Category: Shipping News

30-01-2017 Senegal – the importance of accurate customs declarations

Senegalese customs continue to pay particular attention to a vessel’s declarations of lubrication (lube) oil and failure to declare “used lube oil” may be considered an infringement of the country’s customs code.

The imposition of customs fines continues to be an issue at the port of Dakar, Senegal. In a recent case, a Gard Member’s vessel was fined EUR 100,000 for failure to properly declare a quantity of “used lube oil”. According to the attending customs officer, a difference was noted between the amount of lube oil stated in the official customs declaration and in an attached “Lubricants Declaration” stamped and signed by the Chief Engineer.

Members and clients have also previously been alerted to the risk of fines being imposed in Dakar should a vessel fail to properly and accurately declare its cargo, fuel, stores, provisions and other material on board, see our Gard Updates of 13 April 2012, 2 November 2008 and February 2007. Reports at that time included incidents of fines being imposed for:

• failure to have the bunker declaration form completed by the time the customs officers arrived in the Master’s cabin;
• attaching “unofficial” documents to the customs declaration, even if their purpose was to clarify details stated in the official declaration;
• differences between declared quantities and quantities measured and counted by custom officers’ during own inventory inspections; as well as
• differences noted between the quantity of lube oil notified by the Master to customs and the detailed list by grade remitted by the Chief Engineer at customs’ request.

Masters of vessels calling at the port of Dakar must continue to be vigilant and pay close attention when filling in the customs declaration and stores list as any errors, omissions and/or discrepancies are likely to result in substantial fines. Even lube oil considered to be “in use”, e.g. in the engine sump tank, hydraulic system pressure tank for windlass and winches, stern tube, etc. should be declared in the stores list. However, as such measurements could depend on whether the equipment is in service or not, we recommend to state in the store list whether the measurement was carried out with the equipment in operation or stopped. The accuracy of all numbers is crucial.

As previously recommended by Gard, Masters should also contact the vessel’s local agent well in advance of arrival to ascertain the customs regulations in force in Senegal and the documentation required. In order to avoid misunderstandings, it is advisable that the agent verifies the formal documents before remittance to the customs officer and is present on board when the Master meets with the customs officers.

Source: Gard

25-01-2017 Russian ice breaker and bulker duo forced to stay for winter in the Arctic, By Marcus Hand, Editor, Seatrade Maritime News

An ice breaker and two bulk carriers are being forced to wait out the winter off Russia’s Arctic coast after the ice became too thick for safe navigation.

The ice breaker Kapitan Dranitsyn and two bulk carriers, Sinegorsk and Iogann Makhmasta, are being forced to stay for the winter at Chukotka anchorage outside the port of Pevek, according to Russian news site PortNews.

The port which is on the North Sea Route that connects Europe to Asia during in the summer months, normally closes in November for the winter, however, it had remained open for the supply of materials for building the floating nuclear power plant Akademik Lomonosov.

A convoy comprising ice breakers Kapitan Dranitsyn and the two bulkers arrived in Pevek on 7 January and left the port on 13 January but faced a barrier of heavy ice at the exit from the Chaunskaya Guba bay.

FSUE Rosmorport said the two ice breakers could have broken through the four – five mile ice barrier there was risk of damage to the two Arc 5 ice class bulkers.

“It is not an emergency situation. Winter anchorage is a positive practice to prevent incidents associated with severe ice conditions,” a statement from FSUE Rosmorport said.

The vessels are set for a lengthy stay with the summer navigation period not expected to start until late May – early June.

25-01-2017 Dry Bulk Shipping Outlook 2017: “Returns front ended, normalisation in the price” says Drewry Financial (3)

When we upgraded the Dry bulk shipping sector in June 2016, we had argued that “the long-awaited normalisation process has already begun in the dry bulk shipping; even as we highlight that recovery will be slow, but the time to be permanently bearish on the sector has passed. In our view the normalisation provides opportunity over the next two years.” Our core argument was, “the sector is becoming a supply-side story rather than demand, which has been the case for much of the last decade.”

Our normalisation thesis was based on multiple variables aligning in favour of the sector, “ supply-side rationalisation the key theme of 2016-18, capital is scarce, easing bankruptcy risk, pessimism is at its peak, sector is out of favour and nowhere on investors radar, speculative money is throwing in the towel and serious and patient capital is deploying.”

On stocks, we had stated, “assets as well as dry bulk equities overshot on the downside; the normalisation process will lead to great opportunities even with incremental gains in the underlying markets as discount to NAV narrows”.

Since then, the dry bulk stocks have been the best performer with outsized gains and our top sector picks Star Bulk Carriers Corp (SBLK US), Scorpio Bulkers Inc. (SALT US) have been on a tear and other stocks have followed up with decent gains. Our DFRS Maritime Model portfolio which remains heavily weighted to dry bulk (42% of overall weightage) is up 18.4% since the start of the year.

The run up in stocks has been ferocious but that can be explained by a return of strong investor interest, massive short covering in key US listed names and a reset of valuations. Valuations in historical context do seem cheap but the “value play” is mostly done in our view, “optionality” though still remains very high.

For 1H17, we believe most of the factors having played out well over the past 6-9 months, the sector is ripe for a near term consolidation as returns have already been front loaded. We do expect another rally to follow in 2H17 as freight markets catch up and expectations for a better 2018 starts getting discounted in the price.

Longer term, we see the cost structures which have been “cut to the bone” over the last few years will start rising again. For many companies, lower interest costs have been achieved by way of debt restructuring and interest payment moratoriums. As losses narrow and profitability returns the covenants will also kick in in the near future.

We remain positive but believe stocks could be at the risk of “too soon too fast”, much desired would be a near term consolidation as underlying freight market improvements pan out.

The key risk to the dry bulk recovery is return of new orders led by subsidy-backed ordering activity by Chinese companies at local shipyards. For instance, ordering in 2016 was mainly attributable to the 30 VLOCs ordered at the Chinese shipyards, most of them by Chinese shipowners. Government intervention in a bid to support the struggling enterprises could delay the recovery in the sector.

The dry bulk stocks are likely to enter a short term consolidation after a sharp rally that we have witnessed since the start of 2017. Even after the sharp rally, the current stock prices have factored in only 5% of the premium on the asset prices and are still below our target prices based on a premium of 10% on the current asset prices.

In a very bullish scenario, which is not our base case, there could be significant upside if the asset prices rise faster than our expectations. We note that changes in asset values have an amplified effect on stock prices due to high optionality of the dry bulk companies.

Source: Drewry Financial Research Services

25-01-2017 SwissMarine, Cargill split on dry investment, By Andy Pierce, TradeWinds

Two key players in the dry bulk market are adopting contrasting views on investments with a slow recovery in store.

SwissMarine chief Peter Weernink has plans to grow the fleet with older ships, while Cargill’s Eric Aboussouan believes it’s better to keep money in the bank for now.

Weernink told the Marine Money forum in London he suspects the company will be buying more ships this year, with the focus likely to be on older vessels which are close to scrap value.

“We think the uncertainly when you think of a life span to 2020 to 2022 is lower on those than in the 2008 to 2012 range,” he said.

Weernink, who expressed concern about a potential restart of newbuilding orders, noted that ships built in the late 1990s and early 2000s showed little difference in fuel consumption relative to anything built before 2013, when the first eco ships were delivered.

In a discussion chaired by AM Nomikos sale and purchase director Jamie Freeland, Aboussouan, head of market research and trading analytics at Cargill, said he saw no need to rush into new investents.

“I would wait. There is no rush. Secondhand values, commodities, equities, all have shown a major upward movement in the last six months,” he told the audience at the Dorchester Hotel.

“I think it’s time for Cargill to take a bit of a breath and let’s look at the options in three or four months time. There is no rush.”

Turning to the freight market, Aboussouan said questions remain around coal and iron ore, while there was a big concern about a restart in newbuilding orders.

“I think the market is cautious about the medium to long term outlook,” he said.

“Everybody wants to be positive. At the same time it’s not so clear we will have a much stronger market in 2018 or 2019. There is a lot of uncertainty about it,” he said.

Weernink expects rates in 2017 to be better than last year. “Eighteen and ’19 we do see a gradual improvement going forward,” he said. “The outlook remains gradual recovery.”

25-01-2017 Dry Bulk Shipping Outlook 2017: “Returns front ended, normalisation in the price” says Drewry Financial

When we upgraded the Dry bulk shipping sector in June 2016, we had argued that “the long-awaited normalisation process has already begun in the dry bulk shipping; even as we highlight that recovery will be slow, but the time to be permanently bearish on the sector has passed. In our view the normalisation provides opportunity over the next two years.” Our core argument was, “the sector is becoming a supply-side story rather than demand, which has been the case for much of the last decade.”

Our normalisation thesis was based on multiple variables aligning in favour of the sector, “ supply-side rationalisation the key theme of 2016-18, capital is scarce, easing bankruptcy risk, pessimism is at its peak, sector is out of favour and nowhere on investors radar, speculative money is throwing in the towel and serious and patient capital is deploying.”

On stocks, we had stated, “assets as well as dry bulk equities overshot on the downside; the normalisation process will lead to great opportunities even with incremental gains in the underlying markets as discount to NAV narrows”.

Since then, the dry bulk stocks have been the best performer with outsized gains and our top sector picks Star Bulk Carriers Corp (SBLK US), Scorpio Bulkers Inc. (SALT US) have been on a tear and other stocks have followed up with decent gains. Our DFRS Maritime Model portfolio which remains heavily weighted to dry bulk (42% of overall weightage) is up 18.4% since the start of the year.

The run up in stocks has been ferocious but that can be explained by a return of strong investor interest, massive short covering in key US listed names and a reset of valuations. Valuations in historical context do seem cheap but the “value play” is mostly done in our view, “optionality” though still remains very high.

For 1H17, we believe most of the factors having played out well over the past 6-9 months, the sector is ripe for a near term consolidation as returns have already been front loaded. We do expect another rally to follow in 2H17 as freight markets catch up and expectations for a better 2018 starts getting discounted in the price.

Longer term, we see the cost structures which have been “cut to the bone” over the last few years will start rising again. For many companies, lower interest costs have been achieved by way of debt restructuring and interest payment moratoriums. As losses narrow and profitability returns the covenants will also kick in in the near future.

We remain positive but believe stocks could be at the risk of “too soon too fast”, much desired would be a near term consolidation as underlying freight market improvements pan out.

The key risk to the dry bulk recovery is return of new orders led by subsidy-backed ordering activity by Chinese companies at local shipyards. For instance, ordering in 2016 was mainly attributable to the 30 VLOCs ordered at the Chinese shipyards, most of them by Chinese shipowners. Government intervention in a bid to support the struggling enterprises could delay the recovery in the sector.

The dry bulk stocks are likely to enter a short term consolidation after a sharp rally that we have witnessed since the start of 2017. Even after the sharp rally, the current stock prices have factored in only 5% of the premium on the asset prices and are still below our target prices based on a premium of 10% on the current asset prices.

In a very bullish scenario, which is not our base case, there could be significant upside if the asset prices rise faster than our expectations. We note that changes in asset values have an amplified effect on stock prices due to high optionality of the dry bulk companies.

Source: Drewry Financial Research Services

24-01-2017 DNV GL in China: First AiP for scrubber manufacturer Shanghai Bluesoul

DNV GL has awarded the Chinese scrubber manufacturer Shanghai Bluesoul Environmental Technology with an Approval in Principle (AiP) in recognition of the technical feasibility of the BlueSulf scrubber system. The AiP is the first of its kind for a scrubber according to the new DNV GL rule set, and the first for a Chinese scrubber manufacturer. DNV GL will also provide advisory services to Bluesoul, including hardware-in-the-loop testing, simulations using the DNV GL COSMOSS tool and analyses using computational fluid dynamics (CFD).

“We are very pleased to be the first Chinese supplier to receive this AiP and it demonstrates BlueSulf’s design in compliance with DNV GL class rules requirements, by using the sodium alkali method to clean exhaust gases. We have signed three scrubber projects with Chinese and European owners and we are also in negotiations for several potential retrofit and new building projects. Thanks to DNV GL’s extensive experience in scrubber technology and our continued collaboration, we are confident that we will gain a large share in the scrubber market,” said Jacky Chow, Chief Operating Officer of Shanghai Bluesoul, at the AiP handover and contract signing in Shanghai.

“For us at DNV GL, this is the first project with a Chinese manufacturer, where we will provide such a comprehensive set of services, ranging from the initial AiP to advisory services and the final certification. This project is a global effort and involves our local specialists in China as well as support from scrubber classification and advisory experts based in Norway, Germany and Greece. We are very pleased about the trust Bluesoul has placed in us and look forward to working closely with the company now and in the future,” said Vincent Li, DNV GL Maritime Regional Business Development Manager in Greater China.

Shanghai Bluesoul’s Bluesulf scrubber is a hybrid system that can switch between open and closed loop mode. This type of system is the most popular at present, as it allows greater flexibility to adjust to changes in water salinity and requirements in different ports. In some areas the use of open loop scrubbers has been prohibited. Able to operate both on seawater and fresh water, the design reduces the sulphur content in exhaust gas to 0.1 per cent or less, ensuring compliance with the requirements of the Chinese Emission Control Area (0.5 per cent) that has been in force in eleven ports in China since 1 January 2017 and the upcoming global sulphur cap.

“These regulations have created a new market for scrubbers in the region and we are pleased to be part of that and support customers in developing safe, reliable and efficient exhaust gas cleaning systems,” adds Fabian Kock, Head of Section Safety and System, DNV GL Approval Centre China.

Hardware-in-the-loop testing
DNV GL is the only classification society to offer hardware-in-the-loop testing on scrubber automation systems through its Marine Cybernetics team. These tests are carried out in a virtual environment, enabling experts to check whether a scrubber control system is robust enough to withstand the expected stresses. By the time an automation system goes into operation at sea, its performance has been fully verified down to the individual line of software code.

DNV GL COSSMOS
DNV GL COSSMOS (Complex Ship Systems Modeling and Simulation) is a simulation tool used to assess and optimize complex integrated ship systems fast and accurately with respect to energy efficiency, emissions, costs, and safety. COSSMOS can support scrubber manufacturers during the design stage, for example by verifying the pump capacity and the correct wash water quantity, according to the specific smoke amount of the intended vessel. It can also identify the PH value of the water a vessel will operate in, in order to verify the design and calculations, as well as reduce the risk of additional production costs.

CFD analyses for scrubber systems
MARPOL MEPC.259(68) requires sufficient dilution of a scrubber’s acidic wash water with respect to the limiting minimum pH value, at 4m distance from the discharge outlet. Computational Fluid Dynamics (CFD) is accepted as an equivalent substitute for in-situ measurements at sea. Using CFD analyses, DNV GL can also provide design optimization recommendations for different components, such as the scrubber discharge outlet arrangement, in order to improve the physical dilution of wash water.

Shanghai Bluesoul Environmental Technology Co., Ltd is a professional marine environment protection company that focuses on research and delivery of technical services to their clients. Shanghai Bluesoul has a professional design team: talented members with subject matter knowledge, strong design ability and rich engineering experience, to provide complete ship exhaust gas treatment solutions and personalized services to users. Shanghai Bluesoul explicit promise is ‘minimize the ship operation cost’.

Bluesoul’s scrubbing technology is highly sophisticated, the results of ten years perfecting it to make it as clean and cost effective as it is today. The company offers an all-in-one solution that cools gases and removes sulphur at the same time. Additionally, this system creates zero backpressure.

Source: DNV GL

24-01-2017 New sampling guidelines for the sulphur content of fuel oil, Source: Gard

The IMO has published a recommended method for sampling of liquid fuel oil used on board ships to assist with effective control and enforcement of the sulphur content requirements under MARPOL Annex VI.

IMO’s “Guidelines for Onboard Sampling for the Verification of the Sulphur Content of the Fuel Oil used on board ships” was approved in October 2016 at the Maritime Environment Protection Committee’s 70th session (MEPC70) and has been issued as MEPC.1/Circ.864. Although the guidelines are a recommendation only, they set forth an acceptable sampling method for inspectors to determine the sulphur content of fuel oils, both with respect to location of sampling points and handling of the samples.

It is worth noting that the ship’s representative should, in the absence of a dedicated sampling point approved by the flag state/classification society, be able to propose a location and arrangement for sampling that is safe and representative of the fuel. According to the IMO guidelines, this sampling point should comply with all the following requirements:

• be easily and safely accessible;
• take into account the different fuel oil grades used for the fuel oil combustion machinery item;
• be downstream of the in-use fuel oil service tank;
• be as close to the fuel oil combustion machinery as safely feasible taking into account the type of fuel oil, flow-rate, temperature, and pressure behind the selected sampling point;
• be located in a position shielded from any heated surfaces or electrical equipment and the shielding device or construction should be sturdy enough to endure leaks, splashes or spray under design pressure of the fuel oil supply line so as to preclude impingement of fuel oil onto such surface or equipment; and
• be fitted with suitable drainage to the drain tank or other safe location.

The IMO guidelines also draw attention to the importance of only taking the fuel oil sample once a steady flow is established in the fuel oil circulating system as well as thoroughly flushing through the sampling connection with the fuel oil in use prior to drawing the sample.

Members and clients are advised to revisit their onboard procedures for fuel sampling and consider if the recommendations contained in the IMO guidelines should be implemented. Following an inspection involving sampling, it is also advisable that the ship’s representative verifies that all sample bottles are properly sealed and labelled. For each sample drawn during the inspection, one bottle should be retained onboard the ship for a period of not less than 12 months from the date of collection.

Additional guidance and recommendations are also available in our Loss Prevention Circular: Onboard verification of fuel sulphur content dated 30 September 2016.

(http://www.gard.no/web/updates/content/22628772/new-sampling-guidelines-for-the-sulphur-content-of-fuel-oil)

20-01-2017 Indonesian U-turn to aid supramaxes, By Jonathan Boonzaier, TradeWinds Weekly

The Indonesian government made a U-turn on its 2014 ban on the export of unprocessed bauxite and nickel concentrates last week. The ban, which covered all unprocessed minerals, wiped out almost overnight a lucrative supramax trade ferrying bauxite and nickel ores to China, the biggest consumer of Indonesian minerals. The ban was imposed to encourage mining companies to establish higher-value smelting industries within the Southeast Asian archipelago, but did not bring the desired result. China instead looked elsewhere for its mineral supplies.

Mining industry data indicates that China, the largest consumer of bauxite, imported 71.6 million tonnes of bauxite in 2013, the year before the ban came into force. A full 65% of this came from Indonesia, with Australia, its second-largest supplier, delivering a mere 20%. By 2016, China’s largest bauxite suppliers were Australia and Guinea, with a marginal amount coming from places such as Brazil and the Philippines. The shift in source markets has led to the development of new trade routes.

Panamax bulkers have been dominant in the Australia to China bauxite trade, while the long-distance trade between the West African nation of Guinea and China has seen post-panamax and even capesize bulkers being the preferred vehicle. “China has invested a lot in bauxite mines in Guinea, but it is a bit messy. The lack of port facilities requires vessels to tranship cargoes offshore from barges. I think the Chinese will be happy to go back to Indonesia with supramaxes,” Ralph Leszczynski, Banchero Costa’s head of research in Singapore, told TradeWinds this week.

Leszczynski was also confident that China would be keen to resume importing nickel ore from Indonesia. “The Chinese had to start importing refined nickel from Russia to make up for the Indonesian shortfall. It costs a lot more and has left the smelters in China sitting idle,” he said. Switching from Indonesian nickel ore to refined nickel from Russia removed a large amount of cargo out of dry bulk, as the volume of material dropped significantly, with much of it shipped by rail or container. “The content of nickel in nickel ore is very low. Once you start importing refined nickel your volumes go down from millions to thousands of tonnes,” Leszczynski said.

While the supramax sector is set to benefit from the resumption of Indonesian exports, industry consensus is that overall it will be negative for dry bulk. In a report issued by Oslo’s Arctic Securities last Friday, analysts Erik Nikolai Stavseth and Andreas Wikborg said that reopening the trade from Indonesia to China will diminish the tonne-mile growth for these commodities, which shot up as China sourced more distant volumes. “Indonesia exported some 64 million tonnes of nickel ore and 57 million tonnes of bauxite in 2013 – so while the removal of the ban will shorten distances it will also likely add to global seaborne supply which tempers the overall impact even if only 50% of volumes return,” they said.

Whether Indonesia will be able to re-establish pre-ban volumes remains to be seen as the reversal comes with hefty restrictions and conditions, while export duties of up to 7.5% will still apply.

20-01-2017 Mergers STAY on agenda despite superclub flop, TradeWinds Weekly

The most TALKED-ABOUT event of the current rapidly receding protection-and-indemnity (P&I) year was something that did not happen. The proposed merger between the Britannia and UK clubs and the tie-up between respective managers, Tindall Riley and Thomas Miller, appeared to be deals that would change the P&I landscape.

The merger plan was unveiled days after the February 2016 renewal of cover; less than four months later it had collapsed. But the fallout from this upset has still to fully play out and the failed merger may yet prove to be a catalyst that brings other clubs together. The prospect of two of the biggest and most respected P&I mutuals getting together in a superclub stirred the P&I clubs into some hard thinking about their own futures and even some preliminary conversations. And it was not just the progressive, modernising end of the market that was involved – some of the traditionalist clubs felt compelled to investigate the possibilities, if market talk is to be believed.

There was little information about the progress of the Britannia-UK clubs discussions through the spring of 2016, with TradeWinds reporting at the time that “silence was breeding scepticism”. There has also been little explanation of what went wrong since the breakdown of talks but there is a widespread view that it was the shipowner directors of the Britannia Club who rejected the deal – as they had in discussions with the Standard Club in 1998.

This was more or less confirmed by UK Club chairman Alan Olivier of South Africa’s Grindrod shipping group, in an autumn report to members. Olivier revealed he and fellow directors felt “great disappointment” that the deal had not gone through, which carries the implication that it was the Britannia side that rejected the merger. He also said the UK board continue to be dedicated to the merger objectives of increased capital efficiency, economies of scale and creating value-added services, so it looks as though the UK Club is still interested in consolidation.

Intriguingly, the autumn review highlights that there is a stable of marine mutuals run by Thomas Miller, including the UK Defence Club, Through Transport Mutual Insurance Association (TT Club), Hellenic War Risks and UK War Risks clubs and International Transport Intermediaries Club (ITIC) with an annual premium income of more than $700m. It is tempting to see this as a hint that if there is not an external partner to merge with, there could be consolidation of a more incestuous kind.

The proposed merger of two top clubs to create a P&I superclub that would be bigger than Gard got a generally positive reception in the market. But as the months passed, there was increasing scepticism that estimates of cost savings of perhaps 10% were too ambitious and realistic short-term financial benefits would be in the low single figures. There has long been a view that it is not necessary to have 13 International Group clubs to provide shipowners with choice in the P&I market. The clubs offer similar cover based on virtually identical rule books, pool claims and collectively buy the biggest marine reinsurance contract. So slimming down to maybe eight clubs would not further restrict competition in a market already subject to price fixing. One very tangible concern about the Britannia and UK Club merger was that it might spark a new European Commission anti-trust investigation into the no-undercutting agreement between the International Group mutuals.

18-01-2017 Time for the bunker industry to come clean, Source: Platts

In Denmark a former bunker trading CEO is being sent to prison for defrauding his customers, and no one in the industry seems particularly surprised.

Last month a court in Denmark named Monjasa as the previously anonymous company fined 10 million Danish kroner ($1.43 million) earlier this year for overcharging a buyer, and former CEO Jan Jacobsen as the executive facing a prison sentence.

The case relates to 24 deliveries of fuel oil to a Malaysian customer in 2014, in which the buyer received less product than it had paid for, and Monjasa is still appealing the sentence.

But none of this is news to the bunker industry. This is a sector in which buyers are routinely overcharged by sellers. Industry estimates put the losses to overcharging at as much as $1.5 billion/year.

If you can generally refuel a truck or a plane without being overcharged, why can’t that be the case for shipowners as well?
“Corruption in bunkering certainly occurs in the industry and therefore people think, if he’s doing it, I’m going to do it, because I’m not going to make money if I don’t,” International Bunker Industry Association (IBIA) chairman Robin Meech said.

Meech said a lack of training, low wages and the little long-term connection to their employer leaves some shipping crews willing to overlook or help suppliers overcharge buyers.

“If you steal fifty tons at $300/mt, that’s $15,000—half of that is three months’ wages to the guy signing the paperwork,” he said.

The way the bunker industry developed over the past 50 years contributed to its shady reputation, according to maritime consultant Adrian Tolson, as the oil majors viewed it as simply a means of selling an unwanted product.

“Bunkering is a largely unregulated business,” he said in an interview January 13. “In the past there wasn’t anybody particularly interested in the bunker market other than the refiners, who wanted to get rid of it, and the logistics and barging companies who helped them do that and eventually became the physical bunker suppliers.”

That bunkering and shipping companies tend not to be publicly traded also contributes to malpractice, many in the industry point out.

“Shipping is vastly dominated by privately held companies, and bunkering is too,” Tolson said. “The two are in a sort of unholy alliance together.”

“I once made the statement that the shipping industry gets the bunker industry it deserves,” he added. “I’m not sure I necessarily believe that any more. But I would say that the bunker industry reflects the shipping industry, and as shipping improves the way it operates, so does the bunker industry.”

Part of what helps the trucking and aviation industries refuel without having disputes with suppliers is more accurate systems for measuring the quantities delivered, according to Meech. In bunkering the volume of fuel delivered is often tested by dipping a measuring tape into the tank to check the height to which it has been filled —a method open to mistakes and abuse.

In Singapore from the start of 2017 all bunker deliveries will be required to be measured by mass flow meter, a tool that more accurately measures fuel volumes. The meters can counter the so-called ‘cappuccino effect’, where fuel is delivered with large amounts of air artificially raising its volume, leaving customers with less product than they thought they had bought.

“The mass flow meter has come in because Singapore was starting to lose business and be less attractive because there was so much cheating going on,” Meech said.

But few other authorities are likely to follow Singapore’s example without greater regulation, as individual ports fear losing bunker market share to nearby rivals if they take this step first.
Another area in which misbehavior in the shipping and bunker industries may worsen in the coming years is emissions regulation.

In October the International Maritime Organization (IMO) decided to cut marine fuel sulfur emission limits from 3.5% to 0.5% from the start of 2020, forcing most shipowners to switch to buying cleaner, more expensive fuels.

While shipowners will need to follow the rules to the letter when operating in busier areas like northwest Europe, it seems unlikely that the regulations will be universally enforced elsewhere. In taking a cargo from China to the US west coast, for instance, how many regulators will the ship run into in the middle of the ocean?

Meech has previously forecast that as much as 49 million mt/year of fuel oil demand may remain after 2020 from shipowners ignoring the new sulfur cap.

Privacy Settings
We use cookies to enhance your experience while using our website. If you are using our Services via a browser you can restrict, block or remove cookies through your web browser settings. We also use content and scripts from third parties that may use tracking technologies. You can selectively provide your consent below to allow such third party embeds. For complete information about the cookies we use, data we collect and how we process them, please check our Privacy Policy
Youtube
Consent to display content from - Youtube
Vimeo
Consent to display content from - Vimeo
Google Maps
Consent to display content from - Google