Fit For Purpose - Future Fuels and Contracts

Shipping’s energy transition is underway but the switch to new fuels will require a new commercial approach. Steve Simms of Simms Showers considers how bunker sales terms should be revised or written anew in the years ahead.

With new marine fuels present in liquid natural gas, synthetic fuels, and others, the international bunkering industry must be ready to sell them. With the means of provision for LNG increasing and more LNG providers recognizing LNG bunkering as a market, the expectation is that LNG bunkering soon will be conducted through a trader- supplier model. Bunker providers first should consider entering long-term supply contracts for new fuels, which will encourage the development of technology and infrastructure to deliver them. 

Many elements of long-term contracts will be the same as the contracting models that bunker traders and suppliers use now. There will still be terms for price and payment, handling, scheduling, measurement of quality and quantity, testing, sanctions avoidance, and dispute resolution, including maritime liens and arrest. But, depending on the fuel, some terms would need to be expanded, such as those for safety and planning (required for handling LNG and other low flash point fuels) and also testing and sampling (methanol, ethanol and ammonia, for example, rarely if ever having quality concerns) and retaining samples. 

Maritime commerce generally and the bunker industry specifically will continue to run on contracts. Bunker providers must start their thinking sooner rather than later about how their contracts will work successfully to sell the new fuels.

To read more about future fuels contracts, link to full article here.