BLUE Insight study reveals that ‘short bunker deliveries’ remain prevalent in Rotterdam and Fujairah – with the issue likely to be exacerbated by the prospect of new, more expensive low carbon fuels entering the market
Data collected by our BLUE Insight practice has indicated that a significant number of bunker fuel deliveries in the major marine fuel hubs of Rotterdam and Fujairah are being made below a financial breakeven point; indicating that fuel buyers are not receiving the volume of bunkers they are paying for.
The findings – which are prompting renewed calls for mass flow meters as a universal standard – indicate that short bunker supplies cost buyers, owners and charterers an estimated $100 million in Fujairah and $150 million in Rotterdam throughout 2021. These estimates are based on the delivery economics of very low sulphur fuel oil (VLSFO), but the research supports similar patterns of losses for high sulphur fuel oil (HSFO) and even greater losses for marine gas oil (MGO).
‘Short delivery’ malpractices, where suppliers deliver less product than appears on the bunker receipt, has been an age-old tactic for many years within the bunkering sector. In 2017, Singapore, the world’s largest bunkering port, mandated the use of mass flow meters to ensure the accurate measurement of delivered fuel, a law that has been considered universally successful. However, other ports have not followed suit, and short deliveries have remained a challenge for the industry.
Commenting on the findings, Adrian Tolson, Director and Lead, BLUE Insight said:
“Our data suggests that the evidence is clear; buyers of fuel are disadvantaged and are not receiving the volume of bunkers they are being billed for. This challenge cannot be entirely explained by supplier generated volumetric shortages, but we do believe that the introduction of properly certified mass flow meters in combination with a robust licensing process will do much to eliminate the issues.”
BLUE Insight will publish a full report later in the year once a global analysis has been completed on the true extent of this problem and the continuing challenge it poses to the sector’s reputation. Request a copy of the report preview by completing the form here.