Demurrage Benchmarking Study

January 22, 2010

Haugen Consulting (HC) was first approached a year ago by an oil major who was interested in HC conducting a demurrage benchmarking study with their peers. The project is a natural fit for our company as we are an international independent demurrage consulting firm and thus naturally well-versed in the depth and breadth of demurrage issues. In embarking on this study, we sought input from those interested in participating as to what they would like to see reported.

The purpose of the study is to assess one’s demurrage department’s performance in relation to its peers by quantifying what a successful demurrage department actually is and the business practices leading to that success. To accomplish this many factors would be considered and data stratifications reported, including but not limited to, differentiating amongst cargo, vessel type, payable and receivable claims; and, further, distinguishing settlement cycle time norms between claims made by vessel Owners and claims made by commercial trading partners. In addition, the study will explore the demurrage cost on a per barrel basis, demurrage to freight ratios, demurrage analyst experience, software, operating procedures, and overhead. Naturally, due to the confidential nature of this study, HC would sign confidentiality agreements with all the participants.

Great idea, right? Well, it may be a great project that will yield insightful information but as with all things in life, timing is everything. The study did not take flight a year ago due to an insufficiency of participants; perhaps the economy was to blame. More recently, about a year after we initially embarked on this study, we got a call from an interested participant who last year was not a subscriber but now wants to see this project launched. Perhaps now the time is right?

Again, with enthusiasm brimming, HC campaigned for the resurgence of this study amongst numerous producers and trading companies, but to no avail. Although some previously disinterested parties expressed interest this go around, it was nullified because some of last year’s interested parties declined participation this time. There’s simply not enough interest to get this off the ground at the moment.

Nonetheless, we will not abandon this demurrage benchmarking study altogether, rather, we look forward to the day when more organizations will be inclined to participate to gain insight into running a successful demurrage department. Just give us a call if this study is of interest to you and we’ll be happy to make another attempt at launching it. I’m certain that one day this project will fly, it’s just a matter of when.