A new report from Thetius and Lloyd’s Register analyzes the role of ship fuel oil assessment and quantity verification during “uncertain times.”
Variations in bunker fuel quality have been a pressing issue for some time and lobbying for tighter bunker licensing and chain of custody schemes aimed at improving supply chain transparency have increased in recent years. But as operators and insurers are witnessing, the problem of off-spec and poor quality bunker fuel is at constant risk of resurgence. Changes to the geographic orientations of global bunker fuel markets are another influential factor.
According to the report, to meet growing local demand, Europe will need to increase imports from North America, South America, and the Middle East and this will increase ton-mile costs for crude and refined stocks, and put further price pressure on fuel supplies.
As fraud and corruption in bunker supply continue to impact operator margins, this increased pressure may provide more oxygen to less scrupulous suppliers in the bunker supply chain, leading to even more variability in quality and quantity
When evidence shows that in excess of one million metric tons of off-spec or non-compliant fuels are detected each year, the cost to industry is considerable, with the bill to the unwary ship operator estimated at $27k – 50k USD per event.
Issues operators face
The issues that operators face need to be considered alongside some of the more positive, but no less influential developments such as:
– The introduction of biofuel oils;
– The increasing prevalence of bunker licensing schemes;
– The increased commonality of mass flow meters;
– Upcoming changes to ISO standards for marine grade fuels;
– The rise of GC-MS and ‘lab-on-ship’ technologies.
Together, they form a picture of the constantly shifting patterns, parameters, and problems that ship operators face in their bunkering operations whether fully aware of the risks or not.
As regulations, technologies, and market movements conspire, there has never been a more important time for operators to ensure they are receiving the best advice and oversight on bunker procurement and refuelling operations.
Recommendations for managing fleet fuel oil
1 Expertise matters: The testing, analysis, and evaluation of bunker fuels requires more than a deep understanding of petro-chemistry and laboratory techniques. It also requires a deep understanding of market forces, regional differences in operation, and when things are found amiss – corrective actions.
2 Work with suppliers to set clear expectations: One example of this could be to agree to longer contracts with trusted suppliers in exchange for installing mass flow metres similar to those set out in the Singapore requirements.
3 Take a Belt and Braces approach to new technology: Where time to result is critical, providing test kits and flow monitoring equipment to crew, training them to use them effectively, and backing up results with laboratory analysis offers a well thought-out approach to reducing fuel risks.
Outlook
The report notes that the outlook is generally optimistic in the bunker markets during the long transition to alternative fuels. But as recent events in Singapore have shown is that one thing remains true regardless of the macro trends; professional testing and verification services are the only reliable way to protect seafarers, assets, and financial transactions from harm.
Click here to access the report.
