This article serves as a continuation of Maximizing Vessel Earnings and Optimizing Voyage Efficiency, delving deeper into key strategies for tanker operations. It will cover essential topics such as cargo tank preparation for different cargo types, following charterers' instructions to optimize cargo handling, minimizing demurrage, and best practices to improve port optimization and turnaround times. These insights will help further enhance vessel performance and profitability in today’s competitive shipping landscape.
Ships frequently transport a wide range of liquid cargoes, and ensuring proper preparation of cargo tanks is crucial to prevent contamination between different cargoes. After discharging one type of cargo and before loading another, it is essential to clean both the cargo tanks and pipelines thoroughly. The preparation process must be both effective and efficient, avoiding under- or over-preparation. Key considerations include the nature of the cargo just carried and the new cargo to be loaded. For instance, substances like sulfur, water, flashpoint, wax residues, oxygenates, or sludge might need to be removed. Consulting a tank cleaning matrix
is useful, but it’s equally important to analyze the specifics of the last and next cargoes. Collaborating with shipowners and operators in this process is a valuable opportunity for knowledge sharing and risk identification.
Voyage orders from charterers can sometimes be straightforward, but other times, they may be unclear or filled with generalized instructions. In such cases, crew members with expertise in cargo handling might recognize potential conflicts or issues in the orders. Addressing these inconsistencies early can prevent problems later on. It’s important to communicate any concerns or suggestions with charterers.
Disputes over off-specification or contaminated cargoes are common, and often, shipowners lack independent evidence to defend against such claims. To mitigate this risk, crew members should ensure that proper sampling is carried out at various locations (e.g., manifold, pump stack), and that samples are labeled and stored appropriately. If there are any doubts about the quality of a liquid cargo, notifying the shipowner or operator immediately is crucial. In some cases, it might even be necessary to analyze samples
at the loading port. Improving cargo intake by as little as 3% can significantly enhance the time charter equivalent (TCE) of the vessel.
Demurrage is an additional cost incurred by charterers for using more time than the agreed laytime for loading or discharging cargo. Laytime refers to the period stipulated in a voyage charter party within which cargo loading and unloading must be completed. The freight paid under a voyage charter covers not only the voyage from the loading port to the discharge port but also includes a limited timeframe for cargo handling operations. When laytime is exceeded, demurrage charges come into play, compensating the shipowner for the delay.
The agreed laytime usually varies between 48 to 144 hours, depending on factors such as the voyage type and the cargo being transported. These laytime durations can fluctuate over time based on operational requirements or charter party agreements. Interestingly, demurrage earnings can contribute significantly to a vessel's total income, often representing around 10% of revenue.
A helpful analogy to understand laytime calculations is to compare it to a chess game timer. When one party fulfills their responsibility, they essentially "stop the clock" for themselves, causing time to start ticking on the other party's account. The charter party's clauses determine when this clock starts and stops for both the shipowners and charterers.
To safeguard the vessel’s and owner’s financial interests, it is essential for the ship's crew to be diligent in managing laytime and demurrage-related documentation. Several actions are crucial:
Valid and Timely Notice of Readiness (NOR): Ensure that a correct and valid NOR is tendered when the vessel is ready to load or discharge. In some cases, re-tendering the NOR as per instructions in the order letter might be necessary. Always maintain open communication with the operator regarding when to tender NOR and any subsequent re-tenders, as mistakes in this process can lead to disputes.
Accurate Statement of Facts (SOF): A well-documented SOF that includes all relevant events and remarks is critical. Any unusual circumstances, terminal restrictions, or delays should be noted, as these details can directly impact laytime calculations.
Proper Pumping Log: Maintaining an accurate pumping log is essential for documenting the vessel's compliance with cargo handling requirements, such as pumping rate, pressure, and operational timing. This log, along with supporting discharge documents, helps protect against demurrage claims by providing evidence that delays were not caused by the vessel.
Issuing Letters of Protest (LOPs): LOPs should be issued whenever there are issues or irregularities during cargo operations that may affect laytime, such as terminal instructions or delays caused by third parties. Failure to issue an LOP could result in lost demurrage earnings.
Some charter parties or voyage orders require the vessel to issue a Letter of Protest (LOP) if Free Pratique—a clearance from port health authorities allowing the vessel to load or discharge—is not granted within a specified time after tendering NOR. The absence of such an LOP can render the NOR invalid, leading to a loss of laytime during the waiting period. For example, if the vessel spends extended time at anchorage before berthing due to a delay in granting Free Pratique, substantial revenue can be lost, ultimately reducing the vessel’s Time Charter Equivalent (TCE). Therefore, it is better to issue an LOP prematurely than to forget one altogether.
The pumping log, alongside discharge documents and LOPs, serves as a crucial record that can help shipowners defend against potential demurrage claims. The charter party contract typically specifies the required pumping rate, pressure, and timeframe for cargo operations. If delays occur due to terminal restrictions, they must be carefully documented in the pumping log and supported with an LOP. This ensures that any extended port stay or delays are not attributed to the vessel’s performance.
Additionally, it is vital that terminal representatives counter-sign these documents to verify their accuracy. In cases where counter-signatures cannot be obtained, an LOP should be issued to highlight the circumstances. The failure to maintain proper documentation and evidence can result in a significant loss of demurrage earnings.
Although cargo remaining on board (ROB) after discharge does not directly affect demurrage, it can lead to cargo-related claims if not documented correctly. Upon completing discharge, when the surveyor inspects the tanks, any ROB must be described accurately, particularly if it is un-pumpable. The correct terminology is crucial, as the vessel’s documentation should state that the cargo is “un-pumpable with vessel’s pumps which are in good working order.” This small but significant detail helps protect the vessel from claims suggesting poor performance or failure to discharge cargo completely.
Several factors must be considered to ensure laytime is properly calculated, and demurrage earnings are not jeopardized. For example, time spent shifting the vessel inwards (from NOR to all fast, or from anchor to all fast) and time after “hoses disconnected” or “documents onboard” typically falls outside the charterers' responsibility. De-slopping and bunkering, which are often for the owner’s account, can also prevent laytime from being counted. In such cases, ship operators should verify whether these activities can be done simultaneously with cargo operations to avoid losing demurrage opportunities.
Stores and provisions can often be loaded during cargo operations without impacting demurrage. Furthermore, the time spent stripping
tanks should be minimized, as this time is usually counted against the owner’s account. Stripping should be done simultaneously with discharging whenever possible to save time and reduce costs.
It is also essential to use precise language in the Statement of Facts (SOF). For example, waiting for pilotage services is typically at the owner’s expense, so crew members should avoid the phrase “awaiting pilot” in the SOF unless it is the sole reason for the delay. Instead, terms like “awaiting berthing” are more appropriate if the vessel is delayed for reasons outside its control.
The vessel’s crew plays a significant role in maximizing earnings and protecting demurrage by being proactive and meticulous in their duties. Collaboration with the ship’s agents and shore teams is crucial to ensuring that every minute counts. The actions taken onboard directly impact the shipowner’s revenue and the vessel’s TCE. By understanding and implementing proper procedures for laytime, demurrage, and cargo documentation, ship staff can help secure the vessel’s financial interests and optimize operational efficiency.
In challenging market conditions where there are fewer cargoes and lower freight rates, the demurrage rate may sometimes exceed the general voyage earnings. In such cases, staying in port on demurrage can actually result in increased earnings. While it may seem counterintuitive to promote longer port stays, as long as we meet the charter party’s requirements for rates and pumping pressure, it may be beneficial not to rush cargo discharge. The key is to avoid wasting time that falls on the shipowner's account during port calls.
However, we must remain alert and ready to optimize port turnarounds when needed. A fast port turnaround offers several significant advantages:
More Voyages Per Year: Faster port turnarounds enable the vessel to perform more voyages annually, directly impacting overall revenue.
Improved Flexibility: A quicker port turnaround increases the vessel's ability to reach the next port sooner, potentially securing new business opportunities.
Increased Time Charter Equivalent (TCE): Reducing the total number of days per voyage, thanks to faster turnarounds, improves the TCE by spreading the total earnings over fewer days.
To achieve these benefits, it is essential to involve all crew members on board. Each task they perform contributes to the broader goal of maximizing earnings. Several operations can be further optimized by the crew’s efforts, such as:
Efficient mooring,
Prompt rigging of gangways,
Timely picking of the anchor to avoid delays at the pilot point,
Accurate sampling and gauging of cargo tanks,
Thorough planning of loading operations,
Organized de-slopping and bunkering,
Completion of paperwork efficiently.
By using their professional expertise and practical experience, crew members can identify best practices and share them with other vessels. Feedback and suggestions are always welcome to foster a culture of continuous improvement.
As emphasized in demurrage discussions, minimizing time on the owner’s account is crucial. For example, if a vessel can reduce port turnaround time by just three hours in each port for actions under the vessel’s control, this can increase TCE by approximately USD 500 per day, depending on the segment and frequency of port calls. Small operational gains at each port accumulate and have a significant impact on the vessel’s overall performance.
Another way to expedite port turnaround is through the Early Departure Procedure (EDP), which allows vessels to leave port without waiting for cargo documentation. Not all charterers or ports permit EDP, but when available, it should be utilized. If you spot an opportunity to use EDP, liaise with the operator immediately to initiate the process. A swift departure might even allow the vessel to leave port before overtime charges kick in.
The time spent in port is a valuable opportunity to stock up on essential supplies and services. It’s crucial to plan ahead to avoid expensive and time-consuming deviations later on. Always think about the vessel’s future needs and coordinate with the crew and operator to ensure no supply opportunities are missed while in port.
Some items to consider include:
Freshwater,
Bunker quantity and grades,
Chemicals for de-slopping,
Sludge removal and decanting,
Tank cleaning and changeover procedures,
And other services that might be needed before the next leg of the voyage. Proactively planning for these necessities avoids last-minute rushes, costly delays, or potential deviations that disrupt the voyage schedule.
Effective communication between the vessel's crew and the operator is crucial for success. Don’t assume that the other party has considered every aspect or sees the situation in the same way. Always be open to asking questions and sharing information. It’s encouraged to create an environment where everyone feels comfortable asking:
"Did you remember this?"
"Have you considered that?"
"May I offer a suggestion?"
Collaboration is key. The crew’s knowledge of the vessel’s operations, combined with the operator’s understanding of the commercial aspects, can lead to better decision-making. For example, an operator might have critical information about the next discharge port or region that could affect the vessel's operations or create new opportunities. Sharing insights can make a significant difference in optimizing voyages and enhancing profitability.
The optimization of port turnarounds requires both planning and flexibility. Each small gain in time savings, cost reduction, or operational efficiency can contribute to better voyage outcomes. The ship’s crew plays a pivotal role in this process, and their active involvement in all stages of port operations can lead to tangible financial benefits. Working closely with the operator and anticipating future needs ensure that the vessel stays ahead of potential challenges, maximizing its earnings in both favorable and difficult markets.
By fostering a collaborative environment and continuously seeking ways to optimize performance, a vessel can achieve faster port turnarounds, reduce owner’s account time, and improve the vessel's profitability across its voyages
