i4 Insight take-up signals changing charterer sentiment

Ship performance data, carbon intensity and operational efficiency are now top priorities for shipping’s customers. LR's digital network, i4 Insight, is proving a popular solution for charterers.

Geneva may be more than 900 kms from the sea, but this spectacular city provides the backdrop for thousands of charters negotiated and fixed each year. Many of the world’s largest charterers and traders have offices in the Swiss city from which they control western hemisphere or global operations.

It has already proved an invaluable location for the European operations of i4 Insight, a company that offers a portfolio of interactive digital systems that provide accurate, real-time data to the principals in a charter agreement – namely a shipowner and his customer, the charterer. Though based in the US, i4 Insight’s Geneva office provides an essential link to some of shipping’s most important customers.

The list includes names like Archer Daniels Midland, Bunge, Cargill, Glencore, Gunvor, Louis Dreyfus, Noble and Trafigura. Major oil companies also feature. And some of these heavyweights recently put their names to the ground-breaking Sea Cargo Charter, a framework for monitoring and recording the climate alignment of sea transport operations.

Changing sentiment

This is a huge development for several reasons and is a clear sign that i4 Insight’s business model is right on the money. One, the company’s insistence on both accessibility and transparency of ship operating data for owner and charterer offers a new environment for a joint focus on operating efficiency and an end to the traditionally adversarial relationship between the two parties. Everyone’s a winner, except possibly the hundreds of highly-paid lawyers who specialise in charterparty disputes.

And two, for the first time ever, shipping’s major customers are weighing up their chartering options on the basis of ships’ environmental performance, not merely the daily charter rate. This is now a top priority as existing ships will soon have to be assessed under the IMO’s short-term EEXI and CII measures.

LR’s Chris Hughes has already noticed a transformation in the sentiment of major charterers, particularly their attitude to climate-related performance criteria. This is why, he explains, Geneva is such a good location for the company. Recently, he says, his marketing pitches are being met with much more interest, and the target/client conversion rate is rising steadily.

Hughes cites several reasons for this. The prospect of new low- or zero-carbon future marine fuels will raise shipping’s bunker bill by a multiple in the future. To provide a catalyst for their take-up, carbon pricing is likely and, under timecharter contracts, bunkers are for charterer’s account.

In the absence of carbon pricing, regional measures could well be introduced. The European Parliament’s aim to include maritime transport in the block’s Emissions Trading Scheme is one example.

Raising the stakes

Hughes believes that the IMO’s short-term measures will inevitably mean that charterers take a closer look at the ships they plan to fix, ahead of time. And he points to several products in the company’s portfolio which cater to this requirement, the more recent being the tie-up with BunkerEx, a bunker optimisation service.

A new era of information exchange and cooperation is already evident between charterers and owners, Hughes notes. This reflects the urgency with which major users of sea transport view the decarbonisation issue. And that, he suggests, is why his sales pitches are greeted with increasing enthusiasm in Geneva.

The company has some astonishing examples of new charterer/owner collaboration. Hughes highlighted cases where charterers had offered to support shipowners in the installation of shipboard sensors to provide more data. They were no longer satisfied with the noon reports prepared by fallible human beings. Others have offered to contribute to the cost of cleaning ships’ bottoms to reduce resistance and cut fuel burn.

The i4 Insight business model is based on making the same accurate data available to shipowner and charterer, so that decisions can be agreed and steps taken to optimise key metrics. Hughes sees more collaboration in the months ahead as inevitable because, in his words, “owners and their charterers need each like never before”.