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In a bid to encourage wider adoption of just in time (JIT) arrival principles in the bulk sector, BIMCO has published a new clause for voyage charter parties to promote more efficient shipping procedures and as a result, help reduce CO2 emissions.
The new clause creates a contractual framework to overcome the primary obstacle to just in time arrivals; the obligation on shipowners to proceed with due or utmost despatch and without deviation. This is a critical aspect of making JIT arrivals work. Removing this obstacle will allow ships to optimise their speed and thereby arrive at a port at an optimal time and avoid delays without breaching their usual voyage charter obligations.
BIMCO believes that the widespread adoption of JIT arrivals in the bulk sector will bring many 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, 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.
BIMCO’s JIT Arrival Clause for Voyage Charter Parties 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, 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 owners’ compliance with charterers’ request to reduce speed will not be a breach of the contract of carriage and that charterers.
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.
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.
Just in time arrival schemes have been successfully implemented in the container sector and BIMCO believes that the bulk sector could also benefit. The bulk sector is not as vertically integrated as the liner trades and has many more “players”. As a result, implementing just in time arrival schemes in the bulk sector will require a determined and coordinated effort between owners, charterers and other key stakeholders. A few bulk operators are already using just in time arrival schemes and BIMCO believes that the bulk sector as a whole should actively investigate a more widespread adoption as pressure grows to optimise ships and ports.
Copies of the BIMCO Just in Time Arrivals Clause for Voyage Charter Parties can be downloaded from BIMCO’s website.