Demurrage: Ripe for change?

Last week, I had the pleasure of attending the Oil Operations & Demurrage conference in London. Over 100 participants, originating from 17 different countries. A mix of Claims professionals, Owners and Charterers (with the odd curious consultant) – and an encouraging spread of diversity (the industry is getting there…).

A very well-organised event, with a number of relevant topics covered – from: ‘clauses that protect from ‘holes’ in Worldscale’; ‘current industry dispute themes’; & ‘operational risk management’ – through to: ‘top legal tips for managing USA ops’; ‘navigating the complexities of contamination’; and much more…

Panel discussions and open floor Q&A revealed the different (and often traditional) perspectives held by stakeholders. The old (implicit) adage of: ‘if in doubt then charge it out’, still rings true. Distrust or suspicion between counterparties, and a distinct undertone of ‘winning’ / ‘demurrage as a profit centre’ remains. I left considering four main points: 1) it is 2022 and not 1819! – surely time for contracts to be clear & wholly unambiguous; 2) it shouldn’t be about ‘winning’ – it should be about ‘fairness’ / ‘not losing’ / ‘transparency’; 3) there are $100s millions ‘in process’ – that usually take months (sometimes years) to arrive in the accounts of those owed - which is not just hugely inefficient, it is crippling for many; and 4)  with the right technology, backed with the right expertise, there is opportunity to revolutionise this space – remove inefficiencies, develop a level playing field for everyone and create even more interesting jobs. Thankfully, there are indications that such endeavours have begun. One industry guru shared with me: “I can’t let go of the feeling that it is a colossal shame that all these very experienced and bright people spend their time fighting over this [demurrage], that could be settled calmly and fairly without fuss [with the right system in place], and instead spend their time on doing good for the industry by applying their brain power on real improvement of efficiencies in trade…”.

For further insight, guidance or conversation on this subject, please do get in touch.