Licensing and MFMs are Improving Bunker Industry's Ethics: Steve Simms

Simms is principal at law firm Simms Showers LLP and a member of IBIA's board. Image Credit: IBIA

The trend towards licensing of bunker suppliers and the use of mass flow meters are improving the ethics of the bunker industry, according to maritime lawyer and IBIA board member Steve Simms.

The longstanding use of bunker supplier licensing in Singapore, and the mandatory use of MFMs there since 2017, have driven increased interest in further regulation of bunker supply in other parts of the world with the aim of raising standards. As Ship & Bunker reported last month, the Port of Rotterdam in the process of developing a mandatory MFM policy.

These regulatory changes have improved the overall ethics of the industry and reduced disputes, Steve Simms, principal at Simms Showers LLP, told Ship & Bunker last week.

"Bunker industry ethics are improving from the standpoint that they are changing," Simms said.

"That is, the increased use of mass flow meters has decreased quantity claims and bunker theft.

"Improved testing – and availability of more rapid testing – has deterred some quality claims.

"Regulatory focus on fuel content has required suppliers to pay close attention to quality and compliance, too.

"But there are still actors trying to make a quick return, unethically and illegally.

"That is another reason for broader licensing: so that there are more 'sticks' behind the 'carrot' that consistent ethical behaviour can be for a supplier.

"That is, in the long run, ethical suppliers are the ones that will continue on in the market, including, if licensed, maintain their licenses."

Commercial Complexities

But some authorities may be dissuaded from introducing supplier licensing because of the complexity of the issue, he argued.

"What's holding some port authorities back is that they don't see the urgency for licensing compared to other commercial urgencies," Simms said.

"There's also a concern – the Port of Amsterdam authority recently raised this – that licensing would require authorities to get involved in private disputes between suppliers and their customers.

"That's true, but it also would likely reduce disputes: one element of the MEPC example license is that suppliers must have a quality management system (QMS).

"Generally though if there is to be licensing, the industry, customers and suppliers, will need to show port authorities its commercial value so that licensing becomes not only an urgency but a benefit to a port, as it has been in Singapore.

"IBIA has for the past years consistently emphasized the benefits of compliance and ethics, and this year's Annual Meeting in Houston will conclude with a challenge to enhance that emphasis."

Shipowners to Apply Pressure

Pressure from customers may be what drives further progress with this agenda, he said.

"The bottom line is that customers have choices about where to bunker and who to bunker with," Simms said.

"Given the choice, all other things being equal, they are going to be more likely to bunker with a licensed supplier than an unlicensed one.

"Ports which have a effective supplier licensing will have a commercial advantage as will licensed suppliers. 

"As licensing becomes more widespread, it would also make sense for vessel owners to specify in their charter parties – in addition to the usual fuel specifications – that fuel be purchased from a licensed suppliers, where available."

Simms will be addressing these issues and more at the IBIA Annual Convention 2022 later this week.

His panel session is titled 'Licensing transparency and ethics in the bunker industry', and will have participants from Hartree Marine, Fratelli Cosulich, Bunker Holding, Peninsula and Infospectrum.

The convention will be held at the JW Marriott Houston hotel on November 15-17. The event will start with a welcome reception followed by a series of keynote speeches, presentations, panel sessions and networking opportunities over the following two days.

Ship & Bunker readers can access a 10% discount on registration costs by clicking here and entering the code SB10 when prompted.

If you would be interested in participating as a speaker or panellist, contact contact IBIA's events team via Tahra Sergeant at tahra.sergeant@ibia.net.

If you would be interested in sponsoring the event, contact Ship & Bunker's head of sales and partnerships, Paul Davis, at sales@shipandbunker.com.