For truly efficient fuel management, we need to be proactive and take the whole picture into account, writes Per Holmvang, managing director of DNV Petroleum Services.
Bunkers consistently account for almost half the operating costs of a vessel. With the recent surge in fuel prices showing no signs of letting up and continuing to hurt the bottom-lines of shipping companies, vessel operators are now likely to pay greater attention to this expense item.
We can assume the financial experts of any shipping company to be more price-driven than before as they seek to achieve the best economic mileage out of every purchase.
On the other hand, their colleagues in the technical department will be concerned about the delivered fuel quality and its effect on engine performance.
Such a scenario is in line with the traditional approach to managing marine fuels, which is largely about getting the right price, quality and quantity delivered to the vessel.
Significant progress
Over the past quarter century, the industry saw significant progress in the art and science of bunker quality determination, with particular improvements in sampling procedures and equipment, as well as laboratory-based analysis in terms of testing scope, accuracy, reliability and speed.
Many of these aspects are encapsulated in the widely-used ISO 8217 specification on marine fuel quality.
On the quantitative side, bunker surveyors now have a variety of efficient tank measurement tools and highly accurate electronic devices at their disposal.
To promote standard bunkering practices, major ports like Singapore have also introduced codes of practices, such as SS CP 60 on bunker transfer and SS CP 77 on bunker surveying.
Gradual reduction in fuel sulphur
In the international shipping arena, Marpol Annex VI fuel emissions regulations are among the latest developments.
As the first environmental regulation to be observed by ship operators, Marpol Annex VI proposes a gradual reduction in fuel sulphur levels, as well as the introduction of various Sulphur Oxide Emissions Control Areas (Seca) in major trading areas, where the permitted fuel emissions are even more stringent.
This not only calls for the shipping companies to get their vessels operationally prepared for using low sulphur fuels, but also for fuel manufacturers and suppliers to make available the right type of fuels at the required time and place.
When the Baltic Sea Seca kicked in, the level of market readiness suggests that shipping companies, fuel suppliers and even Marpol Annex VI signatory countries will have problems observing the reduced fuel sulphur requirements.
Learn a lesson or two
On a more positive note, the shipping industry can learn a lesson or two from all the challenges happening in the market place right now.
For instance, given that the conditions imposed on them have become much more complex, ship operators may realise that they have to take a different approach to managing marine fuels – by extending their focus beyond the point of purchase and delivery to take into account the broader, longer-term business requirements.
Whether it is about fuel consumption planning for their existing fleet or the design of fuel treatment plants for newbuildings, ship operators should ask themselves if there are any future consequences and benefits from the choices they are making now.
Obvious as it may sound, many fuel-related decisions today are based on immediate or short-term considerations. The lowest bunker price, for one, may not necessarily be the best if it means accepting a poorer quality that could result in more frequent maintenance and parts replacement.
On the other hand, proactive management of marine fuels involves the ship operator aiming for synergy with as many aspects of vessel operations as possible in order to arrive at an optimal outcome.
Total Fuel Management
At DNV Petroleum Services, we describe this systematic and comprehensive approach as Total Fuel Management.
Total Fuel Management differentiates itself from practices dictated by quality and quantity verification at the point of fuel delivery, where bunker testing and onboard quantity measurements are the main activities. Instead, we address all relevant factors in the pre-bunkering, delivery and post-bunkering stages.
With Total Fuel Management, the practitioner provides customised solutions after detailed consultations with ship operators to understand their unique problems.
As opposed to the focus of getting the right quality and quantity of fuel at the lowest possible price per se, the optimisation principle in Total Fuel Management assesses overall value by determining the maximum mileage from the total energy content in the delivered fuel.
This makes economic sense because the cheapest available fuel may not provide enough propulsion capacity for your vessel, compared to a fuel that is more expensive but with higher energy content. Overall, it may actually cost the ship operator less to use the dearer but more efficient fuel on his vessels.
Total Fuel Management, as applied to long-term fuel-related issues, fits in with the typical shipping cycle, which comprises business planning and development (e.g. profitability evaluation of new trading routes); newbuildings and sale and purchase activities (design or modification of onboard fuel treatment plant) and management of ships in operation (minimising maintenance costs and ensuring schedule integrity).
Given the peculiar needs of each vessel, the Total Fuel Management concept requires practitioners to have sufficient knowledge and expertise in order to offer solutions that are both wide-ranging and tailored.
In this regard, not only is DNVPS a global authority on marine fuel quality issues in its own right, we also have access to the resources available across the Det Norske Veritas offices and facilities to support the solutions we propose.
Provides solutions
As rising fuel prices and unpredictable bunker quality continue to make conditions difficult, Total Fuel Management aims to provide ship operators with solutions for optimising overall fuel efficiency, while at the same time ensuring safe practices and environmental compliance are in place.
But for Total Fuel Management and other similar concepts to work, shipping companies must be willing to adopt a broader perspective and not be satisfied with short-term benefits restricted to specific departments or cost centres.
Even bottom-line analysis may have to be expanded to consider not just the upfront cost of bunkers, but ideally also changes in expenses incurred with the consumption of the fuels purchased; for example, the attendant increase or decrease in fuel-related repairs and maintenance outlays.
Without a doubt, marine fuel management has become much more complicated. It is perhaps time the shipping community acknowledges the potential breadth and depth of this function; and, more importantly, its profound impact on other established areas in vessel operations.
For more information on Total Fuel Management Solutions, contact:
Singapore@dnvps.com
Date: 2006-06-08