This is Why the Bunker Industry Needs MFMs

by Adrian Tolson, Senior Partner, 20|20 Marine Energy
Friday February 3, 2017

January 1st, 2017 stands out as a landmark date for the bunker industry: the day that MFMs (mass flow meters) became mandatory for IFO deliveries in the world's largest bunkering port, Singapore. The initial feedback has been good so far. In the world outside Singapore, most port authorities are taking a wait-and-see approach regarding the prospect of compulsory MFMs, while others simply say that they have no authority to mandate their implementation.

Caution is perhaps understandable, but excuses about a lack of authority are more concerning. Let's be realistic, the bunkering industry has a mixed reputation and the frequent allegations of short volumes only make it worse. It's unlikely that any port authority is unaware of this. And while some may have no legal control to mandate changes, they're all capable of working with their governments or customs authorities to adopt new standards.

The Bunker Industry needs MFMs. The culture generated in our industry over many decades, particularly in the larger ports, has been one of negative or tight margins enhanced only by gains on volume. This creates a self-sabotaging cycle of claims, damaged relationships with ship owners, and an ever-diminishing opportunity to make money. The result is that almost no physical supplier in major bunkering ports can make a consistent profit. MFMs are a way out of this cycle.

The Bunker Industry operates in a commodity market. For those suppliers that don't market themselves, and don't have a competitive advantage we should expect tight margins but not the negative ones that have affected many companies in recent years. MFMs will create a much more transparent environment, with profitability based upon sourcing and trading skills rather than product accumulation. MFMs open the door to a healthier and more profitable bunker market, at least in the major supply ports, and this can only be a good thing for owners, operators, and the bunker companies that supply them.