The International Bunker Industry Association (IBIA), with support from BIMCO, launched an extensive online survey in February 2022 to identify to which extent the maritime industry stakeholders believe there is a need for a wider adoption of bunker licensing schemes, mass flow metering (MFM) and transparency to improve market conditions.
As IBIA said, “the answer – for the most part – is yes.” More specifically, the survey revealed that a vast 91.5% majority agreed that there is a need for increased transparency between bunker suppliers and buyers.
Looking to the case of Singapore, they seemed to agree that the introduction of a Bunker Licensing Program (74.5%) and mandatory use of MFMs (76%) have had a positive impact on the bunker market in the port.
About half of the respondents assumed introducing these measures will result in fewer suppliers and nominal increased bunker prices, but not a huge price increase.
Alexander Prokopakis of probunkers and Chairman of the IBIA Working Group highlights that:
There is a clear support among the respondents towards building further transparency and compliance within the shipping and bunkering industry, despite the underlying expectations of increased premiums and enhanced competitive landscapes
In addition, BIMCO’s Head of Marine Environment, Aron Sorensen, commented that “bunker licensing and properly certified and used MFMs can build transparency and trust in the bunker sector, improve market conditions, and help build a level playing field for quality operators. The survey findings show this is what the industry wants, and it seems an investment worth making to help raise the standards and ensure transparency.”
Conclusions
#1 Quality focus and discipline works
- Since the authorities implemented a mandatory use of flowmeters, we have experienced a significant decrease in the amount of quantity claims;
- All non-compliant suppliers have relocated their operations to neighboring ports, Hong Kong or similar, where the amount of quantity claims now appears to be rising;
- The local authorities in Singapore are providing subsidy schemes for suppliers wanting to install a flow meter;
- The Maritime and Port Authority of Singapore (MPA) is involved in case of disputes, and sends a representative onboard the implicated vessel if issues arise;
- Despite mandatory use of flowmeters, some customers may still request compensation due to commercial relations.
#2 Change is possible
- The IMO2020 transition emanated from ideologic incentives and was considered successful because it applied to all actors within the shipping and bunkering industry;
- Up to 2020, there was significant doubt as to the success of the transition, availability of products etc., but it was brought to shame by an industry who came together;
- The key to success was regulation and governance. With these going hand in hand, there was a level playing field aiding the successful implementation;
- This constituted the largest change to the bunkering industry since the change from coal to oil, and it was made possible.
#3 The industry calls for enhanced transparency
- There is a strong incentive to build and solidify trust and compliance in the industry;
- The survey shows that market players desire enhanced transparency and control, despite the overall expectation of facing price increases;
- Further regulation must be established to create and sustain transparency;
- Given the extent and complexity of such industrial measures, financial incentives are difficult to establish and cannot solely justify change by themselves;
- This calls for an ideologic approach to “(re)branding” the industry, rather than an economic one.
EXPLORE MORE AT IBIA AND BIMCO’S ANALYSIS
