What suits cruising may not suit cargo

Malcolm Latarche

Malcolm Latarche · 25 February 2020

ShipInsight


There is no doubt that the idea of Just in Time (JIT) sailing can be attractive to some combinations of ports and ship operators but for the majority of cargo ships operating around the globe it is – under present circumstances – not a viable proposition.

Last week ShipInsight reported on a joint project between Wärtsilä, Carnival Maritime & HVCC Hamburg Vessel Coordination Center supported by Bureau Veritas Marine and Offshore under which two cruise ships adjusted their arrival times at Hamburg to meet berth availability.

While the cruise line involved has happy to participate in and endorse the project, it can hardly be said that cruise ships generally participate in anything other than JIT sailing. Cruise itineraries normally call for a daily or alternate days port call and in the former case with a voyage time of around 12-14 hours at a fairly leisurely pace. These itineraries are fixed months or years in advance with the cruise terminals involved and there is no risk of competing for a berth as there is with cargo ships.

Obviously the concept has to be developed slowly, and perhaps from the point of view of exchanging data as to weather and other potential obstacles, beginning with cruise ships is a reasonable step to make. However, extending the idea to other ship types and contractual arrangements will prove much more challenging.

There are multiple methodologies for moving goods rather than tourists around the world. Someone with small quantities of cargo to move will probably opt for shipping on a liner service. That choice may involve several voyage steps if there is no direct service that is suitable. A shipper with large quantities of cargoes that are being moved in its own vessels can do as it pleases but may need to use a different option if it needs to charter in tonnage and that would vary again if opting for time charter or voyage charter. For most shippers with cargoes that are in quantities suited to part or full vessel charter, opting for contracting in the spot market on a voyage basis is the likely choice.

Most of these cargo moving methods impose a different relationship between the port and the shipowner and bring in the cargo interests – both shippers and receivers – as well as the charterer to further complicate matters.

A liner service is most akin to the cruise ship scenario and in some cases the ship will be being worked at a terminal that is owned or controlled by the line operator. If the port is large enough, it may be possible for the port to dedicate specific berths to each operator.

Liner vessels, like cruise ships, do tend to have advertised itineraries but it is a well known fact that adherence to the schedule is nowhere near as rigid as is the case for cruise ships. That can cause problems for cargo interests at both ends causing payment delays between the two parties and adversely affecting markets at critical times.

When it comes to the case of ships running on voyage charters, the reasons why operators prefer to arrive early are many and varied. From the beginning of the voyage to arrival at the final discharge port, there are good reasons to do so. First it needs to be said that the principles of voyage charters are understood by all involved, are enshrined in law, represent the different commercial strengths of the parties involved and they have adapted to meet the requirements for ensuring international trade.

Shipowners are rarely in a position to dictate the terms of the contracts under which they will perform voyages. If one is not prepared to accept what a charterer demands, there will always be an alternative owner that is. And just as the best interests of ship and charterer are not the same, neither are those of the port and the charterer under many circumstances. If there are limited berths available for the ship carrying his vital cargo at crucial times, the charterer may well exhort the owner to speed up so as to take the berth before other ships arrive.

When contracting for a cargo, shipowner and charterer will jointly decide on an anticipated arrival date at the load port. Except in very cases it cannot be set in stone because the date may well be several months ahead and the ship may have to complete one or more voyages in between. A spread of dates is agreed (the laycan in chartering jargon) during which the ship should arrive.

Under the laws of chartering the ship is obliged to begin the voyage to the load port even if it is not certain that it would arrive in time. That voyage could be of several thousand miles and will involve consumption of lots of fuel. In the event that it arrives late, the charterer – who by then may have the opportunity to fix an alternative ship at a lower freight rate – can declare the voyage cancelled. The ship will have no protection against this and no means of recovering the cost of the fuel.

Every ship operator knows that there are potential delays that could occur in any voyage ranging from bad weather to unscheduled diversions for any number of reasons, technical issues and more. Therefore he will do all in his power to arrive early. There are other good reasons for an early arrival as well – rising bunker prices, potential strikes, carrying out some service or repair are all possibilities.

Very often in shipping, a charterer or other cargo interest may change the port details at the last moment. Under such circumstances it would be possible for a ship that is sailing at best speed to reach a certain port may suddenly find itself diverted to one within a few hours sailing but be expected to wait there for several days in any case.

Then there is the question of demurrage to consider. Depending upon circumstances and the appropriate clause in the charter party, arriving early enough to tender a notice of readiness within office hours on a working day, could make all the difference in receiving two or three days demurrage or paying despatch to the charterer.

To completely alter the way shipping is done to accommodate JIT will need to involve all parties to world trade and cannot be accomplished by shipowners and ports acting alone. It is difficult to imagine how a port or even a port state could prevent ships from arriving before a berth was available other than by refusing access to territorial waters or anchorages but even doing that would not change the reasons why an individual ship would want to arrive at the nearest waiting place as early possible.

Reaching agreement on laws affecting all of the ships in the world commercial fleet is difficult enough as it is, doing the same for the wider maritime trading community is almost impossible. Trade is a competitive business and anything that gives a small advantage will be firmly grasped.

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