of date and irrelevant by the time it is gathered. 

Because this analysis process is often manual and disparate, it is also error prone. We know that across sectors, manual data entry results in a comparatively large margin of error—up to three errors for every 100 pieces of data recorded. For commodities traders, owner-operators, and tonnage charterers, these errors can cost money or eat into profits.

With a centralized workplace to assess and vet open vessels, stakeholders can seamlessly narrow available trade options according to organizational specifications and other important parameters, as well as compare against market price trends or forward rates toevaluate and validate each trade in context.

3. Evaluation & Decision Making

Finally, the information gathered and vetted needs to be readied for decision-making. However, there is often no standardized or systematic way to approach the evaluation process. Pre-trade analysis can therefore end up being disorganized and non-standardized, hindering the timeliness and quality of decisions.

With a centralized pre-trade workspace, stakeholders can rank results of available vessels in a standardized and easy to understand format to aid decision making, as well as evaluate market trends and spread over time to help uncover insights and fine tune decision making into the future.

Centralize and Optimize Your Pre-Trade Workflow

Disjointed data and separate workspaces are among the primary contributing factors to these problems. Therefore, harmonizing disparate data and making it actionable is the key to overcoming challenges and driving more informed, timely, and profitable decisions.

This requires a centralized space for pre-trade market analysis and opportunity assessment, where stakeholders can seamlessly aggregate and visualize internal and external deal information into a single workflow that helps them identify opportunities with minimal time and effort. Gathering and presenting decision-critical information in an integrated and consolidated digital dashboard streamlines the pre-trade workflow, standardizes the market analysis procedures, and saves great amounts of time and effort in finding the best market opportunity.

This was the impetus for VIP Trade Hub, which offers an unprecedented one stop solution for you to easily identify supply in the market, find the best vessel for your cargo, and evaluate market trends and spread to make optimal trade decisions. To see Trade Hub in action, register below for our product launch webinar on April 28.