This is an appropriate moment to talk about reducing
bunker costs. In fact, at any moment reduction of cost is welcome to the trade
since it enhances the profit margin. What is business if it is not profit and
what is a better business if it does not attract better profit?
Emission regulations being round the corner, the
shipping industry cannot afford to put on the back burner the efforts towards
compliance. Fuel accounts for the major cost of the voyage and any innovative
initiative that promises lesser fuel consumption will prove certainly an
inviting option, if not a veritable temptation.
Ishaan Hemnani BunkerEx Co-Founder and CEO comes out
with some suggestions to reduce bunker costs and the industry perhaps will
This is an obvious one. Drag on a ship reduces
“quadratically” with the speed, which is a fancy way of saying that going at
twice the speed uses four times as much fuel due to the increased drag. Slow
steaming is typically done at 18 knots – anything less is considered ‘super
slow steaming’. Dropping speeds on a cargo ship from 27 to 18 knots can reduce
fuel consumption by 59 percent. Bottom line: if you can afford the extra time,
it’s worth slowing down.
Use an Intermediary
This might seem less obvious. Why use an intermediary
when you can do it yourself? The value of using a buying service such as BunkerEx or
a broker is that they can get you a bigger discount than the cost of their fee.
A good channel will have strong relationships with suppliers and valuable
information at hand to advise their clients on when to buy, who to buy from and
who to avoid. Studies show that using a intermediary reduces the risk of a
claim, so in the long run they can reduce your bunker costs significantly. With
our online platform, there are no fees for buyers and supplier fees are fixed
and transparent, creating a strong incentive to obtain the lowest price.
Account for the “Extras”
Barge fees, calling costs, port charges and extra fees
can significantly increase the “per metric ton” price quoted. It’s important to
bunker in the most efficient location, taking into account all extra charges
and measuring this against the cost of deviating to the anchorage or another
port. Using the latest port mapping technology and calling cost APIs, our
system can quickly compare and determine the cheapest bunker port once all
extra charges are taken into account.
Increase Supply Chain Transparency
Many bunker purchases contain middlemen between the
vessel and physical supplier. Every extra person in the chain will take a fee.
To reduce your costs, it’s important to understand who these middlemen are and
what value they bring to the delivery. Ensure all participants are adding value
along the chain, and that you’re not indirectly losing on extra fees and
Using a fully transparent platform like BunkerEx allows
you to control who you are buying from, with no risk of paying higher fees than
needed. This ultimately results in greater savings for the owner or charterer.
Cover More Suppliers in the Market
Relying on bunker experts (i.e. brokers, traders or
in-house buyers) is recommended, but it’s important they have covered enough of
the market to create a more competitive enquiry. A lot of brokers will continue
to reuse the same suppliers again and again. Although this might be comfortable
for them, complacency often results in higher prices.
With BunkeEx, we tell you who all the reputable
suppliers are, and let you decide how many you want to cover. This ensures
increased competitiveness for your bunker stem and almost always results in
Reduce the Risk of Claims
Every supplier you deal with should have a solid track
record. It’s important to constantly monitor all supplier’s trading activity,
their claim ratios and if they have had any recent issues or key personnel
BunkerEx vets and tracks all of our suppliers and
traders 24/7 to reduce the risk of a claim and ensure smooth operations. Bunker
systems with a clean and well-run process for choosing suppliers will always be
less likely to cause a delivery dispute and hence create savings over time.