Voyage Estimation Software in Shipping
What does good voyage estimation software need, to be a handy tool for the daily work routine?
In 1971 the first e-mail was sent, in 2020 emails are an integral part of the workday. Every employee receives an average of 22 e-mails a day. In comparison, a chartering manager that mediates between cargo owner and shipowner receives up to 1,000 e-mails a day and is forced to process all of them at short notice. This extensive correspondence immediately results in the charterer's next area of responsibility: he has to process the new information quickly and calculate whether an order is profitable.
A good voyage estimation tool has to take the special circumstances of the daily work routine of a chartering manager into account. With Charter.Works we offer a software solution that we developed based on the daily work of chartering managers. You are welcome to find out more about our tool on our website.
It is interesting to take a closer look why the usage of email is such an important part of the work routine. Because not always has the e-mail been the first choice of communication. In the era before digitization, the chartering manager had to use other solutions to complete orders.
From office boy to electronic mail: Why communication tools have to be considered in voyage estimation software
As one of the oldest professions, shipping has a long tradition. It is no wonder that communication channels have also evolved over time because the exchange of information between the contracting parties has always been the crucial point of the daily work of the charterer.
Before digitization and the introduction of operations software and voyage estimation software, typewriters and telephones were the most important modern tools used by the shipping company to complete orders. It was not uncommon for a chartering manager to make calls to cargo owners and shipowners on two telephones at the same time, thereby mediating order and contract conditions simultaneously.
After completing the order, he wrote a booking note that an office boy brought to the contracting parties. If these were not based in the same city, telegrams were written. Since the entire process was based on verbal negotiations, it could easily happen that one of the contracting parties was no longer satisfied with the conditions and they had to be renegotiated.
With the introduction of the teleprinter, the office boy was made redundant. To save time and money when typing, the ship freighters also used abbreviations that have since become established in shipping. The fax machines of the 1980s were ultimately replaced by computers when the e-mail was introduced. E-mails became widespread in the 1990s and have become an integral part of everyday work.
Nowadays, as an expert and a person of trust, the chartering manager uses e-mail as a communication medium between the cargo owner and the shipowner and ensures the successful delivery of the goods. As soon as an order for delivery arrives, the chartering manager first obtains information about the goods, the start and destination port, and the loading and unloading costs.
The negotiation between the parties can begin. After the contract has been concluded, the chartering manager controls the transport of the goods and maintains contact with the shipowner and cargo owner until it is delivered to the port and the ship is returned. At every step, it is his job to inform everyone involved in the progress. This is where the flood of e-mail messages arises.
Despite advancing digitalization, not much changed, neither in the work routine generally nor in the work routine of chartering managers. The easy usage, worldwide distribution, and easy access are a selection of reasons why electronic messages are consistently successful.
In contrast to telephone calls, by using e-mail all information and details can be recorded directly in writing. As the working hours are not tied to certain times due to the international market, it can happen that an important e-mail has to be sent from home at 10 p.m. In the best case, all information for the order is in the e-mail inbox. Implementing this in voyage estimation software is a major challenge. So far, no voyage estimation software has been established on the market that takes into account all aspects of the work of the chartering manager.
Based on the history of the profession, however, you can see that comprehensive voyage estimation software must offer e-mail processing as a feature since much of the day-to-day work of the charterer revolves around fast and reliable communication. But communication is not the only important aspect. The charterer must be able to quickly assess whether an order is worthwhile for him. For this, paper, pen, and calculator are still used.
Everyday work-life: pocket calculator instead of voyage estimation software
In the event of an incoming request, a chartering manager must check within a very short time whether the goods offered can be transported profitably and efficiently. Due to the complexity of the calculation, it is first roughly calculated whether the request is profitable. For this, the weight of the goods, the transport distance, the fuel costs, and the costs for the call at the port are decisive. The chartering manager also takes into account whether the ship can pick up other goods on the route and thus is more cost-effective. For this preliminary calculation, the charterer needs a lot of professional experience. If he hesitates too long to start negotiations, he could lose the offer. A fast, efficient and as accurate as possible preliminary calculation is therefore very important for the workflow. Despite digitization and existing voyage estimation software, this step still mainly uses pocket calculators or notes and pens.
In the course of further negotiations, the charterer then calculates in detail whether the transport can be carried out cost-effectively and whether his first negotiations were successful. If he only now realizes that the order is not profitable, he can no longer withdraw from the contract that has already been concluded. With luck, he can improve the offer by finding ways to save money.
A voyage estimation calculation can show its strengths especially in the area of the first rough preliminary calculation. The software can convert a rough calculation into a detailed and correct calculation with TCE estimates. This gives the charterer the certainty that his negotiations will be profitable from the first moment and can achieve better conditions in further negotiations. A good voyage estimation calculation tool gives the charterer a great advantage over his competition.
The possibility of a precise and fast TCE calculation, as well as fast e-mail management, simplifies the complex daily work of the charterer enormously. Especially if the tools fit perfectly into the existing workflow. This is the big challenge in developing suitable tools for voyage estimation, which we take on with our tool Charter.Works. You can find out more about our software solution on our website or you can contact us!