World Bunkering > News > Summer 2011 > Managing fuel, saving cash

Monitoring the use of fuel and optimising its use is becoming an increasingly high tech business. With companies like Houston-based FuelTrax using a combination of shipboard electronics and satellite communications and the internet to ensure fleets make the best use of fuel.

The patented FuelTrax product, which includes an internet-based product FuelNet, covers a wide range of applications from fuel monitoring to reduce consumption, optimisation of fuel use by recommending the most effective throttle settings, advice on fuel inventories and fuel locations, best practice for crew members, with comparison of their performance, and engine and vessel analysis. The firm lists ExxonMobil Production, Holland America Line and Rio Tinto among its customers.

DNV Petroleum Services offers a Total Fuel Management service that aims, to improve operational efficiency, ensure clients get the most out of their bunkers and also that they meet increasingly stringent regulatory requirements.

According to the company, managing fuel has become more and more complex with “present day decisions having significant consequences in the future”. Shipping companies have to look beyond quantity and quality verification when looking at the bunker issue, and take a more holistic approach by looking at “different but inter-connected practices and issues in ship operations”.

The need for better fuel management has led to many innovations in the field of engine design. Man Diesel and Turbo, for example, has recently successfully completed a type approval test for its fourth super-long-stroke S80ME-C9 engine, which uses extra energy in exhaust gas to produce fuel oil savings of the order of 10-15%, according to the company. Maersk is installing 22 of the engines on its new 4,500 teu container ships.

Maersk has also been developing its own tools to improve fuel management across the fleet. One such is ECO-Voyage, which analyses currents, depth, waves and wind along a planned route to establish the optimum power and speed during a voyage. The information is shared with other ships in the fleet so that they can all benefit.

“The programme enables the captain to run several alternative routes and see how much difference in fuel consumption there will be. Also our large vessels can plan a dual speed voyage to optimise the use of the waste heat recovery system. It should improve their confidence in choosing an alternative route,” explains Kim Henriksen of Maersk Maritime Technology.

According to MMT, potential fuel savings by using the tool are between 0.5% and 1% per year. Maersk’s new 18,000 teu container ships, the Triple Es – which are under construction at DSME in Korea, are expected to use 35% less fuel consumed by container than 13,100 teu vessels being delivered to other container shipping lines in the next few years, Maersk claims.

Rolls-Royce, meanwhile, has signed a £20m ($32m) contract to supply Norwegian operator Torghatten Nord with engines and propulsion equipment for four gas-fuelled ferries that will feature the company’s hybrid shaft generator, which is designed to reduce fuel consumption, and cut emissions.

Stolt Tankers launched its energy management project in 2006 and says the company has already made substantial fuel savings through the measures it has introduced. These have included making more efficient use of onboard heating and operational systems, smoothing hulls and propellers to reduce resistance through the water, reducing sailing speeds and optimising voyage planning. Ensuring crews are up to speed with best practices and maximise efficiency is also important. The project has also been targeting the reduction of SOx, NOx, and CO2 emissions. With demand for fuel demand set to continue to rise in the decades to come, increasing attention is being paid to alternative fuel sources.

Stolt-Nielsen acquired an interest in Seaweed Energy Solutions in March 2011 – an energy start-up looking at using seaweed to produce bioethanol and biogas. Chief executive Niels Stolt-Nielsen said at the time: “The propulsion of our entire fleet is based on petroleum. The raw material for many of our cargoes is petroleum. I feel it is our duty, as well as being in our interest, to help develop alternative sources of energy and raw materials. Through our experience as shipowners and fish farmers, we know a lot about the sea and wish to put that knowledge to work helping to make seaweed such a source.” Detailed work has been done at the International Maritime Organization to improve the energy efficiency of ships to reduce their fuel consumption and cut emissions.

As the ICS explains on its Shipping and CO2 website: “the Ship Energy Efficiency Management Plan (SEEMP) incorporates best practices for the fuel efficient operation of ships, such as better speed management throughout a ship’s voyage, for example. Such efficiency measures will significantly reduce fuel consumption and, consequently, CO2 emissions.

“The SEEMP was developed through detailed discussions between member states, and with the advice and assistance of the international shipping industry, through a specialised working group on greenhouse gas emissions convened by the International Maritime Organization’s Marine Environment Protection Committee. The working group also discussed measures such as an Energy Efficiency Design Index, which will help to ensure that new ships are built as energy efficient as possible.”

International Transport Intermediaries Club (ITIC), the Thomas Miller-managed specialist liability insurer, has provided a salutary lesson for ship managers which, among other things, illustrates what a costly business it can be when you get your bunker calculations wrong. In its latest Claims Review, ITIC cites the case of a commercial manager which had, for several months, been operating a ship on a regular route that involved a call at Singapore, where it was usually bunkered.

The commercial manager was advised by the shipowners that the vessel had been sold for scrap and that, on its next call at Singapore, instead of taking on full bunkers, it only needed to lift sufficient bunkers to reach its scrapping location. Unfortunately, the commercial manager’s operations team failed to take note of the owner’s instructions and bunkered the ship with the usual amount. When the ship was scrapped, the additional bunkers were an unexpected gift to the scrap yard. The owners brought a claim on the commercial manager for $95,000, which was the difference in value of bunkers purchased.

According to Tim Wilson, product manager at Fobas, another aspect of fuel management that needs to be considered is how bunkers are physically managed when they are pumped on board the ship. ISO13739 specifies procedures and requirements when transferring bunkers to vessels and also pre-delivery, delivery and post-delivery checks and documentation.

“From our perspective it is about managing the fuel from the point of ordering the fuel and the quality you are looking for. That means understanding what the ship can or cannot handle with regards to storage, treatment and use on board,” he explains. At issue is whether various grades of fuels can be handled and what degree of tolerance the engines can take with regard to quality.

“Once you have got that, you know what to order and then there is the question of whether you get what you ordered and handle that correctly on board,” Mr Wilson says.

When the fuel comes on board it is obviously not ready for use and needs to be treated and prepared for use. Fuel needs to be managed properly and if it is, “you limit the risk of causing operational issues or even pollution with respect to the use of that fuel”, he explains. He believes that a lot of the difficulties that ships experience are due to crews not being competent in applying good management and best practice. It is easy to blame the supplier, he says “but often it is people on board who are poorly managed that is the problem”.

Even if the fuel is off specification, that does not mean it cannot be used, he says. “It just means there needs to be more focus in managing that fuel correctly for commercial use.” The specification is there mainly to provide the supplier with guidance on the fuel the ship can handle. “If it goes over that, invariably the ship will be able to handle it. It depends on which specification has been exceeded but generally speaking there needs to be greater understanding of the impact of variances in fuel quality on board ship and more training and more scope in understanding the risk if it isn’t done properly.” Barges are doing bunker operations every day, he says, and one danger may be complacency. For example supervisors of a bunker operation might inaccurately calculate the speed of loading bunkers with a resulting spillage on deck.

Fuel management is an area where ships make a lot of mistakes, Mr Wilson says. One problem may be a lack of knowledge by the crew as to what is happening to the fuel once it is on board. “They think they are heating it with the purifiers; they don’t know if the purifiers are working properly and they don’t know if their temperature sensors are working correctly so they assume everything is working well.” Risks can be mitigated by good practice, he says. Good practices need to be instilled in the mindset of the crew; education and experience is essential.

“When we are talking about good bunker fuel management, we most often think about how the fuel is handled on board; however, it is even more important how the purchasing is handled in the owner’s office,” Ivar Tonnesen of Pacific Basin says. “In these volatile times, bunker prices are the hot topic and I sense there is a certain pressure on the person responsible for buying to keep the prices low and get the best deal for his/her employer. But there is more to good bunker management than just getting ‘cheap’ oil. I don’t believe for a minute that a seller is giving low prices just to be nice. More often than not he will try to claw it back somewhere else, and what is more easy than through playing the numbers game when converting volume to weight?

“On a 1,000 cu m delivery and by just overstating the density on the BDR, they have taken back the ‘discount’ or more – add wrong temperature into the equation, and the 1,000 cu m that was meant to be 975mt delivered, now becomes maybe 950mt received, at best. At $615/mt bought it becomes 631.18/mt paid. Was anybody talking about saving money by prudent purchasing?” Then , he says, there is the case of the vessel loading grain in the Mississippi River for Japan. “The person in charge of buying knows that he needs to bunker in either New Orleans or Panama in order to make Japan. A quick look at the local broker’s price list tells him that over the past few weeks, Nola has been fairly consistent with prices around 10 dollars higher than Panama, so he scraps taking bunkers inbound, knowing well that the vessel needs to wait at least 24 hrs before loading.”

By the time the vessel gets to Panama, Mr Tonnesen says, the buyer is in for a surprise. “Despite being told beforehand that she must wait for transit, the ship is cleared to proceed through the canal on arrival at Cristobal, and Balboa is severely congested. This means at least two days waiting for the barge. Yes, the buyer had forgotten that Panama is working on a first come, first served principle. A planned ‘sweet deal’ suddenly turns sour. Again, was anybody talking about prudent purchasing?”

Finally, Mr Tonnesen says, there is the case of the vessel that has to discharge sludge. “This must be done through a special sludge line; however, when the sludge were pumped into the receiving barge, a quick change of manifold connection allowed the chief engineer to also pump about 50mt of ‘sleeve oil’ for which he was paid in cash. Here we have a case of a dishonest crew member who not only overstated his consumption in order to build up his ‘reserve’ but also sold it for personal gain, which in the end, became the owner’s loss.”

There are numerous other examples to show how an owner can lose money, despite the fact that the bunkers were initially bought below the market price. “This is where proper fuel management comes into play – being able to control the whole chain, from picking up the telephone and ordering the fuel, through the delivery, and verification that what the owner is paying for was actually delivered. Being able to provide proper bunker guidelines to the crew, have the necessary control routines in place to ensure that what is ordered is also delivered. Needless to say, this also applies to onboard handling, as unnecessary wastage happens there as well.”

Mr Tonnesen says that “the few dollars one saved when buying the fuel, may easily have cost 5-10 times more when the invoice is signed off for payment. However, by having a proper fuel management plan in place for both onshore and offshore staff is, without a doubt, beneficial for all. With bunker costs pushing 60% or even 70% of a vessel’s daily running cost, it becomes even more important. Too often do we focus on the price issue and forget that the real money disappears in the supply chain or on board, and do not bother do anything to stop it. I think it is safe to say, we have no one to blame but ourselves if we allow this to happen”.