Dry Bulk Physical Freight Traders / Chartering
Saw a thread from a year or two ago talking about this, but wanted to go into more detail. What do physical freight traders do? What are some big firms in this space? What do ship charters do? What is compensation like, is this a pay structure with a smaller base and large bonus (or not) based on PnL like a trading house? What are big exit opportunities in this industry? I know there are pretty basic questions, but have found it hard to find more information, so any input is appreciated.
Role is to trade freight. Simple enough? Well...
But in short, the transportation of freight (wet or dry) is a tradable product. The role of a freight trader is to optimise the seaborne transpiration of these goods. I think it is one of the hardest to describe roles (and I'm in the biz).
Big firms depends on the size of ship e.g. Teekay Tankers may be big in one size but International Seaways big in another. For wet, Shell/BP have big physical positions (own ships) and independent owners like Frontline are also big. Pool operators such as Navig8 and Tankers International are large players. Chemicals would be names like BASF, Ineos. Dry bulk would be Cargill, Oldendorff, Pacific Basin. Again, depends on size.
Comp is generally base around 150/200k for a few years of experience and bonus depends on shop. I know some guys getting % PnL payout, some not. I know some guys making a few million USD a year, some making a tenth of that. Comp on freight is GENERALLY less than the average metal trader and less than the average oil trader (in that order). But still good overall, market dependent. Around 3/400k USD in late 20s/early 30s seems to be the norm - often in lower tax jurisdictions e.g. Singapore, where 350k USD becomes something like 280k instead of 300k into 180k in NYC for example.
Exit ops aren't really a thing. People tend to be charterers as the exit op (exiting from commodity operations or shipbroking). Its a great industry with good pay, good hours, good people in the business and interesting work to do.
My assessment would be that people only tend to go into this is they are really passionate about it. I am yet to meet a chartering manager who does not love trading freight. That said, whilst you can have an extremely high quality of life, I know many , many more people who have had a fantastic year in gas/oil and retired in 30s/40s than I do in freight.
Thank you for this incredibly insightful post!
So is "chartering manager" synonymous with freight trader?
Absolutely. Chartering manager / freight trader is terminology that depends on shop. ‘Freight trader’ is a term that I believe originated from Cargill, but a charterer are Cargill and a freight trader at Cargill is the same person.
Maybe interesting to know that there are shops which ‘trade’ more than others. So somewhere like Cargill will charter ships for their own in house requirements, as well as charter for third party requirements. They’ll also use freight derivatives (FFAs) quite heavily for hedging and speculative purposes. LDC I am told are much less active in FFAs and less active on third party business. The point being that Cargill will probably resemble ‘trading’ shop than LDC. But, back to your point, yes, chartering and trading is basically interchangeable.
Absolutely nailed it. I guess not being able to retire early is the price to pay for having a better work life balance vs trading energy...
Thanks - always found your comments useful so much appreciated.
On comp I know more and more moving to Middle East (90% of time Dubai) and 30-40k a month base is not uncommon for mid level.
I'd add (more for everyone else) that I don't know many who have called it a day in their 40s, but I only know a handful who are still working into their 50s. As with all jobs, invest early and let time do the rest...2k a month for 30 years at 7.5% is over 2million.
Hi not sure if this thread is still active but I was wondering if it's possible for an individual with stammering to succeed in industry like physical freight trading?
I do not want to sound insensitive but it depends on the level of stammering. You will have to do a lot of face to face meetings because freight at the end of the day is a very relationship driven market. If you have no issue in a client facing role and being on the phone all day you'll be fine. At the end of the day if you add value to the company, make good commercial decisions and can manage relationships I do not think people will care.
But just to keep it real your main challenge might be to convince someone to give you the seat. Not saying its not possible but rather it also depends on the person who will make the decision whether you get the spot or not.
I think the shipping industry is extremely fascinating, but there isn't so much information about it. So, the answer given above was very insightful.
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