All vessels are not created equal

Front view vessel

Photo: MV Bakkedal Credit. Martin Wattum

Live data analysis of big data does not only have the potential to put an end to the speed claim game, but it also creates added incentives for vessel owners to optimize the performance of their vessels, benefiting both ship owners and charterers.

More precise data combined with simplified warranty clauses open up for automated settlements of charter hire adjustments. Giving ship owners better rates for their vessels that over-perform, and letting charterers pay a fair price for the performance they get.

Today, performance data is proprietary to the vessel owner and the charterer on any specific voyage. This fact hides a few truths that may be known to many, but not easily quantified. Firstly, two sister vessels never perform identically, and our data show that the performance gap between vessels of the same design can be more than 30%.  Secondly, as information is asymmetric, charterers tend to be biased towards their own perception of average performance, resulting in an inaccurate assessment of a vessel’s actual value.

Why “on paper” does not necessarily reflect reality

Even though the vessel description of two sister ships may be identical on the drawing board, the actual performance of the vessel is contingent on yard quality, technical state of the vessel, performance optimization, crew expertise and many other factors.

Snapshot from (anonymized comparison of performance for ‘SDARI 93’ designed vessels)

Snapshot from (anonymized comparison of performance for ‘SDARI 93’ designed vessels)

Consequently, charterers are exposed to the risk and cost of the bunker-bills, even though they believe that they are covered through the performance guarantee clauses in the charter party. Moreover, vessels chartered in are not incentivized to optimize their all-weather performance, as the only days that count in the current charter parties are the good weather days.

What is Klaveness doing to improve the situation?

Our ambition is to challenge the way the industry values vessel performance. We believe that charterers should get what they pay for, and owners should get paid what they vessels are worth.

Our solution is called Perform.  Perform give owners and operators a common understanding of a vessel’s all-weather performance, a way to compare vessels to relevant benchmark vessels and qualified suggestions for improvement and the value of these improvements.

Next week we will explain how Perform works, and the way forward. Meanwhile, all players that are entitled to performance data can test Perform here.