There is less than a year to go until the new IMO regulations come into place . Yet there is still a huge amount of uncertainty around its implementation.
One of the big concerns is the additional cost of compliance.
S&P Global Platts Analytics estimates that complying with the IMO’s cap will add $60 billion to fuel costs in 2020.
Hapag-Lloyd for example estimates that complying with the IMO’s cap will cost the company an additional $1 billion a year in fuel costs across its fleet of 226 modern container ships. Box shipping company MSC anticipates paying an extra $2 billion annually.
The new IMO rules will not only increase costs but could also trigger unprecedented volatility in prices as a widening array of choice between the various fuel types could skew supply and demand dynamics in what is still a relatively opaque market.
Increased cost and price volatility are just the start. Even this late in the day buyers aren’t clear what new fuels will be available. There is also uncertainty around compatibility, quality and availability. Buyers may also find it harder to buy the right quality fuel for the right price in the right location..
This all adds up to the fact that bunker buyers are going to find purchasing fuel more complex after the new IMO regulations come into place.
With all this uncertainty what can buyers do?
At Inatech we believe that buyers need to review and rethink their fuel procurement strategies.
When talking to some of our customers we have found that many see fuel procurement as an operational activity.They have systems and workflows in place that handle procurement across their organization. This has worked well for them in the past. However as the process gets more complex buyers need to be more analytical in the way they buy.Earlier planning may be needed to secure the right fuels. This means using available data effectively and making new technologies work for the business.
Ultimately, this means smarter fuel purchasing. Even in the most regulated and uncertain situations buyers can confidently buy the right quality fuel at the right price and at the desired destination.
Inatech has a product that makes this possible – Smart Trader
Smart Trader, is a pre-deal analysis and decision support platform, that leverages bunker alerts and pricing data from S&P Global Platts.
Smart Trader been specifically designed to help bunker buyers optimize fleet level fuel procurement and make informed purchasing decisions. Developed to help buyers and operators faced with a widening array of fuel choices and prices,as well as possible quality, compatibility and availability issues caused by the new IMO rules.
What makes Smart Trader so practical and applicable is that it combines internal data taken from an operator’s vessels, suppliers and procurement systems and combines this with bunker alerts and pricing data from S&P Global Platts. This information is displayed via interactive maps and through alerts. This allows buyers to monitor the fuel levels of every ship, track location and direction, and manage fuel options as a vessel approaches port.
By deploying Smart Trader buyers can:
- Optimize fuel procurement across a fleet or by individual ship using one application.
- Manage an entire fleet. See their location, fuel levels, schedule, local port prices, and available suppliers
- Utilize interactive, easy to understand maps for logistics and strategy.
- Better understand complexity and volatility through integrated vessel tracking and bunker alerts and pricing data from S&P Global Platts.
- Secure the right product, with the right quality and price at the desired port.