Time for bunker markets to become more transparent and efficient, shipowners say.

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Editorial note.

A more transparent and efficient market should help the bunkering industry come of age. As a first step towards this direction, a few Danish shipowners recently expressed their concerns in the shipping media.

Since recently, there have been many Buyers’ complaints about issues related with poor quality service and various malpractices in the ARA region, which is the second largest bunkering market in the world, while situation is similarly bad in many ports worldwide. At the same time, the initiatives taken by Singapore have resulted into some positive effects and although the system even there is still far from perfect, introducing such measures is a good starting point.

But what are those measures that need to be reproduced by other port authorities?

First of all, Singapore has applied a set of standards that need to be followed by all bunker suppliers and which the port authorities can easily enforce. Secondly, it has introduced a licensing scheme by which only those suppliers who follow the set of standards are allowed to supply bunkers in the area, otherwise a license will not be issued while it can also be revoked or not renewed in case a malpractice or any other violation of rules/standards takes place. Finally, the use of Mass Flow Meters, which enhances the transparency in regards with the actual quantity of fuel delivered each time, has been mandatory for all suppliers active in the area.

While other ports, such as Rotterdam, have recently announced they are are exploring the possibility to introduce a licensing scheme, they have advised that the installation of MFM will remain optional. According to some shipowners this is not enough. Even if buyers are willing to buy from suppliers equipped with Mass Flow Meters, there should be in place a set of rules about the characteristics and use of the equipment as well as the possible penalties in case a malpractice is uncovered.

Finally, it would seem that Buyers need to change their habits in order for the industry to become healthier. Buying the cheapest fuels, as many buyers are still doing, is not the right approach any more, while it puts suppliers under pressure to offer a cheaper and lower quality product. Instead, supporting those suppliers who are doing the right thing should become buyer’s priority. However, buyers are not yet comfortable to pay the extra price since it does not look like it can result to the desired outcome.

The use of technology and the enforcement of a legal framework can offer, at least a partial, solution to this problem. If suppliers are operating in line with specific standards and buyers are confident about it, they will be willing to pay a reasonable premium on price. What Buyers want is paying a fair price and getting an assurance that the fuel will be delivered in a timely and a trustworthy manner.

A more transparent and efficient bunker market will help the shipowners and the shipping industry to move in the right direction. Whether the answer is Mass Flow Meters, new technology, increased legislation or something completely different, remains to be seen but the fact is that the bunking has not changed much in the last decades.

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