Blockchain for bunker fuels: New initiative to track shipping fuel supply chain

Blockchain for bunker fuels: New initiative to track shipping fuel supply chain

Industry giants partner with Maritime Blockchain Labs to trial new technology for enhancing fuel traceability

A number of leading players in the global shipping industry have teamed up to support a new project to harness blockchain technologies designed to improve the traceability of the shipping fuel supply chain.

Maritime Blockchain Labs (MBL), a subsidiary of Blockchain technology and governance experts Blockchain Labs for Open Collaboration (BLOC), announced late last week that it has launched a new consortium to explore how blockchain could help shipping operators better trace the source and quality of bunker fuels, including details on its environmental impacts.

The consortium includes Lloyd’s Register, Precious Shipping, Bostomar, BIMCO, International Bunker Industry Association (IBIA), and shipping biofuels specialist GoodFuels.

The group will explore how blockchain technologies could help to provide an “efficient, tamper-resistant and auditable chain of custody” for bunker fuels, providing assurances that can help operators meet tightening global regulations governing carbon emission reporting and air pollution.

The group said the ultimate aim was to reduce safety risks and create a “more trustworthy framework for accurately monitoring emissions from shipping such as sulphur, and carbon”.

“MBL takes an industry-led approach – meaning that the solutions will be identified, designed, and tested by the industry itself, with MBL facilitating governance and developing the technology to ensure these solutions are relevant and used,” said Deanna MacDonald, CEO and co-founder of BLOC. “A consortium approach is essential due to the need to cross regulatory boundaries and work within different organisational bodies and systems.

“Too often with blockchain, and digital initiatives in shipping in general, we see a top-down approach where new technology is pushed on the industry. However, this means that complex human and governance elements are ignored, limiting the eventual adoption and usefulness of the technology.”

Khalid Hashim, managing director at Precious Shipping, said there was a need across the industry for improved visibility over fuel supply chains.

“As an off-taker of marine fuels, it’s vital for us to ensure that the fuel we use is compliant – particularly when we think about the market post-2020, and the need to ensure the quality of blended products coming in to meet the 0.5 per cent Sulphur limit,” he said. “Blockchain is ideally placed to create the reliable chain of custody we need to do this.”

The shipping industry is facing growing pressure from regulators and ports around the world to curb air pollution linked to bunker fuel and step up efforts to tackle rising carbon emissions across the sector.

Earlier this year the International Maritime Organisation backed a new plan designed to improve emissions reporting across the industry and cut carbon emissions in half by 2050. However, the strategy was widely condemned by green groups for not being ambitious enough and failing to introduce more robust policies to drive greater investment in low carbon shipping technologies.

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Generous bunker credit terms could become a thing of the past come 2020

The new regulations of the global sulphur cap, coming into force at 2020, are not only likely to put pressure on the supply of suitable fuel oil to the market but also to the supply of credit. In a recent presentation at the Aracon bunker event, head of credit Paul Millar at physical supplier and bunker trader Bomin Group outlined his views on the subject. The increase in bunker prices post-2020 may force some shipping companies out of the market while credit managers will also come under pressure to raise credit lines to cover increased fuel costs. According to Millar, those companies in the bunker supply chain that are least equipped to handle any inflated financial demands will be most likely to suffer.

Read more here: Ship&Bunker