Starting a shipping company

[Biosyn]

Hi, this is my first post in this forum.

I am interested in starting a shipping line company in the United States.
I don't have any contacts in the shipping industry. I am looking for advice, such as what the startup costs are and where I can find more information, licensing, etc.
Should I purchase a cargo ship? I've heard about ships in the Singapore ghost fleet whose prices have fallen enormously.
What are the questions I should be asking myself.

Thank you!

 

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[theag]

Im also interested in this and found The Virtual Shipbroker during my research. his ebooks are a great first resource. very interesting and profitable industry, but also secretive.

 

[Vigilante]

Shipping is an "INSIDERS" game, and it is not as simple to start a shipping company as it is to open a hot dog stand. Get yourself inside the industry. You're going to have to take a job inside of the industry to learn the ropes. This is one industry where an inside education is required.

 

[Biosyn]

Shipping is an "INSIDERS" game, and it is not as simple to start a shipping company as it is to open a hot dog stand. Get yourself inside the industry. You're going to have to take a job inside of the industry to learn the ropes. This is one industry where an inside education is required.

What types of jobs would I need to work in the industry?
Could you give me some ideas, where to start looking.

 

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[Vigilante]

Biosyn - the nice part is that you are in Torrance, CA. There are a TON of freight companies in your town, primarily because of how near you are to the port of Los Angeles, which is one of the main ports for incoming freight from Asia. You're in the PERFECT location. If I were you, I would look for an entry level job at a freight brokerage. If possible, don't be too preoccupied with what they want to pay you. You are there for an education.

Start with THIS company.

 

[futhey]

I have to agree, superior knowledge trumps superior funding any day, right? You can't follow to the top?

If it seems simple, you probably don't know enough about it...

 

[Kak]

I am actually thinking about doing this with a foregin corporation that goes with a second business i am working on.

Shipping containers cost $3000 from port to port (the one I am thinking of). People need to move furniture and stuff, but don't need an entire container are kinda screwed into buying one anyway. I am going to be shipping stuff back and forth between these 2 ports to run my business and don't need all of the container space so I'm actually thinking about piecing out space in the container and trying to make a good buck on smaller shipping units within my containers.

 

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[theag]

I am actually thinking about doing this with a foregin corporation that goes with a second business i am working on.

Shipping containers cost $3000 from port to port (the one I am thinking of). People need to move furniture and stuff, but don't need an entire container are kinda screwed into buying one anyway. I am going to be shipping stuff back and forth between these 2 ports to run my business and don't need all of the container space so I'm actually thinking about piecing out space in the container and trying to make a good buck on smaller shipping units within my containers.

That would make you a freight broker, basically. Maybe theres a fastlane opportunity in providing this service for small-time customers, I though about this too.

From my research I found out that the money (and fun) is in bulk shipping (oil, metals, etc), not containers. Also a lot of parellels to physical commodity trading, which is an amazing industry. I recommend reading "The King of Oil" if you're even remotely interested in that.

 

[TK1]

Shipping is an "INSIDERS" game, and it is not as simple to start a shipping company as it is to open a hot dog stand. Get yourself inside the industry. You're going to have to take a job inside of the industry to learn the ropes. This is one industry where an inside education is required.

+ make as many contacts as possible in thins industry (and with people who are already doing what you want to do)

 

[Likwid24]

Shipping containers cost $3000 from port to port (the one I am thinking of). People need to move furniture and stuff, but don't need an entire container are kinda screwed into buying one anyway. I am going to be shipping stuff back and forth between these 2 ports to run my business and don't need all of the container space so I'm actually thinking about piecing out space in the container and trying to make a good buck on smaller shipping units within my containers.

Are you paying for the whole container on each order? Usually, shipping companies have something called LCL (Less Container Load). My product was only one pallet. We shipped LCL and our cost was extremely cheap. It's basically exactly what your looking to do. They ship a bunch of items, that don't fill a whole container, together and it brings down the shipping cost for each party involved. I paid less than $800 for my last shipment.

 

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[Astute]

Working for a shipping line (Evergreen) and currently a shipbroking firm now I feel maybe I can help with this.

There are basically three types of ships: bulkers, tankers and container ships. You have offshore vessels but I'm not going into that. Bulkers carry bulk cargoes (funnily enough) which are things like steel rolls, coal, grain, ore. Tankers can either be clean petroleum products or dirty. Containers carry just that - they can include 20', 40' containers, reefer containers etc.

Shipping is an industry with massive swings. You need a lot of capital to get into it. An old, small bulker (think around 1990-95) of 2-5k dwt will set you back at least USD 1.5 mil. Then you have costs of special surveys and dry docking (hundreds of thousands each) every 5 years. You have costs of crewing. Port costs. Bunker costs. Insurance costs.

You need to be prepared to take a hit. A lot of your money will be tied up in the vessel itself. You can charter it out to companies at a few thousand dollars per day if you like, if you can get the business.

In the years before 2008 shipping experienced a massive boom which was mainly fueled by China. Prices of vessels being built in shipyards doubled from the time they were penned to the time they delivered.

Since the big crash shipping has experienced a massive slump. Many owners have gone bust. There are too many vessels trading the oceans which are keeping values and prices for chartering at rock bottom. The value of vessels has been decreasing and decreasing.

There is hope, however. But not for a new comer with no experience of shipping. One of the most important thing to understand about the industry is that it is cyclical. There are boom years and then bust years (around a 7 year cycle). There are many shipowners who started out with just one vessel (see Aponte of MSC, John Fredriksen and many others) and have become extremely wealthy, but there are many more stories of shipowners going broke after forgetting that the industry is cyclical.

Now shipping folk are starting to feel that the market has 'bottomed out' and there is a lot of competition for good quality vessels. Older ships are getting scraped and sold for demolition which is reducing tonnage. All of this looks like the market will start to pick up. Some people are suggesting next year, others are saying not before 2014.

You need to have solid experience in the industry to get anywhere. It's not something you can really just jump into without starting from the bottom. You may do well in the short term but the chances are that you will get your fingers burnt.

I suggest if you are serious about being a shipowner then you find a job with a shipbroking firm and gain contacts, knowledge etc. Absorb as much as you can and then find your way into shipowning - it's really a long term thing. For those who are successful the riches are there.

If you want to look into investing in shipping the most promising area is LNG. Since the tsunami in Japan LNG rates have gone through the roof and LNG carriers are chartering at USD 200k per day in some cases. Have a look at Teekay LNG and John Fredriksen's companies. It may be worth investing here after a lot of research.

 

[Astute]

From my research I found out that the money (and fun) is in bulk shipping (oil, metals, etc), not containers.

It's all about supply and demand with shipping. Containers can be just as profitable if you're running the right liner service and if there is demand for it in the region you're trading.

 

[theag]

Working for a shipping line (Evergreen) and currently a shipbroking firm now I feel maybe I can help with this.

There are basically three types of ships: bulkers, tankers and container ships. You have offshore vessels but I'm not going into that. Bulkers carry bulk cargoes (funnily enough) which are things like steel rolls, coal, grain, ore. Tankers can either be clean petroleum products or dirty. Containers carry just that - they can include 20', 40' containers, reefer containers etc.

Shipping is an industry with massive swings. You need a lot of capital to get into it. An old, small bulker (think around 1990-95) of 2-5k dwt will set you back at least USD 1.5 mil. Then you have costs of special surveys and dry docking (hundreds of thousands each) every 5 years. You have costs of crewing. Port costs. Bunker costs. Insurance costs.

You need to be prepared to take a hit. A lot of your money will be tied up in the vessel itself. You can charter it out to companies at a few thousand dollars per day if you like, if you can get the business.

In the years before 2008 shipping experienced a massive boom which was mainly fueled by China. Prices of vessels being built in shipyards doubled from the time they were penned to the time they delivered.

Since the big crash shipping has experienced a massive slump. Many owners have gone bust. There are too many vessels trading the oceans which are keeping values and prices for chartering at rock bottom. The value of vessels has been decreasing and decreasing.

There is hope, however. But not for a new comer with no experience of shipping. One of the most important thing to understand about the industry is that it is cyclical. There are boom years and then bust years (around a 7 year cycle). There are many shipowners who started out with just one vessel (see Aponte of MSC, John Fredriksen and many others) and have become extremely wealthy, but there are many more stories of shipowners going broke after forgetting that the industry is cyclical.

Now shipping folk are starting to feel that the market has 'bottomed out' and there is a lot of competition for good quality vessels. Older ships are getting scraped and sold for demolition which is reducing tonnage. All of this looks like the market will start to pick up. Some people are suggesting next year, others are saying not before 2014.

You need to have solid experience in the industry to get anywhere. It's not something you can really just jump into without starting from the bottom. You may do well in the short term but the chances are that you will get your fingers burnt.

I suggest if you are serious about being a shipowner then you find a job with a shipbroking firm and gain contacts, knowledge etc. Absorb as much as you can and then find your way into shipowning - it's really a long term thing. For those who are successful the riches are there.

If you want to look into investing in shipping the most promising area is LNG. Since the tsunami in Japan LNG rates have gone through the roof and LNG carriers are chartering at USD 200k per day in some cases. Have a look at Teekay LNG and John Fredriksen's companies. It may be worth investing here after a lot of research.

great post, thanks for your insights!

 

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[Astute]

great post, thanks for your insights!

Thanks mate.

Another aspect one may consider is yachts. For some reason I think this is an area that has defied the recession. Yachts aren't used for trading and can be bought/chartered out to wealthy individuals or businesses looking to impress a client.

With the OP living in California maybe it would be easier to get into the yacht industry, rather than commercial shipping.

Definitely worth a thought.

 

[Vigilante]

Working for a shipping line (Evergreen) and currently a shipbroking firm now I feel maybe I can help with this.

There are basically three types of ships: bulkers, tankers and container ships. You have offshore vessels but I'm not going into that. Bulkers carry bulk cargoes (funnily enough) which are things like steel rolls, coal, grain, ore. Tankers can either be clean petroleum products or dirty. Containers carry just that - they can include 20', 40' containers, reefer containers etc.

Shipping is an industry with massive swings. You need a lot of capital to get into it. An old, small bulker (think around 1990-95) of 2-5k dwt will set you back at least USD 1.5 mil. Then you have costs of special surveys and dry docking (hundreds of thousands each) every 5 years. You have costs of crewing. Port costs. Bunker costs. Insurance costs.

You need to be prepared to take a hit. A lot of your money will be tied up in the vessel itself. You can charter it out to companies at a few thousand dollars per day if you like, if you can get the business.

In the years before 2008 shipping experienced a massive boom which was mainly fueled by China. Prices of vessels being built in shipyards doubled from the time they were penned to the time they delivered.

Since the big crash shipping has experienced a massive slump. Many owners have gone bust. There are too many vessels trading the oceans which are keeping values and prices for chartering at rock bottom. The value of vessels has been decreasing and decreasing.

There is hope, however. But not for a new comer with no experience of shipping. One of the most important thing to understand about the industry is that it is cyclical. There are boom years and then bust years (around a 7 year cycle). There are many shipowners who started out with just one vessel (see Aponte of MSC, John Fredriksen and many others) and have become extremely wealthy, but there are many more stories of shipowners going broke after forgetting that the industry is cyclical.

Now shipping folk are starting to feel that the market has 'bottomed out' and there is a lot of competition for good quality vessels. Older ships are getting scraped and sold for demolition which is reducing tonnage. All of this looks like the market will start to pick up. Some people are suggesting next year, others are saying not before 2014.

You need to have solid experience in the industry to get anywhere. It's not something you can really just jump into without starting from the bottom. You may do well in the short term but the chances are that you will get your fingers burnt.

I suggest if you are serious about being a shipowner then you find a job with a shipbroking firm and gain contacts, knowledge etc. Absorb as much as you can and then find your way into shipowning - it's really a long term thing. For those who are successful the riches are there.

If you want to look into investing in shipping the most promising area is LNG. Since the tsunami in Japan LNG rates have gone through the roof and LNG carriers are chartering at USD 200k per day in some cases. Have a look at Teekay LNG and John Fredriksen's companies. It may be worth investing here after a lot of research.

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