Shipping is under increased scrutiny for its share in global CO2 emissions. Alongside technical innovation, stakeholders are looking into operational measures to deliver fuel savings. BIMCO’s Just In Time Arrival Clause for Voyage Charterparties is one of the latest examples. CJC Associate Kaan Polat provides the details, says an press release published on their website.
JIT Principle
The Just In Time (“JIT”) principle has been around for some time. Pioneered by Toyota to optimise supply and production chains, it is used in many industries by aiming to produce “only what is needed, when it is needed, and in the amount needed”.
In shipping, the principle is based on the ship maintaining an optimal operating speed to arrive within port limits when the availability is assured of cargo on the one hand and (a) berth, (b) fairway, and (c) nautical services such as pilots and tugs on the other. Reducing speeds lowers consumption and CO2 emission. A JIT arrival also reduces time at anchorage and increases port efficiency, reducing the port’s carbon footprint.
Incompatibility of JIT Arrivals
The main problem tackled by BIMCO in its JIT Arrival Clause (the wording of the Clause being set out in full at the end of this article) is the apparent incompatibility of JIT arrivals with shipowners’ contractual obligation to proceed with due or utmost despatch and without deviation. This obligation results in the ship “rushing” from one port to the next regardless of the availability of berth or cargo and often ending up waiting at anchorage.
The Clause gives charterers the right to ask owners to optimise the ship’s speed (always staying within the main engine’s safe operational limits) to meet a specified arrival time. As this may expose owners to claims for breach of their despatch obligations to third parties such as cargo interests, the Clause requires charterers to insert wording into the bills of lading and waybills protecting owners from such claims.
Reduce The Overall Length
The JIT principle does not normally reduce the overall length of the voyage. It absorbs into the sea passage time that would normally have been spent waiting in port.
Ordinarily, charterers under a voyage charterparty pay demurrage for waiting time at the port (depending on the terms of the charter) but the BIMCO JIT clause accounts for this by inserting a standard provision that charterers shall compensate the owners for this additional time taken on the voyage but the amount to be reduced by fuel savings that the vessel has made as a result. The parties are given freedom to agree a compensation mechanism that works for the specific voyage taking into account the ship’s consumption figures and fuel prices at the time.
By way of example, the higher the price of fuel, the larger owners’ savings from reduced consumption. As an incentive to charterers, owners’ savings are balanced by a proportional reduction of the demurrage rate. The reduced demurrage rate is applied for the length of time by which the sea passage was extended. If charterers ask the ship to arrive 24 hours later than its original ETA, the reduced demurrage rate will apply for those 24 hours.
COMMENTS
Disponent owners will need to ensure that the head charterparty contains similar provisions or, at least, appropriate provisions entitling them to order the vessel to slow steam, otherwise disponent owners will not be able to ask head owners to slow steam and/or the head owners will fear underperformance claims if they do not proceed with all due despatch.
Another potential benefit of the reduction of time in port may be the reduction of hull fouling.
THE CLAUSE
BIMCO Just in Time Arrival Clause for Voyage Charter Parties 2021
(a) The owners and charterers shall use their best endeavours to obtain and share information regarding the Vessel’s arrival time, this shall include, but not be limited to, information from, or required by, any relevant third party. Any port specific requirements shall be met.
(b) Notwithstanding any other clause in this Charter Party, the charterers shall be entitled to request the owners in writing to adjust the Vessel’s speed to meet a specified time of arrival, or closest thereto, at a particular destination. Such request shall always be subject to the owners’ consent which shall not be unreasonably withheld and, in the case of an approach voyage, also subject to agreeing an amended cancelling date. The charterers shall not be entitled to request an adjustment of speed outside the normal safe operational limits of the Vessel.
Vessel adjusting speed
(c) Extra time used on a sea voyage as a direct consequence of the Vessel adjusting speed pursuant to the charterers’ request shall be the difference between:
(i) the “estimated time of arrival” as provided by the Vessel prior to the charterers’ request to adjust the Vessel’s speed to meet a specific time of arrival, or closest thereto, at a particular destination; and
(ii) the “actual time of arrival” at that particular destination, or closest thereto.
Such extra time shall be compensated by the charterers to the owners at USD ___ per day pro rata or as otherwise agreed by the parties which shall take into account the savings in fuel by the owners and shall be payable by the charterers to the owners, prior to completion of final discharge.
Deviation
(d) Where the Vessel proceeds at a speed adjusted in accordance with subclause (b), this shall constitute compliance with, and there shall be no breach of, any obligation as to despatch and shall not constitute a deviation.
Bills of Lading
(e) The charterers shall ensure that the terms of the bills of lading, waybills or other documents evidencing contracts of carriage issued by or on behalf of the owners provide that compliance by owners with this Clause does not constitute a breach of the contract of carriage. The charterers shall indemnify the owners against all consequences and liabilities that may arise from bills of lading, waybills or other documents evidencing contracts of carriage being issued as presented to the extent that the terms of such bills of lading, waybills or other documents evidencing contracts of carriage impose or result in the imposition of more onerous liabilities upon the owners than those assumed by the owners under this Clause.
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Source: cjclaw
