Unpacking Demurrage: Managing, Measuring, and Mediating
How to Elevate Demurrage & Claim Management with Digital Technology
In the maritime world, demurrage is almost universally experienced. For the charterer, the cost of demurrage is financial. For the ship owner, however, the financial cost of demurrage is recouped, but its delays can have a lasting downstream impact.
Demurrage rates are built into every freight contract, and typically focus on covering a ship owner’s lost earnings, plus an additional margin for the inconvenience. Conversely, despatch rates compensate the charterer for performing faster than the allotted laytime. Both demurrage and despatch, however, result in unplanned deviations from the projected charter P&L.
Fortunately for today’s ship owners and charterers, digital solutions have the potential to manage, measure, and mediate demurrage with greater efficiency and effectiveness than ever before.
Let’s take a look at three ways the right technology can transform demurrage management from an unwieldy operational burden into a controlled science:
1.) Managing Demurrage & Claims
While claims are not a profit center, they can have a substantial financial impact if not effectively managed. When it comes to managing claims of any kind, visibility is key. An ideal digital solution will provide complete visibility into the full diversity of claims types, including laytime, hull and machinery, damaged cargo, and more. With one central workspace to see every claim without exception, and built-in tracking and alerts, ship owners can manage the complex claims process with greater comprehensiveness and timeliness—all while reducing the negative financial impact on their business.
2.) Measuring Demurrage with Precision
Many factors play into the measurement of incurred demurrage, and it can be difficult to properly track each variable for every voyage. An accurate initial demurrage estimate has the power to radically streamline operations and eliminate wasted cycles. By automatically measuring the delta between actual laytime and allotted laytime and incorporating the contracted demurrage rate, the right solution will enable users to generate accurate demurrage estimates in seconds. In an integrated system, these estimates can then be dynamically moved into the review and invoicing process.
3.) Mediating & Substantiating Negotiations
For organizations operating a central Claims desk, it can be difficult to properly track, manage, and settle your claims in a timely manner, sacrificing your ability to negotiate. A digital tool adds tracking, visibility, and workflow to a centralized Claims desk, ensuring no details are lost, regardless of volume. With the ability to centrally track and store all supporting events and communications, your claims desk can accurately and rapidly resolve the demurrage negotiation process.
Elevate Demurrage & Claim Management with Veson
Veson’s Veson IMOS Platform (VIP) empowers ship owners and charterers alike with the robust capabilities needed to automate and improve the management of demurrage at scale. With the standard Operations module, every operator gains the ability to automate demurrage calculations and compare contractual demurrage details with voyage actuals, and track outstanding claims in a central list. Our robust Claims module brings additional visibility to the process, and enhances the solution for use with a Claims desk – adding workflow, tracking and aggregation so operators don’t have to focus on claim follow-up or negotiation. The Platform’s Claims functionality brings increased visibility and contextual advantage to every aspect of the claims process – ensuring you never miss a voyage claim.