Just In Time arrivals for bulkers and tankers – International Taskforce Port Call Optimisation

Published: 14 February 2024

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This is a joint article issued by ITPCO and BIMCO

In the liner sector, owners and operators of container ships generally have a contractual liberty to adjust the speed of the ship for commercial purposes.

In the bulk shipping sector, ships are generally under a contractual obligation to proceed to the discharge port with “utmost despatch” - meaning that the ship must sail as fast as it can safely go without unreasonable delay, using the most direct route.

New contracts with so called “Virtual Arrival” clauses are in use. These clauses are bilateral agreements between an owner and charterer, not with the terminal. However, parties hesitate to charter ships on this basis largely because the opportunities to implement virtual arrival are limited to circumstances where the charterers are also the terminal operators and own the cargo. If a “virtual arrival” scheme has been agreed between the owners and charterers, the owners can tender a valid Notice of Readiness (NOR) before the vessel has physically arrived and is ready to do cargo operations.

Bulk cargoes may be bought and sold multiple times during a voyage, however the charterer remains the same – therefore all owners also need to be comfortable with the charterparty terms and ensure they are not in conflict with obligations towards third party bill of lading holders. Finally, in the case of Just In Time, which is a multilateral agreement between all stakeholders in-volved in a port call, implementation starts with terminals and/or receivers of cargo adjusting their terms and conditions whereby clarity is given to charterers and /or owners.

Many ports have to decrease emissions and improve safety in the port and waiting area. However, they depend on terminals and charterers to agree to optimise speed and limit the time at anchor.

Shipowners and the users of their shipping services, together with ports, benefit from optimising speed in the approaches to ports, and not only for environmental reasons. Safety is also an important factor, as most accidents happen in the approaches and anchorages of ports, and there is less risk of piracy in affected areas. Also, the planning of berths and capacity of nautical services benefit from early planning. Shippers of cargoes have enhanced supply chain visibility due to improved predictability of cargo whereabouts, optimised stock management and better planning of type and timing of hinterland modalities.

Moving forward

How can public port authorities provide commercial parties (ship owners, charterers and terminal operators) with the digital and operational infrastructure to implement Just In Time for bulk and tanker ships, giving comfort that disputes under the current charter party clauses are not fore-seen.

Publishing areas

Transparency and use of definitions is key to avoid disputes, also under current charter party clauses.

The first step therefore is to publish the Waiting Area and the Port-passage Planning Area (PPA).

Image 1

 

Waiting Area (existing definition)

The Waiting Area is defined as locations or berths as designated by the relevant port authority for the purpose of becoming an “arrived ship” for tendering Notice of Readiness. The area maybe outside the legal, fiscal or administrative aera of the port, but it must be clear that ships are ordered to wait in this area for their turn. Normally it comprises the anchor and drifting area, close to the pilot boarding place, see image 1, red circle, and not sufficient to realise bunker savings when optimising speed.

• It gives assurance to the Master that he/she is an “arrived ship”, and then he/she does not need to proceed any closer to the pilot boarding place
• It gives assurance to the charterer that he/she is not paying demurrage for a ship that is actually not arrived yet and that the Notice Of Readiness (NOR) is valid
• Finally, it gives assurance to the terminal that the ship is within striking distance, and that the berth will not be idle too long after giving an executable order.

 

Port-passage Planning Area (PPA, new definition)

The PPA is defined as an area, designated by the relevant port authority for the purpose of optimising speed based on an agreed planning of berth and pilot boarding place. The area maybe outside the legal, fiscal or administrative area of the port, but it must be clear that ships can proceed with optimised speed without jeopardising their place in the planning of the terminal and/or the port.

It gives assurance to the Charterer that ships in this area can reduce speed without losing his/her place in the planning of the terminal and the port, and for the Owner not to lose demurrage. The PPA is much further away than the Waiting Area, allowing ships to realise bunker savings, see the yellow circle in image 1, which is different per port and/or per trade). For the container segment, it has been calculated that the distance should be a minimum of 12 hours’ sailing away from the Pilot Boarding Place to realise 4.23% emission savings . For the bulk and tanker segment, more distance is needed given their lower average sailing speeds.

Basically, the Waiting Area is an area where ships wait while at anchor, and Port-passage Planning Area is an area where ships wait while underway, with a place secured in the port and terminal planning.

Both the Waiting Area and the PPA need to be published in such a way that the information is “easily accessible”, such ason the port’s website. Their coordinates can be used by, for example, AIS solution providers to provide transparency to owners and charterers about whether the ship has arrived in the relevant area and therefore can reduce speed and/ or tender NOR. If the coordinates are published and used this way, it is not necessary to detail them in individual charter parties, rather they can simply be referred to.

Publishing the process

Transparency about the process is also key to avoid disputes, including under current charter party clauses.

The second step is therefore to publish the Just In Time Arrival process, a process which can be applied by any port, so that it is uniform across the globe and also ensures a level playing field between ports. Implementing JIT measures should not result in traders choosing an “easier”, nearby port.

Process concept

1. Notification to terminal: if ship’s AIS crosses the Port-passage Planning Area geofence, an alert is sent to the terminal. This geofence can be facilitated by the port authority

2. Terminal and charterer’s agent can agree on berth planning (Planned Time of Arrival Berth, PTA Berth)

3. Port and charterer’s agent can agree on port planning (Planned Time of Arrival Pilot Boarding Place, based on the berth planning)

4. Owner can optimise speed to meet PTA Pilot Boarding Place, considering minimum speed for main engine vibration or pollution, preparing for hold or tank inspections, or to do maintenance on the main engine, among other aspects.

Securing interest

The interest of each and every commercial party must be secured to make this a success. Stakeholders have therefore been consulted about how this could be addressed.

Terminal

Sufficient flexibility to change terminal planning is important for operational activities such as cleaning lines, repairing valves, etc. A terminal can, for example, provide a PTA Berth with a 12-hour margin, ensuring there will be no idle time for the berth and avoiding a ship needing to speed up to meet the revised berth planning. Just In Time will not necessarily avoid anchor time,but aims to reduce it. Transparency about which ships are within which area will ensure that the ship will arrive at the berth within the agreed time window.

Trader/Charterer

Traders have an increasing interest in green shipping, given all the regulations that start to involve them in this in a more direct way. However, their number one concern, the margin between buying and selling cargo, remains. The result at the end of the year in their so called “trading book” is paramount. Not losing their place in the planning of the terminal and port is important. They track their ships and others on AIS constantly. Having the geofence available for AIS solution providers will create transparency about whether the ship has arrived in the Port-passage Planning Area and/or Waiting Area.

Owner

Not losing demurrage is important. Transparency about its calculation in a Just In Time scenario will help improve trust between owner and charterer.

Discussions about when the ship can reduce speed without losing its place in the planning of the port and terminal, and when it can start the demurrage clock can be addressed by publication by the Port Authority of the Port-passage Planning Area and Waiting Area.

Discussions about the Estimated Time of Arrival at the Waiting Area can be addressed with multiple options.

Option A is a simple calculation by taking the distance between the geofence of both areas and divide it by Speed Over Ground (SOG) when the ship passed the first geofence.

Option B is to have a weather routing agent involved, to have a fixed speed considered after entering the Port-passage Planning Area for various ship types – keeping in mind the regular sailing speeds for Panamax, Handymax, etc.

Work to be done

The proposed geofences can be published in the official nautical charts. However, this requires submitting a proposal to the International Hydrographic Organization (IHO).

The proposed Port-passage Planning Area needs to be defined as well. Again, this requires submitting a proposal to the IHO, but most authority comes from the port implementing the Port-passage Planning Area.

Implementation step by step

The final step is implementation in a port. For implementation in ports there is a best-case and a worst-case scenario. The best-case scenario: small port, no mistrust between owner and charterer, no trading, voluntary implementation. A worst-case scenario: large port, mistrust between owner and charterer, multiple trading, compulsory implementation. For both scenarios there are ports that are willing to take the next step forward.

Feedback

We’re keen to receive feedback on the proposed process, or suggestions to fine-tune the process to meet the needs of all stakeholders involved.

Please send your comments to innovation@bimco.org.

We will publish a second article in the third quarter of 2024, in which the comments received will be addressed.

 

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