Big data reality calls for revision of charter party contracts
If you thought the biggest problem with speed claims was the costly affair of taking them through the court rooms, think again.
Most speed claims actually never find their way to the court rooms, or before the arbitration panel because of the complexity, lack of transparency, time and cost related to running litigation when compared to the value of the disputes. In the few cases where speed and performance disputes are taken to court, Owners and Charterers commonly spend anywhere between 20 000 USD up to 50 000 USD on each speed claim. A cumbersome and costly affair for all parties, with no guarantees of recovery.
Utilizing big data and rethinking charter party contracts
We at Klaveness believe that big data has the potential to put a stop to the endless speed claim game between Owners and Charterers, effectively removing the administrative burden of monitoring vessels, calculating and negotiating performance claims. With open and trustworthy performance data, ship owners can be rewarded for the vessels that over-perform, and charterers can be sure that they pay a fair price for the performance they get. A win-win for all parties.
In light of modern technology and new digital tools, both parties can get access to open and trustworthy data, that contribute to building long term trust. However, none of that matters unless the contractual warranty clauses are adjusted to fit this new reality. Contracts need to be standardized and opened for automated settlements of charter hire adjustments in order to extract the full potential of big data. So where do we start?
We at Klaveness have chosen to start by prototyping a solution in KLAB, our incubator for development of new digital solutions and services. A solution with the potential to reduce uncertainty, increase transparency and build long term trust between Owner and Charterer. Learn more about our prototype next week.