Digital platform

AuctionConnect: Digitalised price negotiations can improve bunker procurement results

Director Per Funch-Nielsen dives deeper on how digitalisation of price negotiations can help reduce bunker fuel costs and offer transparency to the process that was not present in the bunker industry.

Published

4 weeks ago

December 20, 2024

Admin

AuctionConnect: Digitalised price negotiations can improve bunker procurement results

Per Funch-Nielsen, Director of online auction platform for bunker procurement AuctionConnect, shares how digitalisation of price negotiations offers procurement teams a way to efficiently manage bunker fuel costs while offering a level of transparency to the process that was not previously present in the bunker industry:

Simple digital tool, significant commercial impact

The basic premise of any digital tool is that it should serve the needs of those that use them and be easy to adopt.

For fuel procurement specialists, where relationships with their suppliers are a critical element to the success of their function, the technology they use to improve the effectiveness of their jobs needs to be an intuitive element of the procurement process. Digitalisation is often driven by wider efficiency considerations, because the digitisation of data and use of technology creates a traceable process and data that can be easily recalled from storage, shared with colleagues and analysed for ways to improve performance.

But while these benefits of digitalisation can lead to wider operational improvements, in a dynamic sector like the bunkering industry, questions may be raised over the ability of technology to simplify elements of the procurement process. Fuel bills today constitute the major part of ship-owners’ operational costs, and procurement teams that can keep these costs down are able to contribute significantly to the commercial sustainability of shipping organisations.

Good relationships with suppliers play an important part in this process, and digital technologies used by procurement teams must be very easy to adopt and work in support of the relationships, not as a hindrance.

All along the procurement process, digitalisation helps teams to identify and assess suppliers, handle contract negotiations, and verify quality and quantity of fuel being delivered. The bunkering industry has already embraced digital technologies that allow buyers and suppliers to document and track digitally the quality and quantity of physical goods. Operators have a choice of digital technologies capable of managing these documents.

These digital technologies are notably embedded in procurement teams’ operations and play an important role in supporting them as they build relationships with suppliers. The strength of these relationships is important for ensuring smooth bunkering operations as they enable the buyer and supplier to honestly and openly address any problems that may arise with a delivery.

Digitalised price negotiation

However, with the cost of marine fuel already high and set to rise exponentially on the back of the transition to new energy sources, the digitalisation of price negotiations offers procurement teams a way to manage vital costs as efficiently as possible. A simple online tool, such as the AuctionConnect marketplace, offers a plug and play bunkering procurement solution that aligns quickly and seamlessly into existing digital technologies, with no upfront financial or time investment.

While relying on relationships with suppliers to secure good prices for fuel may intuitively feel like a good idea to procurement teams, there is a lot of evidence to suggest that when it comes to fixing a price for a quantity of bunker fuel, digital technologies can more effectively secure the lowest price for a product, while also lowering the overall cost of procurement. Adopting and embracing digital tools in price negotiations may entail a significant mindset change. Simplicity and ease of implementation are vital to making this change.

In the AuctionConnect marketplace buyers run auctions that ask fuel suppliers to bid to provide specified fuel at the lowest price per tonne. The buyer controls which suppliers they invite to the auction, so they only need to work with suppliers they know and trust. As the automated auction progresses, suppliers can see the value of the bids against them, while the names of bidders are kept confidential. If a supplier is outbid, they are notified and can provide a counterbid. A chat function allows buyers and suppliers to communicate with each other to build those connections that are essential to the smooth operation of the bunkering industry. Each automated auction lasts 20 minutes. As a plug-and-play online tool, with no APIs, the AuctionConnect marketplace can work easily with other digital technologies used by procurement teams.

Easy and transparent

From identifying and inviting buyers to closing the auction and fixing the price with the winning supplier, the online auction process provided by the AuctionConnect platform makes price negotiation as easy and intuitive as possible for users. It brings a level of transparency to the process that has not previously featured in the bunker industry, because all parties can see exactly what prices are being offered in the live auction. The transparent auction process eliminates the need for procurement teams to spend time chasing conversations with suppliers about bids and counterbids.

The transparency in the marketplace helps fuel procurement teams to realise significant savings on the fuel they purchase, as suppliers are encouraged to provide their lowest possible bid. In analysis of fuel prices fixed through the AuctionConnect marketplace between the start of 2023 and mid-2024, buyers were able to secure an average weighted reduction in fuel prices of USD7 per tonne below Platt’s benchmark rates.

Simple and easy to use digital tools for price negotiation bring dual benefits, The AuctionConnect platform can help procurement teams deliver real savings on fuel costs ‘at source’ and lower the overall cost of procurement by simplifying the negotiating process that enables teams to focus on the relationships that are important to safe and effective bunker procurement.

Digitalisation is an ongoing process of change for the shipping industry. It requires a significant mindset change for people across the industry. Facilitating this mindset change, to make it easier to adopt digital technologies, means delivering an online tool that effectively serves the needs of the end users that still delivers significant commercial benefits.

Photo credit: AuctionConnect
Published: 20 December, 2024

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Lloyd’s List Intelligence acquires Infospectrum to drive maritime risk intelligence solutions

Combined business will enable LLI to build solutions that deliver actionable insights and help maritime customers successfully navigate key use cases associated with compliance, risk management and operations.

Published

20 hours ago

January 14, 2025

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Lloyd’s List Intelligence acquires Infospectrum to drive maritime risk intelligence solutions

Maritime data, insights and analytics provider Lloyd’s List Intelligence (LLI) on Tuesday (14 January) announced the acquisition of Infospectrum, an independent provider of counterparty risk appraisal reports & data, due diligence research and KYC intelligence.

The acquisition expands LLI’s ability to deliver analysis and risk management intelligence solutions.

The integration of Infospectrum’s comprehensive counterparty risk appraisal, due diligence and KYC intelligence capabilities and data, will enable the combined business to provide customers with more accurate, reliable, and timely risk based decision-making solutions.

With the maritime sector facing increasing complexity from global sanctions, compliance, safety, geo-political and legal considerations, the combination will enable LLI to build solutions that deliver actionable insights and help customers successfully navigate key use cases associated with compliance, risk management and operations.

“The acquisition of Infospectrum is an important milestone for Lloyd’s List Intelligence,” said Michael Dell, CEO, Lloyd’s List Intelligence.

“This acquisition is a significant step forward in our mission to provide the most comprehensive and insightful risk intelligence solutions that support the global maritime industry. By combining our respective strengths, we will deliver stronger capabilities to our customers and enhance our ability to act as a provider of mission critical data, insights and analytics for the maritime sector as a whole.”

“We are excited to join forces with Lloyd’s List Intelligence,” said Panos Panousis, Managing Director, Infospectrum.

“This combination will unlock significant opportunities for both companies and provide the maritime ecosystem with access to a broader range of data, analytics, and intelligence. We are confident that together we will accelerate innovation and deliver exceptional solutions to the maritime industry.”

Photo credit: Lloyd’s List Intelligence
Published: 14 January, 2025

Classification Society

LR: Risk sharing key component to viable emissions reduction

When major change is introduced on a ship, there are numerous aspects to consider by all stakeholders involved which all add risk.

Published

2 weeks ago

December 31, 2024

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Shipping must be open to sharing the risks associated with emissions reduction to enable the uptake of energy savings devices and technologies (ESDs/ESTs) and digital applications, stated classification society Lloyd’s Register (LR) representatives during a presentation at Athens during early December.

The responsibility of investing in and driving the uptake of new solutions must be borne by all relevant stakeholders and not sit solely with the shipowner. This extends not only to financial exposure, but also new vessel design and data sharing.

When major change is introduced on a ship, there are numerous aspects to consider by all stakeholders involved which all add risk. Energy producers, the energy consumers, the associated supply chains, and the investors, insurers, regulators, class societies and governments – all have critical, but different and highly inter-related roles to play within the transition.

“We are in a new era of shipping that comes with a different set of rules, including shipping companies’ approach risk and risk sharing,” shared Elina Papageorgiou, Global Strategic Growth Director and VP Greece and Cyprus at LR at the Powering Progress: Innovation and Energy in Maritime event.

“Longer-term investment decisions should also be informed by the decisions of shipping’s clients’, clients – the cargo owners – and align with their emissions reduction ambitions.”

David Lloyd, Director, Energy Transition at LR, meanwhile noted: “Smart vessel operation and well-informed, data-led investment decisions can significantly support vessel compliance. What’s more, investments don’t have to be extensive to achieve results.”

“Whilst uncertainties around bigger challenges such as alternative fuels and future requirements are resolved, ESDs and digital solutions can support the commercial viability of vessels as we approach 2030 with often surprisingly low levels of investment. But these investments should be shared across all stakeholders and not be limited to owners and financiers.”

Fotis Belexis, Technical Director of Starbulk Carriers, were amongst speakers discussing risk sharing across stakeholders for complex capital investments.

He pointed out that as existing vessels age, they cannot be replaced by newbuilds as there is insufficient global shipbuilding capacity to replenish the fleet with newer tonnage.

As such, older vessels may therefore remain in the market for longer than expected and not depreciate in value as has been the case in the past. Banks and other lenders must realise this and adjust their depreciation and lending models to suit when ship owners want to finance retrofits of ESDs on their older ships.

Moving forward, the room agreed energy saving devices (ESDs), such as wind-assisted ship propulsion, digital solutions and smart operations should all be considered as the in-service fleet using traditional marine fuels seeks to shave its bunker fuel consumption to comply with IMO’s Carbon Intensity Indicator, EU ETS (Emissions Trading Scheme) and FuelEU regulations – the latter will which be in effect as of 1 January 2025.

As emissions reduction targets increase, with steeper increments than currently planned potentially being announced at the Marine Environment Protection Committee meeting in May next year, data-led insight and scenario planning will become more important to understand where efficiencies can be gained.

Photo credit: Lloyd’s Register
Published: 31 December 2024

Bunker Fuel

Singapore: ExxonMobil completes 100 digital bunker deliveries with Bunkerchain

“As the first accredited bunker fuel supplier to introduce MFMS in Singapore, we are proud to lead the way in implementing eBDNs,” the company said in a social media post.

Published

3 weeks ago

December 23, 2024

Admin

ExxonMobil on Friday (20 December) said it has successfully completed over 100 bunker deliveries using electronic bunker delivery notes (eBDNs) in collaboration with Singapore-based Bunkerchain, its first approved eBDN vendor.

“As the first accredited bunker fuel supplier to introduce MFMS in Singapore, we are proud to lead the way in implementing eBDNs,” the company said in a social media post.

Ognjen Plakalovic, Head of Asia Pacific Aviation and Marine Sales, ExxonMobil, said: “Our implementation of eBDNs is expected to help drive efficiency, enhance trust, and boost productivity. We continue to advocate for transparency and value the advantages of digitisation.”

Starting from April 1, 2025, marine fuel suppliers in Singapore must offer digital bunkering services, including electronic bunker delivery notes (eBDNs). The Maritime and Port Authority of Singapore (MPA) expects this initiative to save the industry up to 40,000 man-days annually.

According to the MPA, the move will also enable more efficient data sharing between bunker buyers and suppliers, which will help streamline administrative processes, improve accountability, and facilitate regulatory compliance.

“Integrating eBDNs with mass flow metering systems (MFMS) greatly minimizes the risk of manual errors or intentional tampering with fuel quantity figures, thereby enhancing integrity and trust in fuel transactions,” the company added.