Charterers' delayed freight and demurrage payments are all too common, according to Intertanko, and they are costing tanker owners millions.
Intertanko environment director Tim Wilkins raised the issue in a forum on the second day of the annual Tanker Shipping & Trade Conference & Awards in London.
"It's a new issue for Intertanko. We have taken on a reasonable amount of resources to try to deal with this lately," he said. "Unfortunately, we seem to be in a situation at the moment where late paying of freight (charges) and late paying of demurrage (charges) is reasonably widespread."
Mr Wilkins said Intertanko's membership have, on average, a 10-day delay in freight payments, which he said should be paid upon completion of discharging the freight.
For demurrage charges, which he said charterers should pay on receipt of invoices, tanker owners generally face a 90-day delay.
The cost that Intertanko owners incur due to delayed payments on freight charges added up to US$38M per year, Mr Wilkins said. He did not cite a figure for delayed payments on demurrage charges.
From Intertanko's perspective, there are two options. The first would be pre-emptive – to implement legal clauses through charterparty agreements. Mr Wilkins said Intertanko has drafted a demurrage payment clause and interest on late payments clause and is seeking to have those included in its members' charterparty agreements.
Asked why Intertanko was using charterparty clauses instead of attempting to rectify the bad financial practices through a code of practice, Mr Wilkins said Intertanko regularly broach the idea with individual charterers but that "it seems like the basic terms surprise oil companies".
Recognising owners' limited leverage – "particularly with the current market situation" – to convince charterers to accept the clauses, Mr Wilkins said "it shouldn't come as a surprise that we are putting standard, business contract language into our business agreements".
What our clauses are simply saying is, “is 30 days a more reasonable period to issue an objection or concern?” he said.
The second option, he said, is reactive. Intertanko has released two 'tools' through which its membership can, effectively, rate the payment performance of charterers and act to recover unpaid fees. These are called, respectively, the Payment Performance System (PPS) and Freight & Demurrage Information Pool (FDIP).
Through FDIP, Intertanko will "act as a third party to go chase and recover those fees" that are delinquent for its membership.
Mr Wilkins said Intertanko had recovered around US$12.2M in unpaid freight fees and US$9M in unpaid demurrage fees.
Although the Oil Companies International Marine Forum (OCIMF) does not represent charterers' commercial interests, OCIMF director Rob Drysdale voiced his personal feelings on the 30-day time limit for owners raising concerns around delayed payments.
"From an OCIMF point of view, we don’t deal with the commercial aspects of the charterers. So, I can't answer this from an OCIMF perspective, but from a personal perspective ... yes, I would agree, 90 days seems extortionate," Mr Drysdale said.
"Sometimes you need that time, but it’s very, very rarely. Normally, 30 days would be more than enough to raise an objection... on a demurrage claim."
"If demurrage has been approved and accepted then it should be paid in a timely manner. I don’t see why there should be an issue with it."