The introduction of mandatory use of mass flow metering systems (MFMs) in Singapore, that came into effect from 1 January 2017 and has had a profound impact on the market in the world’s leading bunkering hub, has been a force for good, was a main take out from IBIA’s Annual Convention in Singapore, in November.
Mandatory MFMs has had a positive impact on bunkering volumes with Singapore on track to break its 2017 record of 48.6 million tonnes in 2017, IBIA informed.
Esben Poulsson, President, Singapore Shipping Association and Chairman of ICS, highlighted the positive role played by MPA Singapore in the port and in particular the introduction of mandatory use of MFMs for marine fuel oil supply to increase efficiency, transparency and minimise disputes. According to Mr. Poulsson, vigilance is required to prevent suppliers trying to “beat the system” as the systems become more sophisticated.
Mohamed Abdenbi of MFM manufacturer Endress + Hauser said the most positive side-effects were improved efficiency and reduction in time spent negotiating a final figure for the delivered volume after each delivery. The MFM figure is binding and, although there are still discrepancies between ship and the BDN figure, overall it seems owners have confidence in the MFM figures. He also said the next step should be to use the MFMs across the supply chain, including when barges lift cargoes at terminals, as this would harmonise systems and be fairer.
Another impact of MFMs equally profound is that three of the top 10 suppliers in Singapore have disappeared from the market since the MFM regulation took effect, having lost their licences, as noted by Maritime lawyer J. Stephen Simms, Principal, Simms Showers LLP.
Increased transparency on delivered volumes, combined with MPA clamping down on attempts to circumvent the system is, bit by bit, weeding out operators who offer suspiciously low prices. John Phillips, head of bunker credit management at GP Global APAC Pte Ltd, said the price spread between ex-wharf prices and delivered prices should be high enough to cover transportation cost, but they haven’t been, and if this continues there won’t be many companies with deep enough pockets to survive.
During the MFM session, an IBIA poll showed the following results:
How much more will you pay to receive a delivery via MFM?
- Nothing – 66%
- $2 to $3/ton – 21%
- $3 to $4/ton – 5.5%
- More – 7.5%
“The results seem puzzling when there was such widespread agreement among the speakers and panellists that MFMs are helping to ensure that the recipient is getting what they pay for, and that many suppliers in Singapore have previously not been charging delivered prices that cover the cost of doing business,” IBIA stressed.
However, the way Singapore deals with MFMs is of great interest around the world, and deliveries of marine gas oil (MGO) are next, IBIA concluded. Testing is now underway to ensure MFM systems for MGO are accurate before MPA goes ahead and mandates their use.
