Chartering services – INTERTANKO Payments Performance System (PPS)
- 29 July 2016 09:40
- 05 August 2016 10:13
INTERTANKO is committed to improving the way business is done in the tanker industry. This focus on the commercial side of the business includes initiatives which will provide Members with real, tangible, practical benefits. The initiatives include a Code of Conduct (CoC) for tanker chartering, more transparent and cost-effective vetting and assurance practices, charterparty commentaries and specific clauses, freight and demurrage collection services (FDIP), monitoring new chartering terms and the deterioration in existing ones, as well as a benchmarking tool for delays in freight and demurrage payments, the Payment Performance System (PPS).
Unless specifically agreed, the payment of freight is due on completion of discharge, yet it is routinely being paid more than 10 days late. Similarly, demurrage, due on submission of the documented claim, is being paid 85-130 days late.
By recording, monitoring and benchmarking these payment delays, the PPS provides a comprehensive overview of the state of affairs, giving users a tool to compare different charterers’ payment performance and benchmark their own payment recovery record with that of other Members. INTERTANKO can use the results (always combined figures only with no individual owner(s) being identified) directly in dialogue with charterers, addressing and discussing their individual payment performance and claims handling efficiency.
Ultimately we want to see these payment delays reduced. If for example we achieve a reduction of two days delay in freight payments, a Member would save some USD15,000 a year for a 10-ship fleet; and if we reduced demurrage payment delays from 85 days to say 60, that could mean a saving of USD27,500 a year for the same fleet.
In its first year of PPS operation, INTERTANKO Members with almost 25% of the membership tanker fleet submitted payment data for over 7,500 voyages into PPS, with over 450 charterers in the system.
Comments received from regular users have been used to modify and improve the system since its inception. Modifications include:
· Allowing users to see the payment performance of any charterer in the system (up to a maximum of five views a day to prevent reverse engineering of data).
· The addition of separate data streams for chemical and gas fixtures, separate from the crude/products data, in order not to skew the figures due to sector specific differences.
· Allowing users to update freight or demurrage data only, without having to update the whole record.
· Allowing users to enter voyage data with a ‘0’ value for the USD figures for freight and demurrage, in case of concerns over specific charterparty P&C clauses. Specific legal advice has been sought and we have been assured that entering data into the system is not in breach of c/p P&C clauses.
What you get:
· A list of the best performing charterers for prompt payment of freight and demurrage
· Average delays in freight payments
· Average delays in submitting, negotiating and getting demurrage claims paid
· Comparison of your own data with the average for other participating members for a specific charterer
· Comparison of a specific charterer’s performance with other charterers (in compliance with anti-trust advice)
· Comparisons of delays for different tanker sizes
· USD $ cost to you of late payments
· Comparisons of payment performance over time.
What you provide:
- Vessel + charterer
- Voyage dates
- Freight/Demurrage $$
- F & D invoices sent & settled dates
Ultimately the Payment Performance System helps us to engage in dialogue with charterers, change ingrained bad habits and bring about a reduction in freight and demurrage payment times. INTERTANKO encourages its tanker-owning Members to use PPS and allow INTERTANKO to make it an integral part of its efforts to promote good chartering practice.
The success of PPS is dependent on the active use and support by Members. The more data we have, the more representative results will be, providing more leverage when discussing payment performance with some of the worst performers.
We are doing everything we can to make PPS as simple and efficient as possible and provide maximum usefulness for minimum effort. The system uses advanced data security technology and your data will be held on a strictly confidential basis, accessible only to you. Other Members’ data for comparison will be accessible as combined averages only. Charterers will not have access to the Members’ database.
A brochure explaining the system further can be downloaded here.
For more information, background or practical assistance please contact Bill Box.
Contact: Bill Box