It is often assumed by other members of an organisation that the role of a finance leader is to think in dollars and cents and make decisions about costs. In reality, it should be to think in terms of percentage points. What can we invest in that will make a 20% improvement to our processes? How can we equip our teams with the tools they need to make a 5% improvement in decision-making?
Digital tools have a role to play in improving accuracy, speed of execution, and availability of information, which all play a part in making better decisions. Every organisation is the sum of its decision-making. Every shipping organisation has to make multiple decisions every day across a multifaceted operation. Finding marginal improvements across the entire chain is critical to creating compounding improvements across overall performance.
Defining pre and post-fixture activities
In shipping operations, pre-fixture refers to all activities and processes that take place before the charterparty agreement is finalised. Post-fixture refers to activities and operations that occur after the charterparty agreement has been finalised and signed. Anything that happens in between is part of the voyage itself. All elements require effective management to drive competitive shipping operations.
Often, the decisions that impact the overall profitability of a voyage are made at the pre-fixture stage in conversations between the shipowner, the broker, and the charterer. When the details of a potential voyage come through, the shipowner’s chartering team needs to be able to quickly build a picture of the potential profitability of the voyage and respond before the opportunity goes elsewhere.
But responding quickly, competitively, and accurately is a challenge. Getting basic details wrong, such as port fees or restrictions, bunker prices, or even weather forecasting, can turn a profitable voyage into a loss. For example, for certain dry cargoes such as grain, the impact of rain on the port call could have an enormous impact on the overall profitability. How likely is it that discharge operations will be impacted by rain stoppages? How will that impact the voyage’s profitability and how should you model that in your calculations?
Traditionally, picking up the phone or sending an email to a network of port agents has been the way to understand port fees, restrictions, and get the inside track on congestion. However, tools such as Marcura’s PortLog platform provide the data to users on an on-demand basis. PortLog has over 38.2 million digitised events, making it one of the most complete and accurate port cost databases available with real Statement of Fact (SoF) data.
For many, a freight contract will be negotiated by phone, email, or WhatsApp, and once the terms are agreed in principle a fixture recap will be sent round by email. This is another area where digital tools are improving speed, accuracy, and governance. Sea/, the digital arm of Clarksons, has developed a tool to take the entire fixture negotiation process online. The freight negotiation, charterparty, and recap management all sit within a single platform that all parties have access to. This enables higher levels of
automation, better transparency, and reduces the likelihood of human error at a time when small errors can have a big impact on financial outcomes.
For a more detailed insight and understanding of the topics briefly discussed in this article, please refer to our latest thought leadership report in partnership with Marcura, Navigating New Financial Seas. This comprehensive guide demonstrates how digital solutions can optimise shipping operations from the pre and post-voyage fixture stages, through to the voyage itself, to ensure financial success. The full report can be downloaded below.
