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Leading the way; making a difference Sustainability Project It’s about assistance to Members at a practical level: It’s about specifics: Erosion of, and failure to adhere to c/p terms Lack of understanding about Worldscale Inconsistent, subjective, costly vetting practices Delays in freight and demurrage settlements
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Leading the way; making a difference
INTERTANKO’sPayment
Performance System
Bill BoxSenior Manager Communications & External Relations
Area Manager for Greece & Cyprus
Hellenic Mediterranean Panel2 October 2014
Leading the way; making a difference
INTERTANKO – tanker sustainability
Key issue but change of emphasis (Council and ExCom)
From poor charter/freight rates not covering basic vessel operating costs (min safe freight rate)
To inconsistent, unbalanced c/p terms and vetting practices
And late payment of freight and demurrage • hits owner’s cashflow• increases owner’s working capital req’t
Leading the way; making a difference
Sustainability Project
It’s about assistance to Members at a practical level:
It’s about specifics:
• Erosion of, and failure to adhere to c/p terms• Lack of understanding about Worldscale• Inconsistent, subjective, costly vetting practices• Delays in freight and demurrage settlements
Leading the way; making a difference
Sustainability Projectty
Leading the way; making a difference
Sustainability Project
Contractual obligations NOT met
Freight payable on completion of dischargePilot study:Typical 6-10 days
Demurrage payable on receipt owner’s invoicePilot study:Typical nearly 100 days
Leading the way; making a difference
Sustainability Project
Ultimate Aim:to change ingrained bad habits
Action:Not onlyINTERTANKO Chairman’s letter to charterers>70 top level recipients oil companies and oil tradersINTERTANKO’s industry voluntary Code of ConductBut alsoINTERTANKO’s Payments Performance System
Leading the way; making a difference
Payments Performance System
Leading the way; making a difference
Payments Performance System
What does this mean for you?
5 ship fleetEach fixing once a month5% cost of fundsAverage F & D amounts per pilot study
F&D payment delays cost > $200,000 a year2 day reduction in freight delays: $20,000 a yearHalving demurrage delays (120>>>60): $56,000 a year
Leading the way; making a difference
Payments Performance System
Leading the way; making a difference
Payments Performance System
Leading the way; making a difference
Payments Performance System
Leading the way; making a difference
Payments Performance System
Leading the way; making a difference
PPS: Output and Deliverables
What you get …
Top 20 best payment performers Average delays in freight payments Average delays in negotiating demurrage claims Average delays in payment of agreed demurrage claims
Average delays in submitting demurrage claims
Leading the way; making a difference
PPS: Output and Deliverables Plus +
Comparison between owner’s own fixtures/charterers Comparison between owner’s own data and other
Members Comparison between charterers (sub compliance with
anti-trust/competition rules) Comparison between different tanker types USD amount overdue for how long (i.e. to calc cost of
extra working cap) Comparison of payment performance over time
Leading the way; making a difference
PPS Data needs What you give …
Charterer nameVessel nameVessel dwtVoyage start dateVoyage end date
Leading the way; making a difference
PPS Data needs Plus +Invoice amount for freightInvoice amount for demurrageInvoice dispatch date for demurrageDispute notified date (if appl)Claim agreed date (if appl)Invoice payment date for freightInvoice payment date for demurrageAmount actually paid for demurrage
Leading the way; making a difference
PPS - next steps
Agreement to participate (terms & conditions)
Engagement
Data transfer testing
Going live
