BIMCO (International Shipping Association) has introduced a new contractual framework to address one of the long-standing commercial disputes in the shipping industry. This framework is designed to determine the costs associated with energy-saving upgrades on ships, while charterers receive a significant portion of the financial benefits from these upgrades.
Details of the New Framework
The Copenhagen-based organization announced that its documentation committee has approved the 2026 Energy-Saving Device Upgrade Addendum. This addendum provides a standard framework for negotiating upgrade projects during existing charters. It includes how to divide installation costs, timing impacts, and financial benefits from reduced fuel consumption between the two parties.
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New Agreement and Its Benefits
Instead of setting fixed percentages, this framework allows the parties to negotiate arrangements related to individual projects. It addresses the discrepancies in traditional time charter agreements. Typically, shipowners bear the costs of equipment installed on their ships, while charterers may reap a significant portion of the fuel savings resulting from these upgrades during their employment period. This division has complicated investment decisions even when upgrades measurably lead to improved efficiency.
BIMCO stated that this addendum is technology-neutral and can encompass various energy-saving systems and the financial implications of existing and future environmental regulations. The organization has worked with representatives from shipowners, charterers, and the insurance sector on this framework.
In June, BIMCO announced that the development of this framework had reached its final stages, and after consulting with industry participants and its documentation committee, the drafting process included representatives from Stena Rederi and Cargill Ocean Transportation. This new agreement is designed to provide a common contractual basis for upgrade projects that previously required separate commercial agreements.
BIMCO announced that this addendum will be available through its SmartCon contractual platform and will be accompanied by explanatory guidance.
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