21-12-2016

Singapore’s mass flow metering systems mandate to change global maritime setting

Shippingg

Singapore’s mass flow metering systems mandate for marine fuel oil deliveries will kick off in less than two weeks.

The move towards the compulsory implementation of mass flow meters, or MFMs, for marine fuel oil bunkering, the first of its kind worldwide, will transform the global maritime industry as bunker suppliers and customers increasingly opt for MFMs to do business.

The intent to use MFMs in Singapore goes back to 2014, when the Maritime and Port Authority of Singapore, or MPA, announced it would implement the mandatory adoption of MFMs for bunkering marine fuel oil in the island-state from January 1, 2017.

Since January 1, 2015, all bunker tankers applying to the MPA for a bunkering license for delivery of residual fuel oil have been required to be fitted with MFMs, even though the MFM mandate on the bunker tankers kicks in only from January next year.

Singapore is the world’s top bunkering port, with 2015 marine fuel sales hitting a record high of around 45.2 million mt, a 6.5% year-on-year rise, MPA data showed.

The year 2016 looks promising too, with January-November sales estimated at 44.71 million mt, 8.8% higher year on year, according to MPA data.

WHAT ARE MFMs?

MFMs measure the transfer of bunker fuel between the supplier and the buyer, including the flow rate in the pipe, gauging the quantity, as well as indicating the mass and density of the bunker fuel passing through.

Its use is expected to enhance productivity, transparency and the effectiveness of measurement processes by eliminating human error.

MFMs help tackle industry malpractices such as the “Cappuccino Effect,” a situation where compressed air is blown through the delivery hose and causes frothing or bubbling, giving the false impression that more fuel has been delivered.

The quantity variance using meters is estimated at a maximum of 0.5%, and in the traditional sounding tape method up to 0.7%.

The latter relies upon a quantity reading from the barge fuel tank of the receiving vessel taken prior to transfer.

WHAT MFMs MEAN FOR TRADERS AND SUPPLIERS?

MFMs have found strong appeal among many existing and new players. The use of MFMs typically reduces bunkering operations by around three hours from the usual eight hours, resulting in significant time savings.

As of December 15, 2016, 130 out of 149, or about 87%, of bunker tankers carrying marine fuel oils have been approved.

At least two global players in the bunker industry, who did not wish to be named, want to enter the Singapore market, prompted by the transparency and the efficiency that MFMs bring.

Some smaller traders and/or suppliers may, however, pull out because the nature of the industry has changed and the motivation to operate in the new landscape might simply not exist, industry sources said.

Some of the price-sensitive participants could also depart, as they assess the economics of installing and operating MFMs.

The initial set up costs for MFMs is estimated at around $250,000-$300,000 with additional costs for maintenance and calibration of the equipment, according to some industry sources. The MPA, for its part, has provided an $80,000 grant to existing bunker tankers delivering marine fuel oil in the port to offset the installation cost of each MFM system, ranging from at least S$250,000 ($173,139).

WHAT MFMs MEAN FOR SURVEYORS?

Bunker surveyors in Singapore noticed that a number of their clients have either stopped or are using less of their services, preferring MFMs even before the mandatory rollout of MFM bunkering on January 1.

As of December 1, the number of bunker surveyors had shrunk to 315 compared to 329 surveyors in September.

While surveyors will still continue to be an integral part of the industry, they need to hone their skills and evolve in their roles.

Bunker surveyors, for example, can look at covering new functions, such as reviewing relevant documentation related to MFMs installed on bunker tankers, checking the integrity of the piping system, confirming that the seals are accurate, inspecting zero-verification records, and offering recovery work.

WHAT MFMs MEAN FOR CUSTOMERS?

The implementation of MFMs is hailed as a positive development by ship owners, some of whom feel it was long overdue to tackle issues such as the Cappuccino effect.

Shipping companies might have to pay a higher price for their purchases, as the barge owners/operators may recoup a part of the cost from customers. However, the benefits far outweigh the cost.

The use of MFMs allows for continuous reading of quantity and other parameters captured during bunker operations, ensuring higher integrity.

Currently, the price differential between bunker fuel supplied via the MFM system versus without it is estimated at $3-$8/mt, with the higher end for spot parcels of less than 600 mt. But this could narrow as competition among sellers who supply via MFM escalates.

In addition, the ship crew is not required to monitor and settle bunker numbers with the providers as rigorously when using MFM bunkering, leading to more operational efficiency.

WHAT IT MEANS FOR OTHER PORTS?

MFM bunkering already exists in some ports, including Fujairah and Hong Kong, but is not mandatory.

Singapore’s MFM mandate could prompt other ports to follow in its footsteps after assessing the industry’s acceptance and its ability to transition smoothly, save time and achieve operational efficiency in the city-state.

WHAT’S NEXT?

Currently, the MFM mandate applies to marine fuel oils, but the implementation of MFMs for marine gasoil deliveries in Singapore is also expected as early as next year.

In October, the MPA said it had put in an additional S$0.5 million to fund the test-bedding of the use of MFMs for distillates deliveries.

Trials have commenced and an update is expected in the first quarter of 2017.

Source: Platts 

Previous Next
 

We Are Creating More Value for EXIM Trade : Mr. Neeraj Bansal

View More Videos


Gallery

India Maritime Summit 2017

View All Albums