Singapore’s first live bunker delivery financing pilot transaction, using an electronic bunker delivery note (BDN), was realized successfully as a result of cooperation among Singaporean bank DBS, Trafigura Group’s marine fuels supply and procurement joint venture TFG Marine, and shipping companies ONE and Ascenz, as well as supported by MPA Singapore.
Singapore is the world’s leading bunkering hub in terms of volume, with close to 50 million tonnes of marine fuel sold in 2020. However, banks currently rely on physical copies of the BDN and other supporting documents to avail bunker financing to clients. This is a cumbersome process that typically takes a few days to a week as clients have to manually deliver the physical BDN back to shore for compilation with other paper documents before a trade finance application can be submitted. T
As such, the newly digitalized process demonstrated that in the future clients will be able to obtain financing for their underlying trade in under two hours, enabling them to obtain working capital faster and better manage their cashflows, DBS said.
Another pain-point the digital BDN mitigates against is the risk of fraud in the bunker industry. With the digitalisation of the BDN, this risk is mitigated as counterparties are now able to ascertain the trade data at source. This is done by leveraging the Mass Flow Meter (MFM) system for bunkering electronically. This helps to provide greater transparency and certainty to participants in the bunker trade supply chain ecosystem, the parties explained.
The digitalisation of bunker delivery notes is one of many pivotal steps necessary to transition Singapore’s bunkering sector into the digital era and to ensure our port and shipping industry is future-ready. The objective is to co-create an end-to-end digital workflow that enhances efficiency and transparency for bunker trades, while building trust with banks and shipowners which are fundamental to the long-term growth and development of Singapore’s bunker ecosystem,
…Sriram Muthukrishnan, Group Head of Trade Product Management, DBS, said.
The adoption of digital documentations will help stakeholders across the value chain move towards more efficient and transparent operations that are aided by data-driven decision making. We welcome more of such private-public collaborations facilitated by our regulatory sandbox, that will help Singapore remain the world’s leading bunkering port,
…Kenneth Lim, Assistant Chief Executive (Industry) of MPA, noted.
On his part, Kenneth Dam, Global Head of Bunkering, TFG Marine, added that Singapore is already one of the busiest bunker hubs in the world and will benefit further by utilizing digitalization to increase transparency.
Our electronic bunkering delivery note provides Singapore’s maritime ecosystem with a more efficient, accurate and transparent data collection technology. By improving the end-to-end traceability, this major innovation supports trust between participants in the bunker trade, including banks, buyers and suppliers,
…Julien Glory, Chief Executive Officer, Ascenz, said.
Finally, Takashi Kase, Senior Vice President (Fuel & Global Vessel Operations), ONE, stressed the eBDN is a significant milestone for the Singapore Marine Fuel industry and it will further strengthen the dependability and reliability of Singapore as a Marine Fuel Hub.
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The live pilot transaction comes on the back of a joint agreement signed between DBS and MPA in 2020, to accelerate the digitalization and innovation of financial services and payments across Singapore’s maritime industry. The collaborative areas which MPA and DBS have identified include streamlining and enabling payment transactions between the users of maritime services to expedite end-to-end payment life cycles, as well as digitalising supporting documents for financing.
