Demurrage income driving carriers into ‘hurry-up-and-wait’ scenario
Source: The Loadstar
Date: 20th September 2024
The ability of container carriers to levy high demurrage charges on shippers is holding back progress in solving one of the biggest shipping bugbears – the “hurry-up-and-wait” scenario, in which box ships increase speed to catch up on schedules, only to end up anchored outside their destination port waiting for a berth.
Some estimates conclude this is increasing container shipping’s CO2 emissions by 15%.
Ships can only unload cargo when there are berthing slots allowing them to dock, and the inverse square law means they can realise outsize reductions in fuel consumption and emissions by sailing slower to the destination if there is no berth available.
But flying in the face of decades of insistence that the problem is a ‘low-hanging fruit’, neither the application of VSAT broadband, nor digitalisation, machine learning or AI have been able to make so-called ‘smart-steaming’ – which could be achieved with a telephone call – a reality.
Instead, ‘hurry-up-and-wait’ stubbornly persists, with Linerlytica showing that queues of more than a dozen vessels are routine at the world’s largest ports.
Finland’s Napa is the latest company to attempt to tackle the issue, with its new project, Napa Studio.
Napa CEO made it clear that technology, in this case, is not the answer. He explained: “There are conflicting interests to solve this. There are incentives [to hurry-up-and-wait] built into contracts. There have been so many efforts during the last ten, 15 years to solve this.”
Napa told The Loadstar the problem was that carriers were able to levy D&D charges which may be well more than the fuel efficiencies to be gained from smart steaming.
“Often, demurrage can be more profitable than doing normal business,” Napa said.
In its attempt to address the problem, Napa has “brought together shipyards, owners, classification societies, technology providers, but also stakeholders from the legal, commercial and contractual sides,” Napa said.
“There needs to be a solution that neutralises these conflicting interests, so that shipping, from a contractual point of view, would be aligned toward this decarbonisation market.
“To share the benefit to all the relevant stakeholders – that is the key to solving this,” Napa added.