Contract risk management has been one of the key lessons for charterers in China during the downturn, according to one of Shanghai’s top maritime lawyers. Geir Sviggum, managing partner of Wikborg Rein’s Shanghai office told SinoShip News that charter party disputes are still very common on the mainland.
“While we used to see pragmatic approaches from owners in terms of renegotiation of rates, this has become more challenging as cash is tight across the food-chain from charterers to owners to head-owners and banks,” Sviggum said.
He also noted the “significant shift” from traditional shipping to offshore, especially among the yards.
On important lessons to take from this particular downturn Sviggum said: “This downturn underscores the importance of contract risk management for charterers. Too many have been too exposed with numerous vessels on time charter at high rates. With limited cash reserves one then becomes overly exposed to downturns.”
He added: “I believe owners have also learned a lot about counterparty risk analysis before entering into charter parties.”