July 23 ------ Problems with fuel and bunkering operations have long been known as one of the largest dangers that ship operators face. A Houston, Texas, based start-up FuelTrust is out with new research highlighting the extent of the problem and its impact on shipping. They stress that the maritime fuel market has a long history of not being transparent, and despite regulators' efforts and clamping down on the industry, FuelTrust says they found examples of unethical practices, fraudulent activities, discrepancies, and contamination in their research of the bunkering industry.
With fuel representing more than half a vessel’s operating expenses, any of these issues FuelTrust says can make the difference between profitability or not for a ship operator. Illustrating just how costly fuel problems can become, they cite data from the P&I clubs saying that just under half of all the claims they received fall within the classification of “machinery issues.” Within this grouping, they report 16 percent of the claims are specifically attributed to damage caused to the main engine due to the use of off-spec bunkers.
The research highlights the recent incident traced to a fuel supplier in Houston. Reports indicated that 11 ships lost propulsion while FuelTrust says over 100 others were affected in this single incident of contamination. A fuel contamination incident in 2022 in Singapore, the world’s largest bunker market, impacted over 200 ships with analysts setting the value of the incident at over $120 million.
FuelTrust’s analysis found in 2021 and 2022 more than a third (39 percent) of global bunkers showed deviations above two percent from their documentation. One of the most common problems was water infiltration which they believe happens between the onshore storage tanks and delivery into the ship’s fuel tanks. While the fuel remained below the regulated threshold, FuelTrust still estimates that it resulted in an average loss of $14,910 per affected delivery. Other discrepancies they found included issues with volume and content (37 percent), grade of density (11 percent), and contaminants (7 percent). These problems were cropping up in fuel considered to be “on-spec.” FuelTrust concludes that over 600 vessels were disabled by fuel problems in the last year. This was despite the fuel delivered being “on-spec.” They estimate that it contributed to losses in excess of $5 billion to the global supply chain.
While they note that some of the problems can be associated with fraud, they note that density issues are not always deliberate. They report that around a third of Very Low Sulfur Fuel Oil samples analyzed had a lower density declared than found in lab testing. This could be an indicator of “short bunkering,” they said noting that the industry lacks the ability to identify patterns for issues such as contamination that could be impacting density. An issue as simple as temperature can also lead to a discrepancy in volume.
They highlighted that some port authorities have responded by implementing random or compulsory surveys on fuel supplies. Also implementing electronic mass flow meters has proven beneficial in reducing paper fraud or collusion. FuelTrust is using the report to promote its nearly launched services using AI technology to help assess and validate the fuel supply chain.
Source: maritime-executive.com
Comments