January 18, 2022
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In the maritime world a ship is earning money only when on the move with cargo in it. So, for every moment it is not moving it can be thought of as generating cost but no revenues.
Now of course a vessel will need to spend some time in port loading and discharging which needs to be kept as short as possible so that the vessel can continue to be on the move.
Commonly, Charterers will have the right to nominate and procure the services of a port agent to prepare the SOF which logs all the information concerning matters related to the vessels time at the port.
The agent’s role is to provide a service that accurately records in a transparent way the whole operation and to duly present the checked facts to all concerned parties. Its critical for the SOF and port agent to pick up on any issues that delay the vessel and to identify the cause and duration.
The SOF is ultimately used as reference for the laytime calculation to determine if or how much demurrage is to be paid. It is quite common for disputes to arise because of delays; hence the SOF provides the opportunity for notes and comments to be entered that can be used or referred to in the laytime calculation.
By providing stakeholders ongoing updates to the SOF before an operation is completed, it offers concerned parties a chance to review and question the details to avoid costly disputes.
At the end of the stay in port, the port agent will draw up the Statement of Facts, setting out a log of all the events during a ship's stay in port signed by the master and the shipper or receiver of the cargo.
A standard Statement of Facts document recommended by BIMCO:
BIMCO is one of the largest of the international shipping associations representing approximately 60 percent of the world's merchant shipping tonnage and that it has members in more than 130 countries, including managers, brokers and agents.
The value of an SOF is to ensure that the agent can record in chronological detail all the individual events and activities during the stay in port, beginning with the first contact right through to departure and ends on the issuance of a SOF.
For example, the agent will list all dates and times of each stage of the cargo operation from such things as when the ship was piloted and moored, when Notice of Readiness (NOR) was tendered, preparing for and the actual loading and discharging operations, unmooring and departure.
In the event of voyage chartering there may be periods to be noted with days that are considered public holidays, there may be stoppages resulting from bad weather i.e rain, breakdown of machinery, industrial disputes and suchlike all of which need to be logged as they have consequences on the vessels time in the port.
Read more: Expert viewpoint on demurrage and the maritime industry in 2021 & 2022.
The vast majority of SOF documents today continue to be created with pen and paper, with the details manually entered into an excel spreadsheet and transposed into a PDF form and shared via email. An SOF can contain hundreds of events.
The reliance on a paper SOF is a productivity nightmare, a drain on an already stretched resource. Time wasted through manual data entry also creates a situation ripe for mistakes with so much of the work transcribed multiple times across different systems and along the value chain.
If you think of the typical flow of how a SOF is created, it starts with the agent putting pen to paper to log the NOR, with each stage of the operation transcribed from paper and manually entered into a spreadsheet. From there, on issuance it is distributed as a PDF and sent to all relevant parties - who then transcribe the PDF into their version of a laytime spreadsheet and key the data into their own business systems for evaluation.
The agent will diligently gather and share information on the status of the ship and operation in the SOF, making sure that the ship has been properly managed during its time in port. The period of time when a charterer remains in possession of a vessel after the time normally allocated to load and unload cargo (the laytime), is referred to as Demurrage. The details contained in the SOF enables the demurrage to be calculated.
Demurrage refers to the charges in the form of liquidated damages that the charterer must pay to the ship owner for breaching the laytime. To calculate the demurrage, it is the period of laytime consumed less the laytime contractually allocated. If the period of laytime consumed exceeds the laytime contracted, demurrage is then incurred.
Download your Enqlare Laytime summary sheet.
Whilst the productivity loss for the maritime industry for using a traditional, manual approach to producing and managing a SOF is significant, the real prize for the industry is what can be gained by unlocking the value in the data that the SOF provides.
We all agree that laytimes are time-consuming and that a small mistake can easily result in a significant loss but if we knew early enough of an impending issue, action could be taken to avoid demurrage costs. Often without having information readily to hand operators may miss time bars and lose claims altogether.
The Enqlare Laytime module can be integrated into your risk and invoicing systems and help you migrate to a digital SOF to unlock deep insights into performance.
Read more: Enrich your data and sharpen business decisions using the cloud.
Enqlare can dramatically improve your business performance through automation and smart documents designed to help you scale profitably, unlock process improvements, and consistently save time and money.
The ecosystem of Enqlare software modules is designed for the shipping industry to help teams create more accurate laytime calculations, speed up the work and avoid costly mistakes by utilizing our digital Statement of Facts.
Experience have shown that when you employ a laytime solution, savings can be made (as an estimate it can be >$100K over 100 shipments).
Book your Enqlare Laytime demo.
A seamless integration with existing in-house software.
Enqlare software comes already set up with fast and powerful reporting and filters.
A modern and secure platform, where all data is encrypted and access to is governed by strict security protocols.
If you have more questions, contact us at info@enqlare.com or visit our FAQ page to answer your questions.
Download your: Enqlare Port Calls summary sheet.
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