Containership Owners Could be Sued Over Slow Steaming

Slow steaming is becoming universal

Charterers may be able to sue containership owners who slow steam their vessels after a UK commercial court decision, supply chain industry news site The Loadstar reports.

The precedent-setting case was a lawsuit by charter Clipper Bulk Shipping Ltd. (Clipper Bulk Shipping) against ship owner Bulk Ship Union SA (Bulk Ship Union), arguing that the owner's use of slow steaming breached a clause in their charter agreement saying that cargo should be delivered with "utmost despatch."

In November, a judged dismissed an appeal in the case, affirming Clipper Bulk Shipping's position that it could deduct time lost when Bulk Ship Union set the master steam for the bulk carrier Pearl C below 13 knots, a speed specified in the charterparty.

Lawyers say the decision could also apply to container carriers.

"We think the Commercial Court decision in the Pearl C will definitely be relevant to the container industry, as it has confirmed that where an owner deliberately slow steams and consequently underperforms, this will constitute a breach of the implied duty of utmost despatch, entitling the charterer to deduct the time lost under the off-hire clause," said Matthew Gore and Daisy Rayner, associates at law firm Holman Fenwick Willan.

"The case established that the performance warranty will be the benchmark for assessing whether a vessel has in fact proceeded with utmost despatch."

However, Gore and Rayner said most shipping lines' standard contract language absolves them from liability if a shipment takes longer than advertised to deliver, which may make it impossible to sue an owner for slow steaming.

Container lines are increasingly adopting slower speeds to reduce fuel use and absorb excess capacity in their fleets.

A poll released by UniCredit in December found that ship owners almost unanimously say slow steaming is becoming standard in the industry.