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Tuesday, October 16, 2018

AGENCY FEE RECIPROCITY

Mr. Tim Gifford, Graypen Limited, Immingham, reasons that ship agents dealing with the tanker industry should be let in on a share of the 'golden' tanker market which has lasted for a while.

"Frankly, many owners expected agents to share the 'downs', so they ought now to be prepared to give some shared benefit from the 'ups'," writes Mr. Gifford.
(An article by Tim Gifford)


As an employee of an agency company, which is itself an Associate Member company of INTERTANKO, I am delighted to see the current very positive freight market across most sectors of the tanker industry, from which independent tanker owners are now achieving more realistic returns on their investment than they have at any time in recent years.  This turn around is, of course, largely based upon the premium freight-rates, which the owners of modern, high quality tonnage can command, compared with older vessels of contrasting quality.

However, in parallel with this boom period it is disappointing to record that although many of these (currently successful) ship owners are the same ones who quite rightly demanded higher quality services from their agents during the last few years, but in many cases they also sought direct assistance from ships agents by requesting lower agency fees (as a gesture of 'mutual understanding' of the owners tough position).  Even so, these same companies are now showing a marked reluctance to return the favour and pass on the 'quality reward' to the agents whose direct support they earlier requested.  It does not seem too unreasonable to expect owners to pay more realistic levels of agency fees in view of the strength of the present freight market and their current earning capability.

There are clearly strange forces at work when the principal requires the agent to share the burden of difficult times, but then such reciprocal support should be overlooked against a very positive market in which owners could readily afford to pay more reasonable agency fees and reciprocate the support of the 'quality' agency companies.   There would appear to be a number of 'first-class operators of first-class tonnage' who feel unable (or perhaps unwilling?) to recognize their agents' quality commitment during this current period of success.

Despite such 'red-herrings' as; agents not making any capital investments, current high bunker prices, ever-increasing port costs etc., many tanker owners are now enjoying a period of very positive income.  It would be appreciated if the full Members of INTERTANKO would seriously reciprocate agents loyalty and share a tiny amount of their current revenues in supplementing what remains an extremely harsh agency fee environment.

There is much talk within INTERTANKO of 'shared responsibility', the maritime industry charter on quality, the 'chain of responsibility' theme; however, owners must not miss the point that the quality service provided to them by agents is for their greater benefit, INTERTANKO Members especially.

Such quality in agency requires continuous investment, albeit on a much lower level than owners are obliged to undertake when replacing/repairing vessels.  Notwithstanding, a more supportive approach to paying more realistic levels of agency fees would demonstrate a genuine commitment to the proven owner/agent relationship.  In terms of agency fees, the term 'provided competitive' should not be a disguise for 'cheapest'.

Frankly, owners expected agents to share the 'downs', so they must now be prepared to give some shared benefit from the 'ups'.

Source:  Graypen Limited, Immingham