Introducing maritime technology to the bunker supply chain – Shipowners Club

Georgia Maltezou: LCC Manager – London, the Shipowners’ Club, and Darren Shelton:VP & Co-Founder, FuelTrust, have written an article advising the Club’s members on how maritime technology can improve performance in the supplying of or receiving of fuel (“bunker supply”). The writers noted that bunkering was one of the most common shipping operations occurring daily worldwide. “Supplying or receiving fuel happens on every single sea voyage but despite it being such a routine operation, there are still several disputes arising from it, especially with regards to the quality or quantity of the bunkers stemmed”, they said.

The possibility of placing off-spec bunkers onboard the vessel remained a constant worry for shipowners and the ship’s charterers. Burning off-spec bunkers raises immediate safety concerns and leaves the owners facing not only fuel system failures and engine breakdowns, but also loss of time, underperformance and delay claims, arrests, and the eventual cost of de-bunkering.

The club noted that bunker quality and quantity claims were usually quite complex and fact sensitive, so owners needed to be vigilant and to act quickly.

“Preserving evidence such as the consumption documentation, the relevant logbooks and checklists, the damaged parts and most importantly the fuel samples, is essential; cases are won or lost on evidence and the owners’ ability to prove a sufficient causal link between the bunkers and the damage to their vessel”.

Accurate and complete documentation was, therefore, crucial.

Owners and charterers would be aware that bunker supply contracts were typically drafted on the bunker suppliers’ terms and conditions, which limited, or even excluded entirely, the supplier’s liability for quality or quantity claims.

Bunker supply contracts also often imposed a very short timeframe for notification of claims (sometimes as short as seven days from the day of the supply of the bunkers) and failure to notify the potential quantity or quality issue within this timeline meant that the claim was deemed waived.

“Whilst these short time frames can be contested in some jurisdictions, they may leave the owners or their time charterers with no avenue of recouping their losses”, the Club said.

The Club invited FuelTrust, a GreenTech SaaS Company, to explain how it feels it can harness technology to reduce the financial impact of bad fuel, mitigate the regulatory risk and empower greener fleets.

Darren Shelton said that, at the beginning of the 21st century, the idea of tracing fuel origins by measuring molecules seemed inconceivable. “However, today we not only know it is possible, but also that there’s significant value in examining the digital DNA of fuels”, he said.

Understanding carbon intensity by individual parcels of fuel could help predict a vessel’s emissions based on its unique engine combustion. This information was crucial for calculating potential taxes and credits, which have financial implications for ship owners and charterers.

Equally relevant was the issue of fraud. Technology now enabled principals to detect fuel quality disparities before making a purchase. If a problem arises after receiving the fuel, they can resolve it swiftly by using “machine learning atop lab analyses” for evidence, Shelton said.

FuelTrust has patented AI technologies that create chemical digital twins to track fuel lifecycles and identify molecular disparities. Certificates of quality reports from accredited labs ensure integrity for the machine learning and reliable data-driven calculations.

FuelTrust’s research found that, between 2019 and 2022, more than 39% of fuels globally had a content difference of 2% or more when comparing lab reports to delivery receipts. The primary cause was water introduced during delivery, resulting in average losses of $14,910 per affected delivery.

“At scale this is costing the industry hundreds of millions of dollars, the majority of which is avoidable”, said Shelton.

Although the implementation of electronic mass flow meters had curbed fraud in the paper trail, the introduction of transitional and alternative fuels had created new challenges, said Shelton, saying that “FuelTrust’s technology offers new confidence to principals, ensuring that sourced fuels are not only suitable for the engine but also align with what was paid for. When purchasing premium fuels to achieve sustainability goals, it’s critical buyers receive exactly what they ordered”.

Detecting fraud remained a concern due to human predictability. Dilution of fuels, whether by water or some form of chemical contaminant as seen in recent cases in Houston and Singapore, would unfortunately continue. FuelTrust technology identifies fuel supply chains that introduce risks. “Prudent procurement processes can safeguard against questionable suppliers and facilitate deals with trustworthy ones, benefiting everyone involved”, said Shelton

Should contaminated fuel enter the market, FuelTrust’s software alerts operators immediately if the AI detects a disparity in a lab analysis.

Many fuels that are considered “on-spec” still have quality issues that harm engines, noted Shelton. Due to the broad nature of fuel specifications, numerous ships had suffered losses as a result of on-spec products, impacting the global supply chain. Ensuring fuel quality was “a massive burden on the ship’s crew and shore staff, made more challenging by the difficulty of detecting disparities and filing related claims within contract deadlines”.

A large portion of P&I claims are categorized as “machinery” issues, and damage to main engines caused by off-spec bunkers has been identified as a common root cause for those claims.

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