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Transportation

New report highlights the millions of dollars in damages shipping faces every year from off-spec bunkers

A new 35-page report on bunker testing compiled by consultancy Thetius for class society Lloyd’s Register highlights the multi-million dollar losses shipping endures every year from off-spec fuel deliveries.

According to Thetius research, every year fuel suppliers globally deliver between 1m and 1.5m tonnes of off-spec fuel to vessels over 5,000 gt engaged in foreign trade. Of the off-spec or contaminated fuels that are detected, over 6,200 tonnes is debunkered at significant cost.

Data from a recent BIMCO and the International Bunker Industry Association (IBIA) published in May 2022 indicates that an average fuel oil quantity dispute costs $27,790, while fuel quality disputes average just over $54,000.

“Significant gaps remain where opportunities for poor fuel quality and off-quantity deliveries can gain and maintain a foothold,” the new Lloyd’s Register report states, a focus for much of the discussion going on at Sibcon, the world’s largest bunkering event, taking place in Singapore this week.

The recent BIMCO and IBIA survey showed 80.85% of respondents would prefer to bunker at a port with a bunker licensing program, despite 48.9% believing it would increase fuel prices at the port.

Likewise 94.15% of respondents in the survey said they would prefer to bunker from a supplier that has a mass flow meter installed and 79.79% would accept the supplier’s figures from a properly installed, certified and used mass flow meter. This positive response is despite 59.57% believing that it would increase fuel prices.

“This suggests that many customers are willing to pay extra for the protection and assurance afforded by a mass flow meter, which may offset suppliers’ high initial installation and purchase costs,” the authors of the Lloyd’s Register report stated, going on to add that professional testing and verification services are the only reliable way to protect seafarers, assets, and financial transactions from harm.

“Shipping cannot hope that supply side controls will eventually eliminate the problems from their risk registers without also making sound basic investments into protecting their own assets and interests. New standards and regulations will help those who also chose to help themselves,” the new bunkering report advised.

In March, Splash broke the story of a sprawling contaminated bunker scandal, which ultimately affected 200 ships, with the subsequent legal battles likely to run for years and cost millions of dollars.

Chlorinated compounds were found in many samples of fuel sold by Glencore and PetroChina, resulting in damage to fuel injection pumps, injectors, filter elements and purifier systems with many ships breaking down.

Singapore’s swift, comprehensive action in the wake of the scandal breaking drew praise, as has its commitment to use mass flow meters to ensure the right volumes of fuel are actually delivered – a piece of technology very few other bunkering hubs have engaged with.

“Despite the bunkering industry’s scale and the essential role it plays in supporting global maritime trade, much of it is still steeped in old-fashioned, outmoded operational practices. There is a continuing lack of transparency in the way marine fuel is delivered. This has to change,” argued Kenneth Dam, global head of bunkering at TFG Marine, in a post on the company’s website this summer. TFG Marine is a joint venture between Trafigura and John Fredriksen founded two years ago. Dam urged other leading bunkering hubs to follow the lead of Singapore and get mass flow meters installed as soon as possible.

A recent Blue Insight study assessed bunker deliveries at Rotterdam and Fujairah, the world’s second and third largest bunkering ports. It concluded that reported VLSFO bunker volumes at these two locations resulted in $250m in operating losses for suppliers across 2021 with bunker buyers being severely short-changed on volumes.

TFG Marine, which wants mass flow metes to be made mandatory globally, has joined with 50 other industry participants representing 2,000 vessels to appeal to the Rotterdam and the Antwerp port authorities to follow Singapore’s lead and introduce mandatory mass flow meter delivery in their jurisdictions.

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