The bunkering industry provides over 200 million metric tonnes of marine fuel annually along main shipping thoroughfares, at ports and offshore, to the tens of thousands of commercial vessels that sail the world’s seas. This is a market that was worth USD110 billion globally in 2020 and is projected to reach USD165 billion by 2030.
Yet, despite its scale and the essential role it plays in supporting global maritime trade, much of the industry 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. It is commercially and reputationally damaging. It is holding back our industry and undermining its prospects for growth.
TFG Marine entered the bunkering market in 2020 with a clear mission: to provide a premium bunkering fuel service, by deploying new technologies that increase efficiency and by ensuring transparency for our customers. We are a joint venture, owned by one of the world’s largest energy providers and two of its biggest shipping operators. That gives us industry knowledge and – as customers ourselves - an innate understanding of the challenges our customers frequently face.
A lack of transparency distorts markets
There is an inherent ambiguity in the way bunker fuel has traditionally been delivered. Marine fuels are supplied around the globe at different densities and in diverse atmospheric and climatic conditions. These variables have a significant impact on the quality and quantity of the bunker fuel supplied. Traditional delivery systems, which only monitor volume flow, cannot capture these differentials with any precision. Suppliers and customers therefore rely on manual measurement and adjustment formulae to agree the specifications for every transaction.
The complexity and opacity of this process makes it difficult to track and report transactions with confidence and accuracy. It also leaves customers vulnerable to fraud and corruption. Some operators have taken advantage of this complexity to game the system. There is a long and shameful history of dubious practices by bunker fuel suppliers that have short-changed ship owners on volumes.
Supplier malpractice takes many forms. It can include delivering fuel with high water, slops or air content, providing incorrect fuel temperatures or tampering with gauging, delivery equipment or paperwork to skew delivery data.
So why do so many operators continue to accept the status quo, when unacceptable practices are rife? The unfortunate reality is that time-consuming and costly counterparty disputes are seen as inevitable - a cost of doing business. And with the important exception of Singapore, there has been scant interest from regulators up to now in resolving the issues. The prevailing view seems to be that inaccuracies even out over time.
Superficially that may sound reasonable, but it is not borne out in practice. A recent Blue Insight study3 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 USD250 million in operating losses for suppliers across 2021. The report went on to argue that, since suppliers would not voluntarily incur these losses over such a sustained period, the only plausible explanation was that volumes were being over-reported. In other words, intentionally or not, bunker buyers were being short-changed on volumes.
In the end, it is hard to avoid the conclusion that, whatever the reason, the opacity of bunker operations distorts markets and disadvantages customers.
MFMs and digital data
Frustratingly for those who wish to operate in a transparent market, there is a proven technology that can eliminate the transactional inaccuracies, but it has not been widely adopted. Mass flow meters (MFMs) make use of the Coriolis effect to allow the flow of fluids and gases to be measured with a high degree of precision. When fitted to ships, MFMs produce computerised records of exact volumes delivered in real time. Both counterparties have access to the same data. When it comes to transactions, what you see is what you get. Supply shortfalls no longer happen.
Another big advantage is that the more detailed transaction data afforded by MFMs allows ship owners to analyse, monitor and improve their impacts. This is vital. The maritime industry has challenging decarbonisation targets. Shippers need accurate fuel consumption data to calculate their GHG emissions. Without this, it becomes very hard to assess the effectiveness of decarbonisation initiatives.
TFG Marine is committed to implementing mass flow meters to offer our customers transparency and certainty. Over a third of our fleet already has MFM technology; more of our barges will be MFM-equipped over the next two years. That compares with an industry-wide average for MFM adoption of less than one percent.
While other industries have embraced digitalisation, the shipping industry has fallen well behind. MFMs have been used in a wide range of industries for many decades. While it is true that, until relatively recently, most ships’ systems could not easily incorporate MFM equipment, that is no longer the case. The industry is running out of excuses to avoid modernising and bringing into force rigorous standards of reporting and accountability.
It's time to make MFMs mandatory
As one of the world’s largest marine fuel suppliers, we are engaging with customers, peers, governments and authorities to address the industry-wide challenges that have plagued the marine fuel sector for far too long. Together with a growing number of major industry participants, we are now calling for the widespread adoption of mass flow metering.
We have joined with 50 other major industry participants representing 2,000 vessels to appeal to the Rotterdam and the Antwerp port authorities to follow Singapore’s lead and introduce mandatory MFM delivery in their jurisdictions.
The experience of the Maritime Port Authority of Singapore, which regulates the world’s largest bunker market, has already shown what can be achieved. In 2017, after painstaking work to introduce common standards, it mandated the use of mass flow meters (MFMs) for all bunker fuel deliveries within its jurisdiction.
Mandating MFM usage was transformative for Singapore. With analogue and manual processes increasingly consigned to the past, it is now viewed as the world’s most trustworthy bunker location. Singapore will continue to benefit from being a frontrunner in bunkering technology. It’s time for the rest of the world to follow suit.
A sustainable future for worldwide shipping requires action now. We need mass flow meters across the bunkering industry. We call on our peers, our partners and industry regulators to join with us and help make that happen.
Find out more about TFG Marine and mass flow metering here.
1 IMO: Report of fuel oil consumption data submitted to the IMO Ship Fuel Oil Consumption Database in GISIS (Reporting year: 2020) (link)
2 Bunker Fuel Market Global Opportunity Analysis and Industry Forecast, 2020-2030 by Saurabh Dixit and Yerukola Eswara Prasad (link)
3 Adrian Tolson, Blue Insight (2022) Fuel Buyers Losing Millions a Year as Bunker Industry’s Shame continues Unabated (link)