Background

To encourage wider adoption of just in time (JIT) arrival principles in the bulk sector, BIMCO has written a new clause for voyage charter parties. The clause creates a contractual framework to overcome the primary obstacle to just in time arrivals, which is the obligation on shipowners to proceed with due or utmost despatch and without deviation. This is a critical aspect of making JIT arrivals work as without removing this obstacle ships are unable to adjust their speed to arrive at a port at an optimal time to avoid delays without breaching their usual voyage charter obligations. BIMCO believes that the widespread adoption of JIT arrivals in the bulk sector will bring many benefits including reductions in fuel consumption, emissions and waiting times in ports and anchorages.

BIMCO is grateful to the following subcommittee members for sharing their expertise and assisting with the development of the Just in Time Clause.

• Mr Raoul Baart, Anthony Veder Chartering
• Mr Paul J. Brown, INEOS Trading and Shipping
• Mr Steven Cockburn, North of England P&I Club

Explanatory Notes

Subclause (a) requires the parties to share information with each other regarding the ship’s arrival time. This includes information, such as arrival times, to and from any relevant third party such as an agent, port or terminal. The words “any port specific requirements shall be met” are intended to apply to circumstances where the port or terminal requires the use of a specific data exchange format, such as the IMO Data Model Framework.

Subclause (b) gives the charterers the option to ask the owners to adjust the ship’s speed to meet a certain arrival time or “closest thereto” (as the requested time might not always be within the ship’s capabilities), at a particular destination. If the charterers’ request to adjust speed might result in the ship not arriving within the cancelling date, a new cancelling date must be agreed. Otherwise, the charterers could cancel the charter party if the ship arrives after the cancelling date, even if the late arrival was due to the charterers’ request.

Subclause (c) – among the benefits of using just in time arrivals schemes are reductions in emissions, fuel consumption, and time on demurrage. The Clause contains a very simple compensation mechanism that avoids references to fuel consumption and fuel prices. The reason for this non-prescriptive approach is that to arrive at an accurate figure the parties would have to make a calculation based on the ship’s fuel consumption and the relevant bunker prices in the area of operation. This would in turn create discussions about fuel consumption and what price should apply (Platts, current market price or price actually paid, etc.). Consequently, it is not possible to create a generic bunker sharing mechanism in a standard clause that will work for all. Instead, this should be worked out between the parties on a case-by-case basis.

The parties should agree on a rate that reflects the bunker savings made by the owners. No default figure has been included because the amount should be negotiated between the parties. If the parties do not fill in an amount, then subclause (c) will not apply and there will be no compensation payable by charterers for the extra time used and the owners will keep any bunkers savings.

To calculate the amount of extra time used on the voyage the parties should subtract the “estimated time of arrival” (when the request to adjust speed is made) from the “actual time of arrival”. The estimated arrival time will be the time the ship would have arrived if it had proceeded without adjusting speed, subject to prevailing weather conditions.

Subclause (d) overcomes one of the primary obstacles to implementing a just in time scheme. Owners are obliged under charter parties to proceed with due or utmost despatch and without deviation. This subclause protects the owners from being in breach of these obligations when adjusting the ship’s speed in response to a request from charterers.

Subclause (e) protects the owners from claims from bill of lading holders or other third parties. The charterers are required to ensure that all third-party documentation complies with the clause and to indemnify owners against any liabilities beyond those set out in the clause.