As we mentioned in the last case study, even with the documents and information at hand, differences can appear and laytime disputes may still arise, even if a ship arrives on time. Some examples include:
- An invalid NOR as the pre-conditions to tender NOR were not fulfilled (delayed attendance of the surveyor to conduct holds inspection or NOR not tendered at the agreed place, etc.);
- A lack of information on the berthing schedule/congestion; or
- Prevailing weather conditions (swell, ice, fog) at the port obstructing the vessel’s berthing or arrival at a position to tender NOR, etc.
This is where having the key data and information at your fingertips is important, such as the SoF and contract data, the reasons for differences or delays, etc.
If the claim cannot be settled through agreement and collaboration – the cornerstones of negotiation – between the parties, it will proceed to dispute resolution mechanisms such as arbitration or litigation. A local tribunal will judge the case and determine a new demurrage amount based on both parties’ claims.
Tip: Timebars and Dispute Resolutions
Timebars are clauses that require the demurrage claim to be submitted within a specific period of time
However, the timebar only accounts for the time when the claim should be submitted, not the time it takes to settle it. This could take a longer time and drag for months or even years.
Companies often have special clauses that state that if the company is going to submit a claim, they are required to submit the COMPLETE claim at once, with all supporting documentation. However this is a difficult thing to do, as we’ve seen that gathering all the relevant voyage documentation is not an easy task.
Other clauses may state that once you submit a claim, the other party has a set number of days to respond, allowing for multiple time bars to be in place.
A good charter party contract will have specific wording that takes these factors into account. Industry best practice is to be able settle a claim in 30-90 days.
Conclusion
Understanding and carefully managing demurrage claims allows the contracting parties to minimize disputes, control costs, and ensure more efficient shipping operations.
Proper evaluation and continuous improvement practices can provide valuable insights into eliminating preventable issues, become more familiar with contractual clauses, or implement corrective actions.
This evaluation requires access to comprehensive data which can play a pivotal role and enable companies to analyze patterns, identify common bottlenecks, and then use this data to implement strategic changes to contract terms. This data – both insights and analytics – can reduce the incidence and impact of demurrage fees.
Demurrage fees may be significantly avoided or reduced contractually with the proper data and tools.
By leveraging detailed insights and data analytics, companies can proactively manage their charter party contracts – and operations – to minimize delays, negotiate more favorable terms, and ultimately reduce the incidence and impact of demurrage fees. This not only optimizes operational efficiency but also enhances profitability in the highly competitive maritime sector.
