Nautilus Labs and BIMCO released a white paper to implore the maritime industry to rethink prevailing charter party frameworks.
The white paper explores how current ways of working in the shipping industry have entrenched “sail-fast-then-wait” behaviors, resulting in major inefficiencies that produce excess emissions and increased costs.
Using data from live charter agreements, the white paper demonstrates that this “sail-fast-then-wait” behavior can produce substantial excess fuel consumption and emissions even on a single voyage.
With regulations such as the Carbon Intensity Indicator (CII) and the impending European Union Emissions Trading Scheme (EU ETS), there is an urgent need for the industry to address the inefficiencies causing excess greenhouse gas emissions.
The white paper outlines the potential for 15-20% of the industry’s emissions to be eliminated by changing current approaches to charter party frameworks without a negative impact on fleet capacity.
For an industry that emits approximately 1 billion tons of carbon emissions annually, these savings equate to approximately 150-200 million metric tonnes of emissions and tens of billions of dollars in fuel.
To hasten emissions reduction, the white paper proposes key changes in charter party terms to drive better alignment of incentives between owners and charterers, removing the focus on claims and encouraging collaborative ways of working towards vessel efficiency.
This new approach to charter parties and dynamic performance tables is now possible due to advances in machine learning software and high-frequency data from ships. With these foundational technologies in place, the industry can then optimize berth planning to reimagine “first-come, first-served” port operations that drive operators to race to queue up for a berth, leading to fuel waste and unnecessary emissions.
In the age of decarbonization, traditional key charter party clauses are no longer fit for purpose and need to be reviewed to address these systemic inefficiencies
… said Grant Hunter, Director of Standards, Innovation and Research at BIMCO.
Voyage charters do not incentivize optimal arrival times. Instead they encourage sail-fast-then-wait behavior or require uneconomic static speeds.
… explained Matt Heider, CEO, Nautilus Labs.
To remind, Blue Visby Consortium is aimed at helping the shipping industry eliminate the wasteful practice of “Sail Fast, then Wait” (SFTW) through a collaborative platform.
