INSIGHT: A Deep Dive Into Well-to-Wake Bunker Management

Bunker procurement is getting more complicated by the day. File Image / Pixabay

Bunker procurement is getting more complicated by the day.

Many shipping companies will look back with fondness at how fuel management could be done in decades past: buying a single grade of fuel, sold cheaply as an unwanted byproduct of the refining process, with little in the way of regulation governing how it should be produced, delivered and used.

That time has now passed.

The logic of much higher prices, regulatory complexity, and tighter schedules for shipping is driving the need for a much more organized approach to every aspect of managing a ship's energy requirements.

What's needed now is well-to-wake bunker management.

Sourcing

A modern approach to fuel management will start with sourcing the product.

Buyers need to take control of where they source their fuel from, making sure they have reliable partners at every location where they need to bunker.

Sourcing from trusted suppliers with an established record of delivery is essential, both for contract and spot supply. Buyers need to know that their supplier can reliably deliver the quality and quantity expected at competitive prices and with no unexpected delays.

Most buyers will already have one or two preferred contacts at their most regular ports, but they need to take a bird's-eye view of the market to know about everything on offer and how the market is changing.

Pricing

Finding the right price is key to any bunkering transaction, but too many buyers are still taking
an overly simplistic method of coming to a deal.

Securing the cheapest possible price for the required fuel on any given day can be advantageous, but a comprehensive view of bunker management will take in many more factors.

Hedging, strategic timing, and monitoring tools must all be considered to deliver consistently
lower average fuel costs over a long-term period. The aim should be to determine where in the
supply chain higher costs are being generated unnecessarily and to eliminate or mitigate these
problems.

Collaboration

The next stage of developing a modern approach to bunker management is to work with the full
range of companies relevant to your energy purchases to help formulate your strategy.

Engine manufacturers will be able to provide guidance on the most suitable fuel grades and
feedstocks to maximize performance while engaging with physical suppliers, which can help
determine which of these grades will be available at the best prices.

As the market grows more complex, collaboration with every step of the supply chain will bear dividends in helping to develop a more detailed understanding of the market.

Compliance

Finally, the regulatory landscape is now one of the most difficult aspects of the bunker market
with which the buyer must engage.

Compliance with the EU ETS and FuelEU Maritime regulations is already bringing headaches
for some, and the IMO's new GHG policy framework is set to introduce a new global layer of
regulation within a few short years.

Those taking on biofuels as their emissions strategy in the short term need to ensure the fuels they are buying are delivering the emissions reductions they expect within the regulatory framework. Failure to comply with any of these regulations brings considerable financial and reputational risks, and selecting the right compliance strategy at the right time will make a shipping company more competitive in the market.

Conclusion

The aim of well-to-wake bunker management is to recreate the simplicity of the marine fuel market of the past for buyers while dealing with the more rigorous demands of the modern market.

At Glander International Bunkering, we have more than 60 years of experience in monitoring the evolution of the bunker market. Our teams now aim to deliver a full service to clients, covering every stage of the bunker procurement and consumption process.

A modern bunker company should be able to help its customers with every detail, from fuel production to supply-chain management, price-risk mitigation, technical collaboration, and regulatory compliance.

Coping with the new demands of the marketplace is only going to become more complicated over time, and long-term partnerships between buyers and sellers will be the best way to navigate these increasingly uncertain waters.