Updated: Feb 4, 2021
Bunkering is the process of supplying fuel to ships.
First of all, in order to send an inquiry to find out a price, you will need the following information:
1- Buyers account
2- Port location
4- Product details
6- Port Agent
It may seem like a simple process, but there can often be information missing. For example, the vessel's voyage may not fixed, so there can be several options for consideration which makes it uncertain which port will be visited. Or the vessel may be chartered, in which case it can be uncertain who will pay for bunkers (the charterer or owners). Or perhaps there is uncertainty regarding the price - will it be cheaper to buy now or tomorrow?
Here are some tips about how to tackle these elements one by one...
1) Whose account?
Bunkers are bought on credit. A global standard is between 21 days and 30 days.
The ease of obtaining credit for your company can vary depending on the port and the quantity required. Every supplier has a different way of evaluating credit. Some stopped opening new credit lines in 2020, when VLSFO (very-low sulfur fuel oil) was introduced, which made each customer's credit line even higher.
Some suppliers take insurance to cover any potential "no-pay". This makes the procedure to open a credit line easier.
Some will offer CIA (Cash in Advance) for a few deals until they better understand the buyer's paying tendencies, then open a credit line for future deals.
Opening credit lines with many suppliers will increase opportunities to negotiate by holding more prices from several suppliers.
When the vessel rotates to several ports, we can give indications as to which port is the most cost efficient.
We can also consider as a whole, the method of delivery, access to port, and the price. For example, maybe the price is cheaper in port A, but the method of delivery is by truck, which is less flexible if the ship is a tanker. Alternatively at port B, although slightly more expensive, you can receive bunkers by barge at anchorage. This will save a lot of time for the vessel, and there will be no distraction of your operation.
Check out this article for different types of ships and the points to note for bunkering!
It is important to get the dates of delivery accurate, but the most important thing to understand is that vessels can often be delayed. When we book bunkers, unless specified otherwise, the price will be unchanged for 4 days. However if the vessel is further delayed beyond the reserved date of delivery, there is a chance that the prices could change.
The main products we broker are VLSFO 0.5% and MGO 0.1% max. As of today's date (February 2021), there is about 30-50$ difference between the two products. But depending on the port, it is possible that MGO is cheaper than VLSFO. It is advisable to always check the two possibilities, because around coasts, you can only burn MGO and not VLSFO.
If the exact quantity is not defined, we have an option to book within a range. Of course, booking within a range poses a risk to the supplier with price fluctuations, so the supplier will normally give a deadline to confirm the final quantity.
6) Port Agent
To arrange smooth delivery, port agents can provide us with details of dates/times, berths, and whether there are any special requirements - such as the distance to the vessel, whether we need extra hoses to supply, and whether the berth the vessel operates can be supplied during or outside operations.
Once the price is booked, port agents will follow up with the supplier to inform them of the vessel schedule (in case of early arrival or delay to the schedule).
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