Singapore — Demand for bunker surveying services in Singapore may have dropped since the city-port mandated the use of mass flow meters for bunker deliveries a year ago. But the International Maritime Organization's move to cut sulfur in marine fuels to 0.5% in 2020 could increase demand for bunker surveyors in the city-port, and possibly at ports around the world, said Royal Marine Group's director Daljit Singh Pandher in an interview with S&P Global Platts Wednesday.
"Sampling is an important part of the bunkering and surveying process. The importance of a properly-drawn and witnessed representative bunker fuel oil sample cannot be over-emphasized," Pandher said.
"There's going to be more contractual agreements between owners and suppliers over sampling, where the samples should be taken, which labs to use, one that is mutually agreed by both sides should a dispute arise," he added.
Trade sources said disputes on quality arise when the lab test obtained by the shipowners is different from the test results issued by a supplier. In this case, another sample is sent to a lab for a re-test. Usually, this sample is taken from the receiving ship's manifold and sealed, and handed over to the barge after bunkering.
With a number of fuel quality issues seen this year at Houston, Rotterdam and Singapore even before the implementation of the IMO's sulfur cap, demand for fuel testing and sampling, and therefore bunker surveying services, is expected to increase going into 2020, they added.
LOW SULFUR COMPLIANT FUEL
Pandher, who has sailed as an engineer and as a chief engineer for 12 years, said ship engines are not designed to take low sulfur fuel for prolonged periods. This means that the engines will have to be retrofitted, which adds to cost. High expenses from complying with IMO's regulations may prompt owners to scrap young vessels, he said.
"To scrap a 10-year-old vessel is painful, but how will owners make money in the current market with low freight rates and high bunker costs?" Pandher said. "Crew and lubricants costs are about 65% of your operating expenses. If you cut on crew, you lose quality."
As freight rates have remained flat while bunker fuel prices have risen significantly over the past two years, shipowners struggling with increased operating costs might decide that laying up their vessels is better, he added.
For Pandher, IMO's 2020 deadline to cut sulfur in marine fuels from 3.5% currently is an aggressive target.
He is not alone. A number of industry sources have said there will be competing use for distillates on land and sea, and there might not be sufficient refining capacity to produce 0.5% sulfur residual fuel, and that not all ports will have this compliant fuel.
However, the part that worries Pandher is blending residual fuel down to 0.5% sulfur as "it is not an exact science when it comes to certifying the levels of blending" and could pose a number of problems, especially compatibility and stability.
"Blending of fuels needs to be more controlled and regulated, especially when the blending is carried out outside any jurisdiction. Right now, it's left to the owners and suppliers to ensure quality, which seems rather onerous to me," he added.
EXPANSION ABROAD AND OTHER SERVICES
With demand for its bunker surveying services down by 20% since MFMs were mandated in Singapore in January last year, Royal Marine has had to expand its business to Malaysia, China, the UAE and South Americas through tie-ups with local bunker surveying companies there.
The company has also started to re-focus on ship management, a division it started in 2008. From managing one ship in 2016, Royal Marine now has four on its books, with negotiations to manage a fifth vessel underway.
The company is also concentrating its growth on pre-purchase marine inspection, marine warranty surveys, condition surveys and remote navigation audits.
"A majority of tanker owners are doing such audits to mitigate navigation risks, because one incident can wipe out your reputation and money," Pandher said. "You don't want to be responsible for an oil spill."
With remote navigation audits, Pandher's team of master mariners remotely analyze the performance of the bridge team and the effectiveness of instruments used during a critical passage. This remote audit can be used to identify the areas where the team is lacking, he said.
"After doing audits on multiple ships for a company, you see a trend. We then advise our clients where training is needed," Pandher said.
"We're also seeing an uptick in interest to install scrubbers. Freight rates have not risen has fast as bunker prices, and some owners are considering scrubbers as these can be amortized," he added.
