VIEWPOINT: Winds of Change in the Bunker Industry

by Chris Morgan, Head of Credit and Compliance, Shipergy
Friday November 17, 2023

25 years ago, for those of us who can remember back that far, bunkering was a much less fragmented and less diverse place to do business.

Credit procedures were in their infancy and the industry-at-large had no real handle on what sanctions compliance was or how it was going to affect the business in the turbulent geopolitical years to come.

Credit was 30 days (almost) no questions asked, in many cases. Supply was overwhelmingly dominated by very polluting high sulphur bunker fuels from near the bottom of the barrel and trading was largely an exercise in who you knew. It was pen and paper trading, paper offices, everything printed and filed.

We can all remember it, although some of us remember how instant messaging apps like MSN and Yahoo Messenger felt like the absolute pinnacle of technological advancement. We knew what greenhouse gases were, but were more focused on aerosols and fridges than what came out of the funnel of a ship.

It is fair to say that a lot has happened since then. With all that is going on in the world outside of bunkering, sometimes we can be guilty of spending too much time focused on a tunnel vision of externalities. Bunkering is very much going under most radars in terms of the changes we are undergoing.

Firstly, we have completely changed the main fuel the world uses for global trade, by either removing all but traces of the sulphur from it, or by decreeing that anyone who wants to continue to use in its raw and polluting form it needs an expensive modification to their ship, to be paid for by them.

Bunkering has gone from paying lip service to global sanctions compliance to being utterly enmeshed within it in just a few short years. It was practically a non-issue years ago for the majority of us and it is now arguably the most important industry control we face.

A global, billion-dollar industry for sanctions compliance support and reporting has had to be developed and integrated, and it is something everyone in bunkering, no matter where you are or what you do, has had to adapt to.

Elsewhere, we have seen the widespread adoption of technology across almost everything that we do, from online trading, e-BDNs and VCOQs, to using emerging AI technologies that track fuel lifecycles and identify molecular disparities when dealing with claims. It's a far cry from squinting at a Blackberry screen and waiting a few minutes for the internet page to load, isn't it?

Now, with these huge changes to the industry still ongoing and very much on everyone's meeting agendas in Dubai for the IBIA event last week, instead of sitting back, we are taking the game-changing step to start tackling GHG emissions from shipping so that emitters have to pay to offset their footprint. Europe at first, but the world will surely follow.

It is unprecedented. No other industry in the world that I can think of has changed as profoundly or as quickly as we have. People point to the automotive industry as a rallying point for what can be achieved in terms of totally changing the way a business works with a bit of critical thinking and some prodding by regulators. The shift to unleaded petrol in the early 90s was a comparable move and you might point at the shift again to electric and hybrid cars as a similar development but these were thirty plus years apart.

We've done all this in a lot less time than that because we already had the technology available to us that the car manufacturers historically have had to develop themselves. We've never been fast-paced or especially dynamic before but bunkering, both on its own and as an avatar for shipping, for nothing less than the prime driver of global trade in fact, is undeniably both of these things now. 

As with the automotive industry, shipping has rightly been held up as one of the major contributors to global warming in terms of emissions of CO2 and other greenhouse gases in the past and it has been clear for some time that drastic action was needed to make things better. Well, drastic is what was needed and drastic was what we did. If the astonishing, eye-popping pace of it all made a lot of us a little bit uncomfortable in some ways at some junctures, there is no doubt the world at large is a better and cleaner place because of the things bunkering has taken upon itself to accomplish and is seeking to accomplish moving forward.

It hasn't been easy and there are some difficult times ahead with the ETS trading that we have coming into force in just about ten weeks time. None of us are resting on any laurels, that is for sure.  We will do more collectively and there are bound to be yet more seismic gyrations as we strive to lead the world in making things better for everyone. Bunkering hasn't always had the loftiest of ideals at its heart, but isn't it nice to have something truly inspirational to get behind?

As someone who gives credit for bunkers for a living, it is perhaps fitting that I suggest we as an industry give ourselves a little more credit for what we have all achieved thus far and for what we have set in motion to achieve in the coming months and years.  It is impressive stuff, even if there is so much more to do.

Accepting we will never get the credit we deserve in the mainstream media and uninformed public eye, surely we can afford ourselves a little moment of self-satisfaction.