Laytime, Charter Parties and Platforms!
In our last post on the topic of laytime I asked if you deemed laytime claims to be a defined process or an opportunity to negotiate.
Feedback was, of course, a mix of views, dependent on the industry sector. The “hot” topic related to clauses, in charter parties, that were open to interpretation leaving room to negotiate.
The lack of clarity, which sometimes occurs, as a result of ambiguous laytime clauses in charter parties may leave open the door to differing interpretation.
Studies have shown that more than 70% of laytime calculations is actually process-based, ie: Charterer accepts the 1st Laytime claim sent in by the Owner. No to/fro negotiations needed. This is assisted by clear and explicit laytime clauses being written in the charter party.
When analyzing the figures in greater detail, there appears to be a tendency for ‘negotiations’ to occur a lot more frequently in the SHEX trades where laytime clauses/exceptions are more prevalent and where such clauses are not always written in a clear, concise manner, minimizing the scope for interpretation.
A simple example relevant to all sectors is an “Anchorage-to-Berth Shifting” clause where frequently this clause provides:
”shifting from anchorage to berth not to count as laytime – even if on demurrage”.
Simple enough, it appears, until we interpret when shifting actually starts. i.e. is it from ‘pilot on board’ to ‘all fast’? or from ‘anchor up’ to ‘vessel arrives at berth’? or r a multiple of other options within this simple procedure?
In comparison, Global Coal’s SCOTA contract form is more explicit, providing:
‘’For the avoidance of doubt, the Vessel’s inward voyage to “all-fast” at any point of unloading in the Port (including any shifting between the earlier of the time of “anchor-up” and “pilot on board” at the point of anchorage and the time of “all-fast” at any point of unloading) will not be counted towards Laytime, Turntime or Demurrage’’
Explicit descriptions should lead to less room for interpretations.
Instead, shipping companies are recognizing that 'cleaner' more explicit terms in their commodity/charter party contracts are required for more efficient chartering and subsequently operations/laytime processes.
In addition, the industry is faced with the problem of interpreting Statement of Facts (SOFs) whereby an event can be described in many different ways by ship agents, globally. Whilst a proficient laytime expert may be able to understand such variances, the world of Natural Language Processing (NLP) and Machine Learning (ML) enables a SOF to be ‘read’ 100% accurately. The differing 'event' descriptions can then be mapped to a standardized library of events. This is the first step to bringing a standardised list of port events to the industry.
Standardised event descriptions can then be mapped into a laytime claim quite simply. The machine reads the events and applies the laytime exclusion clauses from a preselected set of rules derived from the commodity contract/CP. The laytime expert then checks, edits, if required, and sends the laytime claim to their counterpart.
We then move into the topic of platforms. What does this mean in layman’s language? Quite simply, instead of sending laytime claims via email with multiple attachments of the laytime claim itself plus supporting documents, we should now be able to share laytime claims across a single platform with differing permissions depending on the user.
This concept already exists in other shipping software already – eg: AXSMarine and Abraxa.
Rather than having a multitude of emails flying around, a laytime management platform would enable parties to collaborate online. All laytime claims would be visible on the platform's dashboard.
This data visibility and aggregation of all laytime claims in a digital format provides benefits for the laytime experts as well as their management, risk dept and accounts dept.