Big data puts an end to the speed claim game
Access to reliable position data opens up for more precise calculations of ship performance and larger variation of charter rates
Vessels failing to meet their warranted speed and consumption under timecharter agreements are a massive issue for the shipping industry, but in reality it is not the vessel owners who are footing the bill.
Now you see me, now you don’t
Vessel descriptions are routinely exaggerated, but loopholes in performance clauses combined with few possibilities to verify the vessels’ reporting has traditionally kept the charterers in the dark and obscured their possibilities of recouping losses.
Add to that the administrative burden of monitoring the vessels, calculating, documenting and negotiating performance claims, and you have a recipe for frustration and conflicts.
The wider implication of the hollow promises is that charterers, when sourcing vessels, are skeptic to pay extra for fuel efficient and well maintained vessels. We observe differences in actual performance worth more than MUSD 0.5 per year for vessels considered equal and achieving the same market rates, a discouraging fact for owners interested in delivering a premium product.
Open and trustworthy performance data
With new digital tools, our chances of working with actual figures are improving greatly, even without having to invest in onboard equipment. Performance data based on AIS and Inmarsat readings reduce the administrative burden onboard, but more importantly, take a great step in the direction of a precise measurement of the actual time spent on a voyage and actual route and distance travelled.
With more stringent measurements of bunkered quantities, and better flow meters on board, we are also getting closer to knowing how much fuel was actually consumed during the voyage, and at which time it was actually consumed, important information for calculating performance.
Pay for performance
More precise data, combined with simplifying and standardizing warranty clauses open up for automated settlements of charter hire adjustments, creating incentives for both ship owners and charterers. Ship owners would get better rates when their vessels over-performed, and charterers would pay a fair price for the performance they got. It’s time shipping put away some of its bad habits and started embracing the opportunities provided by big data and digital services.