Cutting costs “at source”

Reducing the cost of fuel ‘at source’ needs to be included and considered as the first part of the optimisation process to mitigate against rising fuel costs, says online auction platform for bunker procurement AuctionConnect. The platform, set up in 2003 and claiming to be the first such service, argues that this is “even more important given the significant increase in the cost of future fuels that will drive the energy transition and enable the shipping industry to meet its decarbonisation targets”.

The platform notes that most procurement departments purchase marine fuels via brokers, traders or direct with suppliers. “However,” it continues, “there is also the opportunity to utilise bunkering procurement technologies, available today and free-to-use, that simplify the complexities of traditional price negotiation, increase transparency and reduce the cost of procurement by always ensuring that fuel buyers get the best possible price. Platforms like AuctionConnect enable buyers to invite multiple fuel suppliers to bid against each other in reverse auctions and drive bunker fuel prices down below Platts’ rates. Buyers can make substantial savings on each tonne of fuel they purchase, depending on the circumstances in the market and the specific bunkering port.”

According to AuctionConnect: “With future fuels being a key element of meeting the shipping industry’s decarbonisation targets by 2050, there is increasing concern in the market of the high cost of these fuels, which could be as much as five times more expensive in 2030 than fossil fuels. This could become a significant barrier to their development and uptake and impact the meeting of shipping’s sustainability ambitions. Many vessel owners’ immediate response to this challenge is to invest in clean technology and efficiency solutions. While they are an important part of the decarbonisation process and in reducing fuel costs, they are also a significant capital investment on top of the increased costs of future fuels. Online auctions offer an easy and low-cost way for buyers to reduce fuel bills even before they consider the hardware or technology to improve energy and fuel efficiency.”