The latest fuel contamination outbreak to hit the bunkering market, this time in Singapore, should be a wake-up call to the danger of discovering quality issues only after fuel is onboard vessels, warns marine fuel tracking expert FuelTrust
FuelTrust estimates the scale of this contamination outbreak to have spread to dozens of vessels. The disruption is widespread, with many vessels suffering blackouts, engine damage, and the need to debunker. Given the additional disruption to cargo delivery, insurance claims could easily run in the hundreds of millions of dollars.
"We are seeing another fuel crisis similar to Houston in 2018," said Jonathan Arneault, Co-Founder of FuelTrust. "Four years later, the lawsuits from Houston are still ongoing, and we're just realizing the financial impact that a single batch of bad fuel can have on the industry. This recent incident is shining a light on a persistent global issue. Fuel quality problems cause debunkering issues every month in ports around the world, most of which never make the news."
Bunkering remains a fragmented supply chain, full of 'unknown unknowns'. Contaminant issues may not be picked up by today's required testing. The lack of digital technology to drive transparency and traceability across the industry means greater risk of fuel quality, quantity, compatibility, and fraud issues. Early warning systems to alleviate risk exist today, at a cost that works out to cents on the barrel.
"We have analysed more than 390 million barrels of fuel, looking at their exact chemical make-up.” Arneault continues. “FuelTrust gives suppliers and shipowners the ability to know the content history and expected performance of fuel prior to sale or bunkering. This could reduce operational and financial risk across the industry. In this latest instance, a GCMS (Gas chromatography-mass spectrometry) test would have revealed the presence of the organic chlorides contaminating the fuel. FuelTrust keeps a GCMS lab analysis of the supplier storage fuel tanks, in a secured blockchain record and provides alerts when our AI detects anomalies or non-compliant fuels before they are bunkered.”
FuelTrust's Bunker Insights uses artificial intelligence and blockchain technologies to establish a digital record of fuel transactions, analyze and identify chemical risks and provide an early warning to ship owners and bunker suppliers based on these insights. FuelTrust's AI Digital Chemist™ allows users to know where a batch of fuel came from, what changes happened to it over its lifecycle, how it will operate in a particular engine under specific conditions and enables us to make extremely fine predictions about what happens during combustion.
Mark Barton, Business Development Manager at MHG Insurance and a FuelTrust advisor, confirmed the scale of the disruption to shipping from contaminated fuel, and echoed the call for an early warning system.
"What is yet to be seen here is the true scale of the contamination, which has already spread to dozens of vessels. Damage to these vessels not only means financial impact in terms of repair and time at sea, but also costs associated with failure to meet contractual agreements. We will likely see delays lasting weeks, but legal challenges could go on for years.
"This underlines the need for better transparency and visibility in the marine fuels supply chain – and for a method of giving shipowners and bunker suppliers advance warning of problems with the fuel. The industry cannot afford to continue finding out about this kind of contamination only once the damage is done, which is why solutions like FuelTrust's are so valuable in our fight for a safer, greener and more trustworthy marine fuels sector."
Dr. Ram Vis, owner of Viswa Labs, echoed the call to use technology to better document and analyze risk in the supply chain.
"The current bunker quality problems give a feeling of déjà vu from an organic chlorides contamination in 2001, and more recently what we saw in Houston four years ago. While the industry has taken steps to safeguard the fuel supply chain, how do we prevent this from ever happening again in the bunker fuel industry?
"The most effective solution is to use technology, reducing reliance on manual procedures wherever we can. There are plentiful technologies available today which can facilitate that. We can use blockchain to create a secure record of analysis, so that any gaps can be instantly identified, and the point of contamination or adulteration can be captured. In addition to blockchain, machine learning will capture the changing trends in the fuel quality relative to the bunkering port and supplier. If applied correctly, machine learning along with blockchain should prevent a recurrence of such incidents for decades to come.
Dr. Vis continues, "The last time this happened in Singapore, the MPA took very stringent action, and it is a tribute to their constant vigilance that, for almost 21 years, there has not been any major contagion there."