IMO2020: The Reality of Dealing with FONARs

Bulk carrier. Image Credit: Ship & Bunker

Now the fuel choices for ships have been broadly made, suppliers have developed plans which are being announced to the market, the focus is shifting to buyers and their final preparations for next year. There is still significant work left to do.

Today I really want to focus on the unfortunate situations that will occur from time to time and require the market to utilise FONARs (Fuel oil non-availability reports). With ~119 working days to go, how prepared are your buying process and procedures to comply and support FONAR submission when compliance is genuinely not possible?

Having spent the last month researching FONAR's and building the NSI FONAR template and procedure to assist our customers, there are a few learnings to share:

• A FONAR is not a waiver.
  • A FONAR is merely a reporting mechanism to report your non-compliance, it is then at the discretion of the port state control to decide on what actions they may take, which may include taking no action at all. The quality of the report and evidence used to support it will be key in helping the port state decide what action to take.
• A FONAR must be supported with evidence that shows full and proper voyage planning.
  • Do your procedures produce documentary evidence that a fuel plan covering all supply options and ports was considered pre, post-fixture and after any subsequent voyage changes? Do you have a full, independent and accurate database of global bunker supply options?
• When submitting a FONAR, all previous FONARS from the previous 12 months for the same port state and same owner/operator must also be submitted.
  • Do you have a FONAR procedure? Do you have a record of all reports that have been made by your owned/operated fleet and any that may have been submitted when a vessel may have been on time-charter.
• Where the non-availability reason is selected for FONAR, extensive evidence is required to support this.
  • Did you consider all suppliers (blacklisting and credit are not sighted as reasons not to cover the entire market)? Can you quickly and easily produce a communication log with each supplier and their full contact details (this level of detail is required rather than just highlighting a back to back trader that may have been used).
• Where a technical reason is selected for FONAR:
  • A full description of this technical reason is required with supporting evidence along with the owners plan and timeline for rectifying this and ensuring the vessel is capable of using the fuel in question in the future.
• P&I cover validity / seaworthiness:
  • Many clubs have made the following statement (https://www.american-club.com/files/files/cir_22_19.pdf) – accidental non-compliance subject to terms may be covered whereas cover for fines and detention would not be covered where it is a result of inaccurate/inadequate record keeping reinforcing the need for improved planning and evidence gathering.
• Commercial considerations:
  • Price/Credit is not considered a valid reason for a FONAR – it is clear that traders will not have adequate working capital to support the entire new market and owners will have to establish their own credit lines. Fortunately, in the wake of the OW collapse and uncertainty this brought, physical suppliers are more open than ever to considering direct credit where they may secure the debt against a ship and adding protection for the buyer also against double payment risk.

It is clear that full detailed voyage planning and record keeping are key to ensuring compliance and having the right evidence readily available to comply from 1st January. For our part we have made amendments to our working practices to ensure we will always have the right information available quickly to support our customers in the planning stage with tools such as www.2020planning.com. We have also developed our operating system to record all supplier communications and provide an auditable trail of all suppliers responses to a bunker enquiry and be easily imported into our FONAR template to help owners make a full and high quality report.

On the final run in to 2020 we are asking our customers the final preparation questions,

• Do you have all the information regarding locations and planned availability that you need?
• Do you have a full database of supply options that is maintained and updated?
• Do you have all the credit lines with physical suppliers in expected ports that you will need?
• For suppliers you do not currently use, have you examined why and considered mitigation that you may put in place?
• What are your contingency plans?
• Do you have a FONAR procedure and register?
• Does your operating procedure require amending to produce the right evidence and outcomes?
• Have you developed ship specific implementation plans as per IMO recommendation?

If the answer to any of the above is negative, time is becoming short to complete these and they should be fully examined to put buyers in the best position to comply in 2020. Equally, if you are an owner with your vessels chartered out the head owners still have responsibility for ensuring compliance; there is only a single signature required on a FONAR which is that of the Master – given that the Master and head owner may not be party to much of this planning, head owners need to consider how to protect themselves and what evidence they will require from charterers to show that true best endeavours have been made to obtain compliant fuel.

The FONAR conundrum brings up another interesting scenario. If you are purchasing through traders how can you be sure they have covered/have credit from every supplier in the market? Will they be able to supply you with a comprehensive audit trail? Will they take responsibility if there are gaps in coverage? To cover the market in its entirety it seems logical to set up direct credit where possible and then cover select suppliers where credit not possible via a trader. As a broker we can manage that process for you and ensure you have full and transparent market coverage.