Short Deliveries in Rotterdam, Fujairah Cost Bunker Buyers $250m in 2021: Report

Adrian Tolson, Director and Lead, BLUE Insight. Image Credit: BLUE Insight

Short deliveries in the key bunker hubs of Rotterdam and Fujairah cost bunker buyers a combined $250 million last year, according to analysis by BLUE Insight.

The total comprised an estimated $100 million shortfall in Fujairah and $150 million in Rotterdam throughout 2021.

"These estimates are based on the delivery economics of very low sulphur fuel oil (VLSFO), but the research supports similar patterns of losses for high sulphur fuel oil (HSFO) and even greater losses for marine gas oil (MGO)," the marine and energy consultancy said in a press release today.

The findings suggest that "a significant number of bunker fuel deliveries made in the major marine fuel hubs of Rotterdam and Fujairah are being made below a financial breakeven point; indicating that fuel buyers are not receiving the volume of bunkers they are paying for."

BLUE Insight says its findings are based on "significant inputs from suppliers, buyers and surveyors active in those locations, supported by stress testing from BLUE Insight's team."

Breaking down those numbers further for Rotterdam; data from Ship & Bunker indicates in 2021 the average price of VLSFO was $509/mt, suggesting a little under 295,000 mt of bunkers were paid for and never delivered.

In total, BLUE Insight calculates that short delivery malpractice accounts for about 3% of the total volume in Rotterdam.

Mass Flow Meters

BLUE Insight says its findings should prompt renewed calls for the use of mass flow meters (MFMs) as a universal standard.

To date, only Singapore has mandated the use of MFMs for bunker delivers and it is widely accepted to have been successful in eradicating short delivery malpractice - that is, where suppliers deliver less product than appears on the bunker receipt.

Adrian Tolson, Director and Lead, BLUE Insight, had previously told Ship & Bunker that the introduction of MFMs in Singapore had saved buyers about $1.7 billion in fuel costs in less than four years.

"Our data suggests that the evidence is clear; buyers of fuel are disadvantaged and are not receiving the volume of bunkers they are being billed for," said Tolson.

"This challenge cannot be entirely explained by supplier generated volumetric shortages, but we do believe that the introduction of properly certified mass flow meters in combination with a robust licensing process will do much to eliminate the issues." 

While short delivery malpractice is nothing new, Tolson sees the issue becoming exasperated by industry efforts to decarbonize, and new, more expensive fuels are introduced.

"As carbon regulations tighten, initially through the IMO's EEXI and CII, and as carbon taxes and levies are introduced, fuel delivery volume discrepancies are likely to have major compliance implications," he said.

"Inaccurate and higher fuel delivery volumes will overstate emissions and lead to penalties and higher operating costs for owners and operators."

BLUE Insight's findings come ahead of a full report to be published later in the year once a global analysis on short delivery malpractice has been completed.

In the interim, a preview of the report showing the calculations for Rotterdam and Fujairah can be downloaded here: https://shipandbunker.com/download/BLUE_Insight-Bunkering_Problem-Interim_Report.docx