Speed and Consumption Warranty

What it does

A speed and consumption warranty is the owner's description of how the vessel will perform: the speed she will achieve and the quantity of fuel she will consume, usually stated for laden and ballast conditions and qualified by weather limits, for example up to a stated sea state or wind force. It is a central part of the vessel description in a time charter, because the charterer is buying the ship's performance over time.

The clause provides the yardstick against which actual performance is measured and sets up the charterer's remedy if the ship falls short. Under-performance, the ship being slower or burning more fuel than warranted in the agreed conditions, gives rise to a performance claim, typically compensating the charterer for the time lost and the excess bunkers consumed, calculated over the voyages performed during the charter.

Commercial effect

The warranty allocates performance risk and feeds directly into the economics of the charter. The charterer plans its voyages and prices its business on the warranted speed and consumption, so a shortfall costs it time and fuel money. The clause converts that loss into a measurable claim, while a ship that performs as warranted gives the charterer the value it paid for in the hire rate.

How the warranty is framed and qualified is where much of the value lies. The weather limits, the basis on which performance is assessed, often using independent weather routing data, and whether good-weather periods alone are used to judge performance all shape the size and viability of any claim. The clause is read with the off-hire and weather provisions, and it pairs naturally with voyage performance analysis.

Owner's perspective

The owner wants the warranty stated with realistic figures and clear weather and condition qualifications, so that it is judged only in the conditions for which the promise was given and is not exposed to claims for slow steaming caused by heavy weather, adverse currents, or fouling outside its responsibility. It wants the assessment basis defined to avoid disputes built on selective data.

The owner also wants the consequences confined to a fair measure of the charterer's actual loss, the time and bunkers genuinely wasted, rather than an inflated calculation. It is mindful that hull fouling and bottom condition over a long charter can affect performance, and it negotiates how those factors, and the good-weather sampling used to judge performance, are treated so the warranty remains a fair description rather than an open-ended guarantee.

Charterer's perspective

The charterer relies on the speed and consumption figures to plan and price its employment of the ship, so it wants them to be accurate and the warranty to bite if the vessel under-performs in the agreed conditions. It values a clear basis for measuring performance, commonly independent weather routing data over good-weather periods, so that a genuine shortfall produces a recoverable claim.

The charterer wants the remedy to capture both elements of its loss, the extra time the slower ship takes and the additional fuel a thirstier ship burns, since both directly affect its voyage economics. It negotiates the weather limits and assessment method so they are fair but not so generous to the owner that real under-performance escapes the warranty, and it aligns the clause with how it actually trades the ship.

Negotiation points

• The warranted speeds and consumptions for laden and ballast conditions, and the weather limits.
• The basis for assessing performance, including the use of independent weather routing data.
• Whether performance is judged on good-weather periods only and how those are defined.
• The treatment of hull fouling, currents, and bottom condition over the charter period.

Common variations

• A warranty of speed and consumption up to a stated wind force or sea state.
• A clause assessing performance using independent weather routing reports.
• A good-weather warranty judged only over qualifying weather periods.
• A performance regime with agreed allowances for fouling over a long charter.