Size matters

A ship agent was informed by one of their LNG clients that they should have benefited from a quantity discount on pilotage tariffs available at the port for which the agent had erroneously not applied.

The discount was available to individual ships, or a consortium, if the ship or consortium of ships achieved the frequency in calls indicated in the scheme within one calendar year.

There were a number of discount rates available, calculated on the length of the ship in metres and the amount of calls made. The lowest number of calls where the discount could start to apply was 18-36. Over 180 calls provided the largest discounts.

The client claimed that they were entitled to discounts for the years 2018, 2019 and 2020 which would have totalled EUR 280,000. One of the conditions to obtain the discount was that the application must have been made no later than 31st December of the year to which the discounts applied. Therefore, as the agent was not made aware of this issue until 2021 they were already time barred from claiming the discounts for the previous years.

The agent had previously claimed for the discounts in respect of the fleet of another client but the application had been rejected because the fleet had not made enough calls to qualify. Based on those numbers the agent did not apply for the LNG client as they had made even fewer calls. However, the LNG fleet had much larger vessels than the previous fleet.

The agent had negligently failed to realise that due to the bigger size of the vessels in the LNG fleet fewer calls were required to qualify for the discount. Whilst the smaller sized vessels required at least 61-72 calls a year to qualify for the discount, the LNG vessels qualified after only 18 calls.

As a result, it was clear that the vessels were entitled to the discount and the agent had not applied for them.

The claim was settled for the full amount of US$ 280,000 by the agent, who was reimbursed by ITIC.