The Business Risks and Rewards of Differing ‘Warranted Conditions’

This paper was presented in February 2025 at the HullPic Conference under the title: 'Choose your words carefully: The Business Risks and Rewards of Differing ‘Warranted Conditions’ in Speed-Fuel Warranties'

Among other things, it shows an anonymized case for a Suezmax Tanker and a Kamsarmax bulker, where the exact same vessel's speed-fuel figures can be ~45% different, purely due to variations in the 'warranted conditions'. A shocking example of how current speed-fuel warranties are deeply flawed.

Introduction

Speed-fuel warranties are fundamental to commercial shipping agreements, directly influencing vessel valuations, chartering decisions, and financial risk. However, the lack of standardized ‘warranted conditions’ has led to widespread ambiguity, creating room for misinterpretation, commercial disputes, and even arbitration battles. Without clear definitions, shipowners and charterers frequently find themselves at odds over what constitutes ‘good weather’, leading to costly misjudgments in performance and contentious claims. This paper explores the commercial and legal risks associated with inconsistent warranty wording, highlighting real-world financial impacts. More importantly, it argues that a shift toward clearer, standardized performance benchmarks will not only reduce disputes and improve market predictability but also accelerate maritime decarbonization. By rewarding efficiency and eliminating loopholes that mask underperformance, standardization can drive investment into greener, higher-performing vessels, creating a financial incentive for sustainability in global shipping.

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