AWT Weather Routing/Routeing: Applied Weather Technology

What 'About' Speed and Bunker Allowances

by Jim Sigafoose

The use of the term “about” in c/p speed and consumption descriptions has become ubiquitous in the dry cargo trade. While the word itself is an indefinite term and has no fixed legal definition, the maritime industry over the years has established that ‘about’ usually means an allowance of 0.5 knot for speed.

In relation to the ‘about’ term for consumption, note the following comment from an arbitration award in early 2007 (LMLN 0710):

Held, that it was arguable that with modern machinery it should be possible for owners to provide a bunker consumption warranty that was more accurate than one with a 5% margin.

Despite this, the award went on to say that 5% was now so commonly used in the industry that this figure should be applied when the parties to the contract used the word “about” to describe a vessel’s consumption.

But does this mean that an upward allowance will apply in all cases? This prompted the following question to a panel of distinguished London arbitrators and maritime legal experts that was assembled at the AWT-hosted workshop on “Shipping Operational Disputes” held in Beijing last year:

How does the 5% allowance apply when calculating a bunker savings?

The panel responded by way of example, taking a theoretical case of a charter party warranty of about 40 tons per day. An owner’s viewpoint would be that any savings on the voyage would be referenced to the charter party figure plus 5%, i.e. 42 tons per day. A charterer’s viewpoint would be the opposite; any savings should be calculated based on a downward allowance of 5% (38 tons per day), since the ‘about’ term should work in both directions.

There are arbitration awards that support the owner’s viewpoint of 42 tons per day on which to calculate the savings.

However, a differing opinion was expressed. If in this example the vessel was consuming 41 tons per day, it would not be logical to conclude that the owner is saving bunkers simply by doing what is described in the contract, i.e. consuming about 40 tons per day, which allows for a range of 38 to 42 tons per day. Another arbitration award from 2007 (LMLN 723) supported this opinion, stating:

The owners could not be heard to say that "the vessel underperformed and consumed more bunkers than described but because it did not over consume as much as it might have done we can treat that as a saving and reduce your loss of time claim". For that reason the tribunal would reject the owners' submission that any saving in bunker consumption should be measured by reference to its warranted consumption plus 5%.

This suggests that a common-sense and logical approach to settle speed and consumption disputes is to calculate a range of acceptable performance. A vessel whose performed speed was determined to be within the 0.5 knot range of the stated c/p speed would be said to have satisfied the contract; similarly, a vessel whose consumption came within the 5% range of the stated figures would be deemed to have fulfilled the c/p bunker terms. Only when the performance falls outside the calculated ranges could it be said that there was a loss or a savings to either party.