A new white paper from BIMCO and Nautilus Labs calls for a rethink on ‘sail-fast-then-wait’ behaviour and outlines the potential for a 15-20% reduction in emissions by changing current approaches to charter party frameworks without negatively impacting fleet capacity.
Using data from live charter agreements, the white paper aims to demonstrate that a ‘sail-fast-then-wait’ way of working can produce substantial excess fuel consumption and emissions, even on a single voyage. By changing this approach, the paper argues that emissions could be reduced by around 150-200 million metric tonnes, thereby saving ‘tens of billions of dollars’ in fuel costs.
The white paper, titled 'The Wrong Speed for all the Wrong Reasons', proposes key changes in charter party terms ‘to drive better alignment of incentives’ between owners and charterers, removing the focus on claims and encouraging collaborative ways of working towards vessel efficiency.
According to BIMCO and Nautilus Labs, a new approach to charter parties and dynamic performance tables is now possible due to advances in machine learning software and high-frequency data from ships. Using these technologies, the shipping industry can then optimise berth planning to ‘reimagine “first-come, first-served” port operations that drive operators to race to queue up for a berth, leading to fuel waste and unnecessary emissions.’
‘In the age of decarbonisation, traditional key charter party clauses are no longer fit for purpose and need to be reviewed to address these systemic inefficiencies,’ said Grant Hunter, Director of Standards, Innovation and Research at BIMCO.
‘BIMCO is committed to helping our industry achieve its Net Zero targets. By realigning incentives between owners and charterers and removing the barriers to collaboration, we can ensure we’re all on course towards a more sustainable future for the maritime industry.’
‘Charter party agreements create misaligned incentives between owners and charterers; with financial penalties at the centre of their relationship, a zero-sum dynamic emerges,’ explained Matt Heider, CEO, Nautilus Labs. ‘
‘Voyage charters do not incentivise optimal arrival times. Instead, they encourage sail-fast-then-wait behaviour or require uneconomic static speeds. On the other hand, time charters often result in suboptimal performance: owners are not incentivised to make proactive improvements to vessel efficiency, while charterers are constrained by static speed clauses.
‘Across all charter party agreements, the need for more data-driven collaboration is core to our industry achieving Net Zero.’