Singapore bank DBS has partnered with Trafigura Group’s marine fuels supply and procurement joint venture TFG Marine, Japanese containerline Ocean Network Express (ONE), bunker monitoring firm Ascenz, and the Maritime and Port Authority of Singapore (MPA)to complete Singapore’s first live bunker delivery financing pilot transaction.
The transaction was done by way of an electronic bunker delivery note (BDN).
Singapore is the world’s leading bunkering hub in terms of volume, with close to 50m tonnes of marine fuel sold in 2020. However, banks currently rely on physical copies of the BDN and other supporting documents to avail bunker financing to clients, a cumbersome process that typically takes a few days to a week as clients have to manually deliver the physical BDN back to shore for compilation with other paper documents, before a trade finance application can be submitted. The newly digitalised process demonstrated that in future clients will be able to obtain financing for their underlying trade in under two hours, enabling them to obtain working capital faster and better manage their cashflows.
Another pain-point the digital BDN mitigates against is the risk of fraud in the bunker industry. In the traditional bunker trade world, the physical BDN has a higher risk of being manipulated as it can be used to request for financing for underlying deliveries which may not be genuine or which could have already been financed by another bank. With the digitalisation of the BDN, this risk is mitigated as counterparties are now able to ascertain the trade data at source. This is done by leveraging the mass flow meter (MFM) system for bunkering electronically.
For the next phase of development, there are plans to integrate the use of digital BDNs with SGTraDex once the digital utility is operational in 2022. Developed by public and private sector partners led by the Alliance for Action (AfA) on Supply Chain Digitalisation, SGTraDex is a common data infrastructure launched this month to facilitate trusted and secure data sharing across supply chains.