Since the internet became commercially popular in the early 2000s, there have been companies trying to change the way the market trades bunkers. Shipping was expected to be amongst the first to embrace technology to unlock new ways of doing business but has ended up being one of the last. A lot has changed since 2000, we are now used to transacting online in our everyday lives and have seen the rise of the 'digital ship'. Is it finally time to get smarter about bunker procurement?
Technology gives us to the information we need - when we need it.
We are now used to carrying smartphones and have come to expect that the information we need is at our fingertips. Over the last two decades technology has driven higher and higher quality consumer experiences in our everyday life. We are starting to see this translate into the workplace.
You probably wouldn't book a flight without checking all of the other options through a price comparison site. You might save $100. But shipping companies frequently stem bunkers without knowing there is a better option available. We recently worked with a client who was able to save
$20 / MT by calling bunkers only with minimum deviation. In total they saved
~$30,000 on a single bunker delivery by shopping the market. In bunkers, the truth is that there is no good way to know what you don't know today. My personal view is that by using technology we can get smarter about where and when to bunker to great effect.
Today if order just about anything online, get instant confirmation and real-time updates until it lands on your doorstep. I'd argue it's about time the bunker market catches up - real time updates, clear audit trail, documents in one place, benchmarking and reporting. All of this is unmanageable when relying on email and excel to hold your operations together.
IMO 2020 will bring additional complexity and be an opportunity for data-driven companies
In the lead up to 2020 the bunker market will go through the biggest shake-up in memory. It is already a full-time job to keep on top of who supplies what, where at what price. The mental map people use to navigate the market today is going to change drastically. Bunker planning is going to become a lot more complex with an array of new fuels and compatibility issues. Technology is going to be crucial in helping bunker buyers make informed decisions and demonstrate compliance in the new world.
It is not a zero sum game, as FinTech has shown in Financial Services, there is a tremendous amount of extra value that can be created by taking a data-driven approach to how we plan, operate and finance the bunker trade. Bunker prices are also expected to rise in 2020, which means that credit will again become a much more important part of doing business. FinTech companies have already changed the way finance teams evaluate credit risk and has opened up new credit lines for many individuals and companies who would have struggled in the past.
Smart shipping companies are already doing this - the relative advantage will only increase
Relative bunker pricing is much more important than absolute. In many ways it doesn't matter if bunker prices double as a shipping company as long as all your competition also pay the higher prices and freight rates go up too. Some smart shipping companies are already enjoying a
2-3% saving on total bunker costs, by using technology to take a holistic approach to bunker procurement. One study showed a yearly saving of
$25 million across a large fleet of vessels. With bunkers typically representing
60%+ of a vessel's operating cost a good bunker strategy can make a big difference in today's highly competitive environment.
Today shipping companies are overloaded with information, but they can't make use of all the data available when planning. Technology will be used to get smarter about which ports to bunker in, when to enter the market and which suppliers to work with.
Most shipping companies don't have all the capabilities to develop these tools in house. Partnering with a technology driven company to take a data-driven approach to bunkering has several benefits for a shipping company there are no development or maintenance costs, access to more information and dedicated professionals on hand to support.
Danny Soos is CEO and founder of OilFront.
OilFront is a bunker broker which uses technology to make its operations transparent and provide a value-add service to the shipping company. There are no upfront fees and you can use us alongside your existing channels. It can be as simple as giving us an enquiry and seeing what we we can do. For more information, please get in touch on details below.
Neil Lamerton, Head of Bunkering
Email: neil[at]oilfront.com
M: +44 (0) 7872 608086
Skype: live:bunkers_48
Danny Soos, CEO
Email: danny[at]oilfront.com
M: +44 (0) 7931 582879
Skype: dannysoos
www.oilfront.com
bunkers[at]oilfront.com
T: +44 (0) 20 7193 7500
