INTERVIEW: KPI OceanConnect and PIL on Digital Bunkering First

by Jack Jordan, Managing Editor, Ship & Bunker
Thursday February 23, 2023

Marine fuel firms KPI OceanConnect and Bunker One have carried out their first digitalised bunker transaction using the Singapore Trade Data Exchange (SGTraDex) for a stem outside Singapore.

The transaction saw Pacific International Lines's (PIL) boxship the Kota Rakan bunkered with VLSFO at Lome on February 7, with the bunker delivery note and other paperwork exchanged electronically via SGTraDex. Bunker One carried out the physical supply.

The deal is the latest step in the gradual digitalisation of the bunker industry, a process that has the potential to improve the industry's efficiency and crack down on fraud.

Thomas Lee, KPI OceanConnect's head of global accounts in the APAC region, and Goh Chung Hun, head of fleet at PIL, set out their attitudes to digitalisation in an interview with Ship & Bunker on Wednesday.

"What we wish for when we purchase is that we get the correct quantity and the proper quality of bunkers," Goh said.

"With digitalisation, I think we go a step further with SGTraDex whereby there is a platform where the various stakeholders in the transaction can put the certification, the documents related to the bunkers, on the platform.

"The testing-house can put the test results onto the platform, the bunker surveyor can put his report onto the platform, and as and end-user or receiver of the bunkers, I have a certain level of assurance that the documents that I have in my hands come from the correct party and are authentic.

"I think that level of transparency is a breakthrough in the industry."

Following Singapore's Lead

Singapore has been at the forefront of the digitalisation revolution for the bunker industry, and its Maritime and Port Authority has mentioned the possibility of making electronic paperwork and other digitalised bunkering systems mandatory at some point in the future.

PIL takes about 75% of its roughly 1 million mt/year bunker requirements in Singapore, Goh said, and the firm is encouraged to see the possibility of the standards being introduced there being rolled out elsewhere in the world.

"The best practice that comes out of Singapore doesn't necessarily propagate and escalate to the rest of the bunkering ports around the world; however, we certainly hope so, and we will strive to do our part in promoting it.

"We certainly want the same level of assurance and transparency that is available today through SGTraDex.

"I can't really put a timeline to it [becoming the norm worldwide], but for me, the wish is as soon as possible."

Two Decades of Digitalisation for KPI OceanConnect

Thomas Lee of KPI OceanConnect said the transaction with PIL was a continuation of his firm's long-standing focus on digitalisation since the start of the century.

"We have already built a strong digital platform – KPI AuctionConnect - that has been running successfully for 21 years," he said.

"It brings buyers and suppliers together online to achieve the best price – all the transactions are recorded and reportable making the procedure transparent and auditable."

The firm sees digitalisation as going some way to counter the increased workload brought by increasing paperwork requirements for bunker transactions in recent years.

"In reality, the time involved for us to actually generate invoices, BDNs, CoQs -- the bunkering world is not getting any simpler," Lee added,

"One bunker transaction, compared to 20 years ago, now involves a lot more documentation.

"Yes, we have emails and can attach all the documentation we want to Chung Hun and his team, but this process is time-consuming and unproductive.

"We need a trusted digital highway for us to cut through all the parties involved in the trade."

PIL's Goh suggested digitalised paperwork could save as much as 1-2 hours of paperwork admin time per bunker stem. The MPA has previously estimated that digitalisation could save Singapore's bunker industry a total of more than 39,000 man-days per year.

Mass Flow Meters

Singapore's requirement to use mass flow meters to measure bunkers deliveries -- rather than traditional tank soundings -- since 2017 has been a key step in the foundation of a digitalised bunker industry there.

"The mass flow meter is fundamental to the e-BDNs, because the meter reading immediately fits into the e-BDN without spending another hour disputing what the right figure was on soundings," Lee said.

"I know it's still under debate, but the world will go to mass flow meters -- one day soundings will be history, like the dinosaurs."

Mass flow meters measure bunker deliveries more accurately than tank soundings, avoiding the problem of air being delivered along with the bunker fuel paid for -- deliberately or otherwise -- and leading to quantity disputes.

The rollout of MFMs in bunkering locations other than Singapore has thus far largely been voluntary on the part of some bunker suppliers, but moves to make them mandatory at other locations are now under way. The port authorities at Rotterdam and Antwerp-Bruges are currently formulating an MFM policy similar to Singapore's that could be in effect within the next few years.

Fraud Crackdown

The advent of digitalised bunkering could also make it harder to carry out other types of malpractice that have beset the bunker industry in the past, according to KPI OceanConnect.

"We cannot ignore the fact that in the marine fuel and maritime industries there have been a lot of fraud cases of fake invoices and fake BDNs," Lee said.

"SGTraDex actually eliminates all the potential frauds of emails, invoices, BDNs, CoQs; everything needs to go through the firewall of SGTraDex and our company before these can be transacted.

"It will assist in the fraud management part of our industry, and not just in bunkering; that is a very vital element that I believe all of us are concerned with."