INTERVIEW: Will Regulation, Not Bunker Savings, Drive the Uptake of Digital Bunkering Platforms?

Julie Louise Nielsen, Global Head of Bunker Sales at StormGeo. Image Credit: StormGeo

For over two decades efforts have been made to digitalize the bunker industry. Those who were around in 2000 may remember the launch of Smart Bunkers, one of the first attempts at an online bunker trading platform. The headline promise was no different to the many platforms that followed: we will lower your bunker costs.

Still, despite apparent backing from the likes of Maersk, Smart Bunkers witnessed limited uptake. As did the many such platforms that followed it.

Indeed, despite being told time and again that digital bunkering platforms will be the next big thing, until very recently the uptake of such technologies has been low. Critically, historical interest has not been enough for such platforms to establish a foothold in the market as an ongoing concern.

There have of course been a few exceptions over the years - Gerry Van Geyzel's ClearLynx, bought by ZeroNorth in 2022, is one of the more notable exceptions  ; OceanConnect's Auction Connect, now part of KPI OceanConnect, is another. But for the most part, the industry has been happy to work with limited assistance from technology.

Today, digital bunkering spans a much wider range of offerings and away from the buying and selling of bunkers - and perhaps more to the point, where digitalization is a value add and not something we are being asked to pay for - a number of bunker companies have had success using digital solutions to provide a greater level of information for its customers. Monjasa with its particularly comprehensive bunker app is a stand out example. Minerva's ADP platform is another.

Most readers will presumably be aware that digital bunkering platforms are once again enjoying a moment. But with such a long history of industry ambivalence towards such technology, will uptake this time be any different?

For those that believe change is coming, the answer is yes and it comes down to one simple factor: regulation.

Specifically, they see that the complexity of managing regulatory compliance will soon become impossible without such platforms.

To get a better understanding of this dynamic, Ship & Bunker recently talked to Julie Louise Nielsen, Global Head of Bunker Sales at StormGeo.

StormGeo is one of a number of companies that strongly believes and sees the time for bunker industry digitalization is now. With its origins in weather routing services, the company today offers a fully comprehensive 'one-stop-shop' digital voyage optimization platform with bunkering platform. 

Launched at the beginning of this year, Nielsen says the platform has quickly become a success.

Q) Why do you see that the uptake of digital bunkering platforms in the past has been limited?

JLN: I'd say it's a combination of industry conservatism, lack of awareness, perceived complexity, and a fear of transparency. Shipping, and maritime in general, have been infamously slow to adopt new technologies.

More specifically, I see there have been 5 key barriers to adoption:

1. Technological Hesitancy: Reliability and the learning curve associated with new systems are the key concerns here, and for some reason we also still tend to think that we are smarter than AI and technology.
2. Initial Investment Costs: The upfront costs for systems are considered high, and what the return on investment will be is often unclear. For some reason this is not benchmarked against bunkers being 60+ pct of the OPEX and how the largest daily running cost can actually be improved
3. Data Security Concerns: It is often unclear how well data is protected and what the consequences of a data breach would be.
4. Regulatory Challenges: Navigating different regulatory requirements across jurisdictions can be complex, and companies may be unsure how digital systems align with these regulations.
5. Integration Issues: Integrating new digital systems with existing operations and legacy systems can be challenging and time-consuming, and because historically companies faced issues as platforms were not yet mature, they believe that this is still the case.

There is often also a lack of awareness about the benefits and capabilities of digital bunkering platforms among industry stakeholders. This hasn't been helped by the fact that until now bunkers have had very little focus from top-management: bunkers have always been a cost that needed to be there, to get the vessel sailing.

Today is a different story and C-levels are now starting to be curious and interested in how to optimize and improve on the bunkers. The vessels still need it to sail from A to B, but the new regulations are playing a great part in why there is now focus on the bunker industry.

Q) The headline promise of bunker platforms has been to lower bunker costs. What kind of savings can be expected?

JLN: Digital platforms like StormGeo help our users to achieve great savings through:

1. Accurate Fuel Monitoring: Real-time monitoring and accurate measurement of fuel consumption help identify inefficiencies and reduce fuel wastage, as well as guiding the operation department to lift the right amount of bunkers in the right port.
2. Optimized Speed and Route: By optimizing speed and route planning, vessels can minimize fuel consumption while maintaining schedules.
3. Fuel Quality Management: Ensuring the use of high-quality, compliant fuel can enhance engine efficiency and reduce consumption - an important and challenging task for the bunker buyers.
4. Operational Adjustments: StormGeo Bunker Management is assisting operators and bunker buyers to move away from their usual habits. Just because one port or one supplier was the right match last week doesn't mean it will be the same case tomorrow. Our platform thoroughly calculates, explains, and recommends the right amount of bunkers to be supplied in which port to optimize the voyage best possible.

The bunker cost savings can be substantial and typically range from 2% to 5% of annual fuel costs, depending on the vessel and route specifics. For large shipping companies, this can translate to millions of dollars in savings each year just by getting full transparency over the bunker management which includes both planning and procurement.

Another hidden factor is that companies often mistaken procurement to be the only way to optimize, where in reality the largest optimization lays in the planning. If you bunker in the wrong place, then the bunker department only has a small chance to improve the overall cost. If you optimize your planning, then suddenly you have created a joint team effort to optimize the full transaction and not only the negotiation phase.

Additionally, digital platforms can help reduce human errors and discrepancies in fuel transactions, further contributing to cost savings. Also, it is going to eliminate the reliance of single person skills and thereby break down silo working environments, not only in the bunker department, but in the organization itself. Teams across the organization come together as one, all with the same goal to optimize the revenue for the company.

Q) What other benefits do digital platforms offer?

JLN: Besides cost savings, StormGeo's digital bunkering platform offer several other significant benefits:

1. Enhanced Transparency and Traceability: Digital platforms provide detailed records of fuel transactions, enhancing transparency and traceability throughout the procurement chain.
2. Improved Efficiency: Automation of manual processes reduces the time and effort required for fuel procurement and management, leading to increased operational efficiency and cost optimization, and to let the experts focus on their expertise instead of administration.
3. Better Decision Making: Access to real-time data and analytics enables better decision-making regarding fuel procurement, route planning, and overall fleet management.
4. Compliance and Reporting: StormGeo's platforms facilitate easier compliance with regulatory requirements and simplify reporting processes.
5. Environmental Benefits: Improved fuel efficiency and optimized routes contribute to reduced fuel consumption and lower emissions, supporting environmental sustainability goals.

These benefits collectively contribute to more streamlined operations, reduced costs, and enhanced competitiveness in the maritime industry.

Q) Helping to manage the dollar and time cost of compliance is now a major benefit of digital bunkering platforms. What are some of the key upcoming regulations industry stakeholders should be aware of?

JLN: Key upcoming regulations that owner/operators need to be aware of include:

1. IMO 2023 Carbon Intensity Indicator (CII): This regulation aims to reduce carbon emissions by setting yearly reduction targets for vessels.
2. EU Emissions Trading System (EU ETS): This regulation requires shipowners to purchase carbon credits for their emissions, creating a financial incentive to reduce carbon output.
3. =FuelEU Maritime Initiative: This initiative targets the decarbonization of the maritime sector by promoting the use of sustainable alternative fuels.
4. E-BDN: Electronic Bunkering Delivery Notes are coming into force in January 2025 in Singapore, replacing paper-based bunker delivery notes with an electronic version, facilitating easier storage, retrieval, and processing of delivery records. It further enables real-time capture and sharing of data related to bunker deliveries, including fuel type, quantity, and quality. E-BDN together with MFM, which is also mandatory in Singapore, provide the transparency this industry needs in order to comply with all the other regulations in force.

StormGeo is one of the few in the market supporting all these, so our clients are in safe hands when it comes to complying with the new regulations.

Q) What is the cost (both time and dollar) and complexity associated with regulatory compliance?

JLN: The cost and complexity of regulatory compliance can be significant. Costs include:

1. Upgrading Equipment: It can be costly to install new technology and upgrade existing systems to meet regulatory standards. This often ranges from hundreds of thousands to millions of dollars depending on the vessel.
2. Operational Changes: Implementing new operational procedures and training crew can incur additional costs and require significant time investment.
3. Administrative Burden: Maintaining compliance involves extensive record-keeping and reporting, which can be time-consuming and requires dedicated personnel and / or a digital solution.
4. Potential Fines: Non-compliance can result in hefty fines, adding to the financial burden.

Additional complexity arises from the need to understand and implement varied regulations across different jurisdictions, integrate new technologies with existing systems, and continuously monitor and adjust operations to remain compliant.

Partnering with one provider for all your solutions will ensure a better workflow as well as give you a better understanding of your business and needs, resulting in better regulatory compliance. This is one of our key areas of focus with our Bunker Management system, that we can link it to all our other solutions, ensuring full compliance across all areas.

Q) How does the StormGeo platform help manage the cost of compliance?

JLN: StormGeo has existed for more than 25 years and since 2021 is part of the Alfa Laval Group, which gives us a greater insight into the industry than if we were only a software provider. They are a profitable owner who is willing to invest as well as being there for the long run. We make an effort to be on top of all relevant regulations as well as being ahead of future regulations. For example, we have recently established partnerships on the E-BDN in Singapore as well as globally for our Bunker Management solution. We also recently launched our new FuelEU Maritime solution. We have 1300+ vessels on our EU ETS solution, and we are supporting CII, EUA, EU ETS and much more.

Specifically, the StormGeo platform helps in several key ways:

1. One-Stop-Solution: We are seeing a much greater interest in gathering all software solutions under one provider, to simplify the data entrance point and flow, as well as gathering expertise. We have a growing number of clients requesting this to ensure their compliance and effectiveness towards their complex business.
2. Regulatory Compliance: It provides tools and features that streamline compliance with new and existing regulations, such as real-time emissions tracking and automated reporting.
3. Route Optimization: The platform uses advanced algorithms to optimize routes, reducing fuel consumption and emissions, and ensuring compliance with regulatory standards.
4. Weather Forecasting: It offers precise weather forecasting, enabling ships to avoid adverse weather conditions, thus enhancing safety and efficiency.
5. Data Analytics: The platform provides detailed analytics and insights that help ship operators make informed decisions, improving overall operational efficiency and cost optimization. This is especially beneficial if the client is a user of all our platforms, as they can all talk together.
6. Training and Support: StormGeo offers training and support to ensure that users can effectively utilize the platform and stay updated with regulatory changes as well as updates to our solutions - our platforms are constantly being developed to meet the requirements from clients or regulatory compliance changes.

Additionally, we have real, knowledgeable people behind all our solutions with real experience monitoring them 24/7/365 worldwide. So, not only are we good at building AI solutions, our top-priority is our knowledge and our client interaction, which also helps with product development.

Q) What level of uptake of its platform does StormGeo expect to see in the short, medium, and longer term as a result of these new regulatory drivers?

JLN:

Short Term (1-2 years):

• Increased adoption as companies prepare for imminent regulations like the IMO 2023 CII and EEXI, FuelEU Maritime and the upcoming E-BDN in Singapore.
• StormGeo sees and expects significant interest from early adopters and companies aiming to stay ahead of regulatory compliance. The early adopters will benefit in the longer term.

Medium Term (3-5 years):

• Steady growth in adoption as more companies recognize the benefits of digital platforms and the cost of non-compliance increases.
• Wider industry acceptance and integration into standard operational procedures.
• It would surprise me, if these regulations will remain as-is, hence I'm expecting a strengthening of the regulatory framework, which means that compliance is becoming even more complex and companies that have not moved with the first wave will probably face even more complex issues than the early adaptors.

Long Term (5+ years):

• Near-universal adoption as regulatory requirements become more stringent, and the advantages of digital platforms become fully realized.
• Continuous evolution of the platform to adapt to new regulations and technological advancements, maintaining its relevance and utility.

StormGeo expects to see a progressive increase in platform uptake driven by these new regulatory requirements and the continuous demonstration of cost and operational benefits.