The missing piece of the just-in-time jigsaw

A new project aims to solve the challenge that shipping’s contractual complexity poses to the emission-saving just-in-time arrival concept.

Freeing shipping from the ‘sail fast then wait’ trap is key to cutting emissions across the industry. With accurate arrivals times, vessels could sail efficiently from point to point, rather than speeding to anchorage at high engine loads and burning further fuel while waiting for berth allocations. The advent of new ship-to-port connectivity has made just-in-time (JIT) arrival a possibility, but in many sectors the convoluted nature of shipping relationships still gets in the way.

 

That challenge has been taken up by the Blue Visby Consortium, a group of shipping and chartering stakeholders whose coordinators – ship monitoring specialist NAPA and law firm Stephens Harwood – indicate that the solution involves both technical and legal expertise. While previous JIT projects have focused on the technical challenges of giving accurate arrival times, Blue Visby adds a layer of cooperation between stakeholders that could iron out the age-old ‘split interests’ between ship operators and charterers.

 

Those split interests are couched in arcane terms like laycans and demurrage, but can be easily summarised. Bulk charter agreements can include specifications from charterers including speed warranties and obligations to reach ports as fast as possible, sometimes backed by an option to cancel the charter in case of a delay. In other charter types, prompt arrival can trigger financial benefits to the ship operator. And in charters where the charterer bears the fuel cost, the ship operator can have little incentive to optimise speed and efficiency.

 

Given these arrangements, operators may be wary that slowing down to meet a specific arrival time at berth risks either extra penalties or loss of income. Better to get to anchorage as soon as possible and wait for the next available berth. Blue Visby’s unique approach to resolving this concern is to add both a contractual framework and a sharing mechanism to the technical framework that enables just-in-time arrivals.

Borrowed concepts

The sharing mechanism is inspired by general average, long used by maritime insurers to spread risk. Blue GA enables shipowners, charterers and cargo interests to share the costs and benefits of just-in-time arrivals – that is fuel cost savings, the expense of longer voyages and, where applicable, the value of emission savings (for example under carbon tax regimes).

 

Under Blue Visby’s contractual framework, stakeholders implement terms into charterparties and cargo sale contracts that enable this sharing mechanism/ Blue GA is administered neutrally by the Blue Visby Mutual Association – modelled on the familiar P&I club structure – of which all stakeholders become members.

 

With those agreements and institutions in place, the technical solution is similar to other just-in-time arrivals systems. An algorithm calculates optimal arrival times based on vessel specifications and performance, port congestion and weather conditions, while maintaining the vessels’ independent order of arrival.

 

This enables Blue Visby to achieve the fuel and emissions savings and the port congestion reduction that JIT offers, while potentially bringing those benefits to a wider range of vessels. And while JIT is normally coordinated by a single port, Blue Visby could offer wider systemic advantages by coordinating arrivals across several ports.

 

The innovative approach has already been endorsed by consortium members including big charterers Anglo American and Marubeni and ship operators CMB and Tankers International. As with conventional JIT solutions, significant systemic savings will only be achieved with wider acceptance. But by addressing the thorny issues of contractual risk and obligations, the Blue Visby approach brings the wholesale adoption of optimised arrivals and sailing speeds a step closer.

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