The international shipping industry is facing unprecedented pressure to curb emissions in the IMO 2020 era, and a new platform seeks to help shipowners comply with new fuel standards without breaking the bank.
ENGINE is a revolutionary platform that promises to help shipowners by aggregating market data surrounding fuel procurement and management—filling a major need for data-starved maritime organisations that have had to operate in the dark.
New challenges in the bunker market
On 1 January, the United Nations’ International Maritime Organization (IMO) began enforcing IMO 2020—a law that bans ships from using fuels with a sulphur content above 0.5%. This is a significant departure from the 3.5% maximum that was previously allowed.
The UN believes its regulatory decision will significantly curb maritime shipping emissions. However, IMO 2020 comes with a steep price tag for the shipping industry, which must now adapt quickly and cost-effectively.
According to one estimate, 60,000 vessels still need to reduce their sulphur emissions by over 80% to remain in compliance. It’s expected these actions will generate about $50bn in new fuel costs within the next four years.
Tough choices for shipowners
Owners that want to continue running vessels with high-sulphur fuel must invest in a desulphurisation device called a scrubber—which can cost between $2m and $4m per ship. By 2025, it’s estimated that about 5,000 ships will be using scrubbers—about 30% of worldwide tonnage.
The other option is to explore low-sulphur fuel alternatives—like liquified natural gas (LNG). But this is significantly more expensive than using scrubbers.
For example, a VLCC can expect to spend anywhere from $15m to $17m in capital investments when switching to LNG —a hefty price tag for an investment that produces no return other than achieving regulatory compliance.
What’s more, bunker transactions aren’t logged openly—meaning there is very little, if any, transparency into fuel prices and suppliers.
Shipowners simply do not have much market data to analyze, making it difficult to determine which type of fuel to buy and from which vendor. Making matters more complicated, using low-quality fuel can damage engines, driving up expenses even further and threatening operational stability.
While the lack of bunker data has been plaguing the industry for years, the problem has compounded with the onset of IMO 2020. Shipowners are scrambling to find data on alternative fuel—which, historically, hasn’t been available.
ENGINE, a true game-changer
ENGINE is an information-sharing platform that allows shipowners to share data in a secure and confidential way.
Using ENGINE, shipowners can benchmark their performance against real transactions, leading to improved transparency and auditing, informed decision-making, streamlined benchmarking and performance analysis, and ultimately smarter purchases.
Every transaction is a new data point. As the number of participants grows so does the database of transactions, enabling better and more accurate decision making. Some of the largest owners are already using the ENGINE platform, which currently captures over 10,000 bunker transactions per year.
ENGINE works by aggregating data from multiple sources and structuring it into data streams. Data is then cleansed, reordered and anonymised to protect shipowner privacy. Data streams are matched, linked and stored in a data warehouse for analysis.
Using business intelligence (BI) tools, users can then cross-check information across said data streams. Then they can use buying modules to make transactions—and, in the process, submit data back into the warehouse for other shipowners to leverage.
ENGINE enables shipowners to contribute to a system that benefits the entire industry, helping remove risk and uncertainty from fuel procurement and management. The industry may be in flux, but ENGINE presents a viable solution that will become even more valuable as time goes on and more data is aggregated.