IMO 2020: Industry on Course for Unparalleled Bunker Contamination Challenges, Says Tolson

Wednesday June 13, 2018

The industry faces unparalleled bunker contamination challenges in the post 2020 bunker market unless it takes action now, 20|20 Marine Energy's Adrian Tolson warned today.

"Firstly, the industry needs to see more transparency and clarity around products.  We believe that now is the time for blenders and suppliers to fully warrant the quality of their fuel, even if it is sold within the Platts window.  Secondly, suppliers should no longer be able to hide behind the fact that products just 'meet ISO specifications', when in reality they are not fit for purpose, and contravene Clause 5 of ISO 8217," he says.

"And finally, there needs to be a universal increase in knowledge of the fuel supply chain by all parties involved, so that history stops repeating itself, and to ensure that positive change can occur. This is particularly important in a post 2020 world, where there is already concern about the quality of blended products that will flood the market to meet the 0.5% Sulphur limit."

The comments come in the wake of ongoing bunker quality issues in Houston and the wider US Gulf Coast, problems that FOBAS yesterday warned have now extended to the Panama market.

While Ship & Bunker sources say the problems have reached an "unprecedented scale" with as many as 100 vessels affected, Tolson is keen to highlight that such an event is far from unique.

"The Gulf Coast last saw a series of contamination claims in 2013. However, in 2007 a myriad of claims with supply origins in the Gulf Coast tore their way through the entire global bunkering industry, impacting almost every major supply port," says Tolson.

"These problems continue to happen again, and again, the same mistakes continue to be made and it looks like the industry is operating in a state of blissful amnesia. It needs to change."

Tolson also points to a correlation between high bunker prices and bunker quality problems, a presumably worrisome observation for an industry facing a significant jump in fuel costs due to the implementation of a global 0.50% sulfur cap on marine fuel from January 1, 2020.

This is relationship caused because when prices increase, they reach a point where producers can get a better return from the bunker supply chain rather than selling into normal outlets, he explains.

"2007 and 2013 were eras of peak bunker prices, so it is no surprise that we are now dealing with this problem with fuel oil now rising to $400 per ton, and crude at over $70 per barrel.  The general consensus is that crude will continue to rise post 2020, and suppliers need to get their houses in order," Tolson says.

"They can no longer use the excuse that margins are under pressure, and that they are being forced to use the cheapest components. In fact, the clever ones will use this situation as an opportunity to build and market their brands around transparency and professionalism, instigating processes, such as warranties that ensures the viability and provenance of their products. Not all will be able to achieve this, and if this means the industry loses a few participants as collateral damage, then so be it. Bunkering will be better for it."