With the news that BHP Billiton has launched an online system that invites bids from shipowners wishing to carry the miner’s cargo (as reported by Keith Wallis at Reuters) Bimco must be feeling pretty proud of its prophetic abilities.
In a report issued in the middle of last year Bimco forecast a challenging market for brokers in the months ahead. In the context of dry bulk specifically the Bimco report said: “On standard fixtures it may be difficult for brokers to add value, and that is where digitalisation may gain the first foothold into an otherwise reluctant industry. For instance, where a large exporter frequently ships under standard terms to the same discharge port, a digital portal for tenders and offers may facilitate doing business without the assistance of a broker.”
The BHP portal is the first of its kind from a major charterer. After an initial foray where 13 owners and operators were invited to bid for a cargo of 170,000 tonnes of iron ore BHP Billiton accepted an offer at US$0.13 below the spot price. The company has suggested that it will continue the practice of online tendering and extend it to other shipowners.
A practice that may well have a similarly deleterious effect on brokers’ fortunes is already being practiced by Vale, which has begun to place very long term contracts of affreightment for over 50% of Brazil China iron ore trade from 2018 onwards.
Bimco’s contemporary prediction that dry bulk shipping companies would consolidate in any meaningful way, similar perhaps to what has happened in the liner sector, is yet come to fruition, however.