2.Optimising berthing requires co- ordinating a multitude of ports and terminals around the world, each with its own ecosystem of shore-side infrastructure having an impact on berthing.


3. Fragmentation – a multitude of ships sailing to the same destination at the same time, from different starting points, with each ship “carrying” its own microcosm of fragmented interests.


4.The problem of split incentives. Bulk cargo vessels perform voyages at the instruction of their charterers, who control the ships' commercial employment. The relevant contracts contain speed warranties and the obligation for the vessel to sail with utmost dispatch, or similar. In time charterparties, the fuel cost falls on the charterer, meaning that shipowners have no incentive to optimise operations and, indeed, are contractually obliged to follow the charterers’ instructions. In both time and voyage charterparties there are requirements for the vessel’s arrival at a loading port by a particular date (“laycan”). In voyage charterparties, the vessel’s prompt arrival at the port of destination triggers financial obligations in the form of “demurrage”, which is legally defined as ”liquidated damages for delay” but, from a financial perspective, is an income stream for shipowners.


Viewed from the perspective of supply chains, contracts for sale of commodities on board also contain provisions that require prompt arrival of the vessel, laycans, delivery periods, as well as demurrage: FOB buyers, who can benefit


from demurrage at the loadport or CFR/DAP sellers who can benefit from demurrage at the discharge port. Indeed, the English courts have long recognized that sale contract demurrage can be a profit centre, and not just an indemnity for charterparty liabilities.


There have been great strides in the last fifteen years in weather routing and voyage planning. This has resulted in increased efficiency of individual vessels (unilateral optimisation), but with no impact on the systemic problem of SFTW.


There have also been attempts in two other areas of vessel efficiency: virtual arrival (“VA”) and just-in-time berthing (“JiT”).


VA, was introduced in the early 2010s by OCIMF and Intertank, but has failed to gain traction. It is a bilateral contractual mechanism between one shipowner and one charterer and does not address the wider supply chain (cargo interests). Similarly, it does not address the systemic aspect, i.e. it disregards the group of ships proceeding to the same port.


JiT seeks to coordinate the port ecosystem, and communicate with the ships hours or a few days before berthing, rather than systemically optimise the group of ships on their entire voyage. Indeed, as every port is different, JiT solutions are difficult to deploy at scale.


Both VA and JiT struggle to deliver GHG savings at the scale necessary. A different approach is that adopted by the Blue Visby Solution. It differs from VA and JiT because it approaches SFTW from the perspective of systems optimization, rather than


The SFTW dinosaur will soon take its place in maritime museums.


from a unilateral (vessel voyage planning), bilateral (VA) or port management (JiT) perspective. The Blue Visby Solution envisages a contractual mechanism that encompasses both charterparties and sale contracts, and includes a mechanism for sharing costs and benefits amongst the platform participants, inspired by general average, so as to remove the obstacle of split incentives. In this sense, it adopts a uniquely supply-chain approach, incentivizing owners, charterers and cargo interests to participate.


The SFTW dinosaur will soon take its place in maritime museums.


Haris Zografakis Partner, Stephenson Harwood, London E: Haris.Zografakis@shlegal.com


© Haris Zografakis


11 | ADMISI - The Ghost In The Machine | Sustainability Edition 2023


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20