BIMCO has published a new clause for voyage charter parties in a bid to encourage wider adoption of just in time (JIT) arrival principles in the bulk sector, to promote greater efficiency in port visits and help drive a consequent reduction in CO2 emissions.
The new clause creates a contractual framework to tackle the obligation on shipowners “to proceed with due or utmost despatch and without deviation”, seen as a primary obstacle to just in time arrivals. Removing this strict requirement can provide ships with more leeway to optimise their speed and thereby arrive at a port at an optimal time, avoiding delays without breaching their usual voyage charter obligations.
BIMCO believes that the widespread adoption of JIT arrivals in the bulk sector could offer a range of benefits, including reductions in fuel consumption, emissions and waiting times in ports and at anchorage. In addition, the concept will make shipping more efficient and improve vessel utilisation.
From a charterers’ perspective, the JIT scheme should help foster a greater focus on setting more accurate laycans. Currently, BIMCO notes that charterers often agree laycans that have ships hurrying to arrive at ports to meet a cancelling date only to end up waiting for lengthy periods at anchorage before berthing.
The new JIT Arrival Clause gives charterers the right to ask owners to optimise the ship’s speed to meet a specified arrival time. If the ship is on its way to a loading port, charterers must in return agree a revised cancelling date.
The safety of the ship remains paramount, BIMCO says, and any speed adjustment request must fall within the ship’s safe operational limits. The clause also requires charterers to incorporate wording into bills of lading and waybills stating that an owner’s compliance with the charterers’ request to reduce speed will not be a breach of the contract of carriage.
“Applying the just in time arrival principle does not normally shorten the overall length of a voyage. It converts what would have been waiting time at a port into extra time spent at sea. The difference is that the extra time at a reduced speed decreases fuel consumption as well as reducing emissions, helping to minimise congestion at ports and anchorages,” BIMCO explains.
“The BIMCO clause defines the ‘extra time’ as the difference between the ship’s original estimated time of arrival before charterers’ request to adjust the speed, and the actual time the ship arrives at its destination.”
“The mechanism for sharing potential bunker savings has been made simple and straightforward. Owners and charterers can simply agree that each takes whatever benefit there may be from the adjusted arrival time – or they can agree that charterers will pay owners a daily compensation amount that takes into account that owners are benefiting from reduced bunker costs. Equally, owners and charterers can, if they wish, agree to apply other compensation mechanisms to suit their needs.”
While just in time arrival schemes have been successfully implemented in the container sector, the bulk sector is not as vertically integrated as the liner trades and has many more actors, requiring a coordinated effort between owners, charterers and other key stakeholders.
Nevertheless, some bulk operators are already using just in time arrival schemes and BIMCO believes that the bulk sector as a whole should actively investigate more widespread adoption as pressure grows to optimise ships and ports.
BIMCO’s Just in Time Arrivals Clause for Voyage Charter Parties can be accessed here.