Ami Daniel, CEO of Windward, writes for Splash today on the next revolution to take place in bunkering.
Marine bunkering – the act of refuelling large ships in either port or at sea – is one of the fundamental anchors of the maritime world. Already valued at $150.7bn globally, the bunker fuel market is projected to exceed $216bn in the next five years.
But despite perennial demand, fuelling maritime vessels across the globe is contingent on the whims of world events that routinely create volatility in the industry – new and complex regulations, supply chain disruptions, fraud issues, and fuel price fluctuations, among others.
As advances in artificial intelligence continue improving cost-efficiency and optimizing operations throughout industries worldwide, it begs the question: Can AI help chart a new, more sustainable course for maritime bunkering as well?
A costly challenge
Bunkering operations are a highly choreographed affair, relying on a complex series of steps navigating supply chain components on land and at sea, including refineries, storage facilities, and delivery services. Holdups caused by everything from simple vessel delays to “bunkering fraud” – an issue that recently disabled 600 ships and cost shipowners $5bn last year alone – can send a chain reaction that ripples through both the bunkering market and the maritime industry it supplies.
Further complications can arise due to ever-evolving regulations, which fluctuate alongside changing environmental initiatives, politically motivated sanctions, and fuel quality issues. Subsequently, the increasing difficulty of compliance heightens the risks of fines, legal troubles, and reputational damage.
Compounding these issues are the outdated methods bunkering traders often use to analyze market trends, locate customers, negotiate fuel prices, and facilitate the purchase and delivery of fuel.
AI in bunkering
AI’s potential to optimise and redefine bunkering operations is too great to be ignored.
By utilising machine learning algorithms, AI can help predict fuel demand patterns and adjust inventory levels accordingly, ensuring timely and efficient fuel supply. On the supply chain management side, AI can analyse vast amounts of data to optimize fuel delivery routes, minimise fuel wastage, and reduce transportation costs.
AI also gives bunkering companies the ability to track patterns in the ships they serve. For example, identifying regular port visitors and offering them alluring package deals stands to transform occasional encounters into long-term partnerships.
Steer clear of sanctions
Beyond its promise for innovation, efficiency, and customer loyalty, AI is perhaps the strongest ally a bunkering company can have from a regulatory point of view. Since the start of the Russian invasion of Ukraine, new sanctions have been implemented and updated consistently to keep pace with the tactics of bad actors trying to circumvent them.
The EU’s recent 11th package of sanctions was aimed at addressing this issue. As of July 24th, maritime entities, including bunker suppliers, are expected to go beyond mere sanctions-list screening. More specifically, there is now a port and locks access ban, including for bunkering services, for vessels turning off, manipulating, or spoofing their locations and for vessels conducting ship-to-ship transfers when suspected of violating Russian oil restrictions or trading above the price cap.
Some of these AI technologies serve regulators as well as commercial players, creating much needed alignment and reduced friction between the different stakeholders.
This means that those providing bunkering services must be hyper-vigilant when it comes to the necessary documentation from vessels. With this new standard of enforcement, the bunkering industry must improve its screening process, or risk providing services to vessels in violation of critical sanctions. AI can detect ship-to-ship transfers and track the subtle shifts of GNSS manipulations – providing a small company based in Singapore with the same level of expertise as a supermajor from London.
Smooth s-AI-ling
As has proven to be the case across numerous industries, AI has the potential to revolutionise marine bunkering by addressing various challenges and enhancing operations. It can optimize supply chains, ensure regulatory compliance, and assist bunkering traders in analyzing market trends and negotiating fuel prices.
The advent of AI via software as a service also has the potential to level the playing field, allowing small players access to the same level of technology as bigger more established ones.
Moreover, AI plays a crucial role in ensuring shipping compliance by detecting deceptive practices and tracking vessel movements. As high-level AI becomes increasingly effective and accessible, the bunkering industry would do well to adopt these strategic tools as they prepare to set sail for improved efficiency, fewer maritime compliance risks, and further innovation.
It is a sad comment on either the cynicism brought on in me by fifty years in merchant shipping or on the number of bad actors in bunkering that my first thought on reading the title was “And what new frauds will AI in bunkering promote?”
Ami Daniel makes a good case for the use of AI to detect irregular patterns in ship movements and improbable consumption, but I fear that the less honest folk will use AI to create new frauds, and we will see a tech shoot out.