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Bunker Fuel

Integr8 report: Two-thirds of residual bunker fuels still sold with pre-2017 ISO specs

New ISO 8217 standards present a rare opportunity to do away with industry’s reliance on obsolete fuel specifications but noted that it will be no easy task as majority of fuels are still sold with pre-2017 specifications.

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Integr8 report: Two-thirds of residual bunker fuels still sold with pre-2017 ISO specs

Integr8 Fuels, the bunker trading and brokerage arm of Navig8, on Tuesday (11 June) announced the release of its Bunker Quality Trends Report Q1 2024, which revealed several issues including the impact of the Red Sea closure on VLSFO compliance and emerging bunker quality trends.

In the latest report, bunker quality and claims manager Chris Turner advised shipowners and bunker buyers on how they can improve their buying processes and performance. 

Analysing data from over 130 million metric tonnes of deliveries to assess fuel quality trends and challenges from region-to-region, Turner revealed the most pressing quality issues the industry is up against. 

These include:

  • Red Sea closure affecting VLSFO compliance for vessels rerouting around Africa
  • Global VLSFO compliance suffers as suppliers stretch barges to cash in on rising HSFO
  • demand, driven by increasing scrubber numbers
  • Two-thirds of fuels are still sold with obsolete (pre-2017) specifications. Can the new ISO specs finally shake up old school practices?
  • Profit margin-motivated blenders push more HSFOs over ISO limits
  • VLSFO sulphur off specs worsening in the ARA and partly driven by high- to low sulphur barge switching

Red Sea closure impact on VLSFO compliance

Geopolitical events often have a knock-on effect on fuel quality, sometimes relating to blending economics, and occasionally, also relating to the impact on barge infrastructure because of rapidly changing demand.

Since October 2023, many more vessels have been rerouting around Africa rather than travelling via the Red Sea, resulting in a significant increase in volume of HSFO demand, with a ripple effect stretching as far as Barcelona. During the same period, there has been a 30% increase in VLSFO sulphur off specification incidents in ports along the African coast and nearby Spain, which upon closer inspection, show a root cause of affected barges also carrying HSFO.

Integr8 Fuels’ analysis has identified suppliers running a similar model who are unaffected - this likely due to their infrastructure allowing double valve segregation and separate manifolds onboard the barge preventing any cross-over contamination, and/or proper management of grade changeover.

The increase in HSFO demand is also putting pressure on supply models.

Another factor is the significant increase in the number of vessels equipped with scrubbers, resulting in a far higher demand for HSFO than in recent years with data available to Integr8 suggesting approximately 100 million MT of deadweight tonnage being either delivered or retrofitted with scrubbers in 2023. This combined with the price spread which remains very appealing, and scrubber assets travelling further at higher speeds, continues to support the demand going forwards.

Suppliers of course want to meet this increased demand and in doing so place transitional temporary pressure on existing assets or could be forced into a sea change in strategy, both of which may result in the practice of storing both HSFOs and VLSFOs onboard the asset.

This is made apparent by increased sulphur off specification occurrences with the root cause being the switching of grades by certain suppliers, in ports including but not limited to Barcelona, Callao and Hong Kong.

New ISO specs

The International Organization for Standardization’s (ISO) recently launched ISO 8217:2024 standards present a rare opportunity to do away with the industry’s reliance on obsolete fuel specifications. This is no easy task as research from Integr8 shows that two-thirds of residual bunker fuels and three-quarters of distillate bunker fuels are still sold with pre-2017 specifications.

ISO 8217:2024 introduces several important amendments. Notably, it sets minimum viscosity limits across all residual grades, addressing handling issues with low-viscosity fuels. It also identifies specific chemical species linked to operational problems, such as organic chlorides, and incorporates international testing standards. The new specification prepares the industry for the growing use of biofuel blends by establishing new testing parameters for these fuels, such as FAME content and net heat of combustion.

There are however missed opportunities, namely related to de-minimis levels of organic chlorides and cold flow properties.

Suppliers may again attempt to avoid the small print on organic chlorides as they have previously done with Clause 5, which could possibly have been better addressed by incorporating a maximum limit in tables. Cold flow properties must only be reported, not guaranteed, leaving the potential need for buyers to seek additional guarantees outside ISO 8217:2024. This remains a concern as certificates of quality (where such values are reported) often lack reliability when provided at a distant time from delivery.

Despite these challenges, the ISO 8217:2024 specification represents a substantial step forward, providing the necessary framework to address many current fuel quality issues. The uptake of the 2024 specification will depend significantly on ship owners demanding these new standards be incorporated into charterparty agreements. By doing so, owners can drive the transition from outdated specifications to the latest version, paving the way for a more reliable and efficient future in marine fuel standards.

Global HSFO off specs

Global HSFO quality has worsened in the past six months. The number of off-specification HSFO samples has gone up from 3% to 3.4%, and this is significantly higher than for VLSFO (2.1%) and MGO (2.8%).

Profit-motivated blending can go some way to explain the deteriorating HSFO trend. Almost half of HSFO off specs have been blending-related and come as a result of blending close to HSFOs density and viscosity limits, Turner argues. Water content is the second most likely usual off spec suspect and has made up around a third of HSFO off specs.

But fortunately, neither density, viscosity nor most of the water off specs qualify as so-called “critical” or “high risk” off specs. They are not likely to lead to serious engine trouble or debunkerings, which can cost shipowners dearly. These off specs are typically economically motivated. Density and viscosity off specs are more common for HSFO than for VLSFO and LSMGO because they are the blending targets for HSFO, and blenders have an incentive to blend as close to those limits as possible to save money.

VLSFO sulphur off specs

Sulphur is the biggest off spec concern for VLSFO. Again, this has to do with blending as the 0.50% sulphur limit is the target that blenders have their eyes on. Blending too far from the limit can eat into your profit margins, and we have seen the average sulphur contents in VLSFOs creep up in both the ARA and Singapore in the past six months.

In Singapore, you were 2.5 times more likely get a VLSFO stem with a sulphur content of 0.51-0.53% in the past six months as you were getting one in the preceding six-month period. It is evident that blending is being optimised towards the 0.50%.

But while only 0.3% of VLSFOs test off spec for sulphur in Singapore, the ARA has seen 2% of VLSFOs testing off spec. In the ARA, “we regretfully report that we are almost twice as likely to face a sulphur off specification incident now than in the previous reporting period,” Turner wrote.

Note: The full report of Integr8 Fuels’ ‘Bunker Quality Trends Report Q1 2024’ can be downloaded here.

Related: Integr8 Fuels: Off spec issue with MGO equally likely to occur as with HSFO

 

Photo credit: Integr8 Fuels
Published: 12 June 2024

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Bunker Fuel

Cargo ship “Tony Stark” detained in Spain for bunker fuel spill

Authorities have not allowed the Antigua & Barbuda-flagged ship to leave the port on Africa’s north coast until the owners pay bail of EUR 120,000.

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Marine Traffic / Raul Buque

Spain detained a cargo ship for causing a spill during a bunkering operation near the Spanish enclave of Ceuta, according to Reuters on Tuesday (23 July). 

Authorities have not allowed the Antigua & Barbuda-flagged Tony Stark ship to leave the port on Africa's north coast until the owners pay bail of EUR 120,000 (USD 130,129), Reuters reported, citing comments from Spain’s Merchant Fleet. 

Trails of fuel oil were found in front of Benitez beach, the breakwaters of the port and San Amaro beach in Ceuta, in the Alboran sea.

The Merchant Fleet estimated the size of the fuel spill was one metric tonne. It opened a disciplinary procedure that will determine the final fine.

 

Photo credit: Marine Traffic / Raul Buque
Published: 24 July 2024

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Decarbonisation

DNV: Leading maritime cities driving decarbonization of shipping

Dr Shahrin Osman, Business Development Director, DNV Maritime Advisory and co-author of Leading Maritime Cities report, explains the central importance that decarbonization and digitalization occupy within shipping.

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Dr Shahrin Osman, Business Development Director, DNV Maritime Advisory

Dr Shahrin Osman, Business Development Director, DNV Maritime Advisory and co-author of the Leading Maritime Cities report, explained the central importance that decarbonization and digitalization occupy within shipping in this article published on Tuesday (23 July). 

He outlined how maritime cities are the centres of gravity driving this forward, facilitating innovation and coming up with the solutions which are needed for shipping to reach its ambitious decarbonization goals:

The Leading Maritime Cities report shines a light on the key cities driving the maritime industry forward. With decarbonization and digitalization key factors in today’s maritime world, the report’s co-author explains how these are being advanced by activities in the leading maritime cities.

The latest edition of the Leading Maritime Cities (LMC) report was published in April this year. The collaboration between DNV and Menon Economics delivers fresh insights into the maritime cities which offer the best policy measures, infrastructure and supporting institutions, and how these are driving advancements in the maritime industry.

Leading maritime cities in a world of transition

The LMC report recognizes the central importance that decarbonization and digitalization occupy within shipping. The impact of these two dimensions cuts across the traditional pillars that cities are benchmarked on. To address their transformative effect, this year’s report introduces new indicators – such as capabilities in the adoption of digital technologies and automated processes for port operations, and proactivity in implementing green and sustainable financing practices.

“The maritime industry is in the midst of a major transformation,” says Dr Shahrin Osman, Business Development Director, DNV Maritime Advisory and co-author of the report. “Decarbonization targets mean that the entire industry is looking at how it can undergo a transformation of technologies and fuels to reduce emissions, all of this being supported by advances in digitalization.”

Singapore dominates rankings with strong decarbonization efforts

“Maritime cities are the centres of gravity driving this forward. This is where the leading companies and talents are residing and where the real transformations are taking place. They provide platforms for progress and serve as conduits, linking the industry with the wider global economy.”

Like in the previous edition of this report in 2022, a combination of objective and subjective indicators are used to rank the different cities. Singapore was once again recognized as the leading maritime city, followed by Rotterdam and London, with Shanghai and Oslo making up the remainder of the top five. The Asian city-state hit the top spot in three out of the report’s five pillars, retaining its position as leader in Attractiveness and Competitiveness and overtaking Athens and Shanghai in Shipping Centres and Ports and Logistics. Much of this is due to Singapore’s strong positioning towards decarbonization.

The Silicon Valley of the maritime industry

“Driven by key bodies like the Maritime and Port Authority of Singapore and the Global Centre for Maritime Decarbonization, Singapore has a forward-leaning, future-ready approach. They look at things not just for the next few years, but for the next decade,” says Shahrin. “This includes policies towards building up a multi-fuel infrastructure, the electrification of harbour craft, and the promotion of green shipping corridors.”

“Overall, this has made Singapore an attractive location for shipping businesses, to the point where we now regard it as the Silicon Valley of the maritime industry.”

Government policies driving the green transition in key cities

As the example of Singapore has shown, strong, progressive government policy is one of the key factors behind the evolution of maritime cities, underpinning a forward-leading approach. This can attract companies and top talent to a city, while creating a competitive economic environment with well-developed infrastructure can encourage these actors to stay.

“This is especially relevant for decarbonization initiatives, where returns on investments take longer, and are dependent on wider infrastructure being in place,” says Shahrin. “Government support mechanisms can be crucial in facilitating innovation, so that new products and solutions can be developed.”

Shahrin points to the Norwegian Green Shipping Programme as a prime example of good government policy in action. This brings together public and private actors to overcome key decarbonization barriers, supported by funding from the Norwegian parliament.

Attraction of talent to cities key to progress

Central to the attractiveness and competitiveness of a maritime city is its ability to attract and retain top talent. The presence of research and educational institutions can help to develop talent within that location. The availability of professional opportunities and general high standards of living will encourage leading talents to relocate.

“Achieving technological progress is dependent on aggregating available knowledge that could otherwise be located in silos, and bringing it all together in clusters,” says Shahrin.

Note: DNV’s full Maritime Impact can be viewed here

 

Photo credit: DNV
Published: 24 July 2024

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Research

New study shows real world complexities and shortcomings of IMO CII formula

If IMO aims to maintain CII as a meaningful measure to incentivise shipping’s decarbonisation, a thorough review of the formula is necessary, says Royal Belgian Shipowners’ Association and AMS study.

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RESIZED IMO Building

The Royal Belgian Shipowners' Association (KBRV) released a study that investigated issues with the International Maritime Organization’s (IMO) Carbon Intensity Indicator (CII) formula. 

The study, titled Evaluating the Carbon Intensity Indicator: Challenges and Recommendations for Improvements, was done in collaboration with four master’s students from the Antwerp Management School (AMS). 

As part of their thesis project, the research conducted by the students included a comprehensive literature review, a qualitative analysis, and a quantitative analysis using data from Belgian-controlled ships.

The following are the key findings and recommendations of the study:

Key Findings 

Both literature review and qualitative analysis identified three variables with the most adverse impact on CII ratings:

  • Waiting Time: Time spent idling or waiting in ports or awaiting orders.
  • Number of Ports of Call: The frequency with which a ship docks at different ports.
  • Distance Travelled: The total nautical miles covered by the vessel.

The quantitative analysis confirmed the significant impact of these variables. However, a deeper dive into different shipping segments revealed a complex interplay of factors affecting CII ratings, making it difficult to pinpoint the main adverse variables universally.

For example, container vessels are highly affected by the number of port calls. An increased number of stops results in a worsened CII rating.

When comparing three Very Large Crude Carriers (VLCC) with similar distances travelled, waiting times, and number of port calls, differences in CII ratings still occurred. This could be attributed to external factors beyond anyone's control, such as adverse weather conditions.

For LPG carriers, there was a clear correlation between waiting days and CII ratings. Carriers that traded on routes with major port congestions - thus longing waiting time - scored lower than a sister ship with identical design efficiencies on less busy operating routes.

Recommendations

These findings underscore the multifaceted nature of CII ratings. If the IMO aims to maintain the CII as a meaningful measure to incentivise shipping's decarbonisation, a thorough review of the formula is necessary, taking into account the various factors beyond the control of both shipowners and charterers that influence the CII ratings. At a higher level, the scope and goal of the CII within the basket of measures needs to be reassessed as well.

Shipping is the most efficient way of transporting goods, emitting the lowest GHG per ton of transported cargo. Addressing the carbon efficiency of the sector requires the effort of every stakeholder involved, from shipowners and charterers to port authorities and customers. Placing the responsibility for a ship's efficiency solely on the shipowner does not accurately address the complexities and other influencing factors that exist.

Note: The study titled Evaluating the Carbon Intensity Indicator: Challenges and Recommendations for Improvements can be downloaded here

Manifold Times has covered several parties calling for the amendment of CII in the past including:

Related: INTERCARGO joins shipping industry in calls for IMO to amend CII flaws
Related: IBIA pursues amendment to Carbon Intensity Indicator for bunker vessels

 

Photo credit: International Maritime Organization
Published: 24 July 2024

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