The Parties Involved with a Bunker Dispute

The issues associated with bunker disputes are well known. The very notion of a bunker dispute conjures up images of Silicon and Aluminium passing through an engine until eventually the engine sustains damage to such an extent that the voyage cannot be continued. However, whilst the consumption of fuel oil with excessive levels of Aluminium and Silicon will result in damage to the engine, there are numerous other factors to consider, such as viscosity, sediment, carbon, spent lubricants, incompatibility to name but a few. Some of these factors are considered within current and previous editions of ISO8217, whilst others are barely mentioned but nevertheless deem a fuel to be ‘off spec’

The words ‘off spec bunkers’ send all parties connected with the vessel and the fuel into a state of confusion and anxiety, and rightly so. Owners of a vessel are quick to blame the charterers and the charterers are almost as quick to blame the sub-charterers. The sub-charterers then pass the blame onto the suppliers, who conveniently hide behind a period of notice extending only to one or two weeks and thereafter claims will not be considered. Whether the suppliers have a legal right to do this is for others to consider.

However, the point is that there are numerous parties involved with any bunker dispute;

The Ship Owner

The owner may not have purchased the fuel oil and therefore he is at the mercy of others to ensure that any fuel oil supplied to the vessel is of an adequate standard and quality. However, whilst the ship owner may not have direct responsibility for the procurement and supply of the fuel oil, he is obliged to ensure that ship’s staff have the knowledge, qualification and experience to handle fuel oils. The ship owner has to consider how he would deal with a dispute should one arise, and he has to ensure that he has implemented procedures. The ship owner is obviously aware of the dimensions of the potential damage to his principal asset, namely the ship's engines, as a result of using the wrong fuel, but occasionally a scrupulous ship owner is aware of the benefits that may develop from an ‘off spec’ fuel oil, and it may often be seen as a route to have an engine completely overhauled at the expense of others.

The Ship’s Staff

The ship’s staff are often at the initial stages of any dispute, in that if the fuel oil has been consumed before the analysis results have been made available, then problems encountered with fuel handling equipment and the main and auxiliary engines are often indicative of poor quality fuel oil. Most fuel oils supplied these days are within specification, but on those occasions when ‘off spec’ fuel oil is delivered, the degree of ‘off specification’ is not considerable. Most ‘off spec’ bunkers can be consumed within the machinery onboard a vessel provided additional measures are in place. On the one hand ship’s staff are conscious of their employment prospects and will therefore bend over backwards to appease the ship owner. However, on the other hand ship’s staff will do their utmost to avoid any suggestion of negligence and to that end, incorrect information is often provided concerning bunkers and fuel handling, together with engine maintenance and operating hours etc.

The Charterer

An average sized bulk carrier consuming say 35mt per day, may consume up to 10,000mt of IFO and over 1200mt of MDO in a single year. At a cost of say US$700.00 per mt, the IFO costs alone may be in the region of US$7 million annually. It follows therefore that a charterer would prefer to purchase cheaper fuel oil although that does not necessarily mean that the quality will suffer.

The charterer, who is essentially the bunker buyer, has a contractual obligation to supply fuel to the agreed specifications. Other than this, he has neither the obligation nor the commitment. What if the specification provided by the owner is vague and non-specific? The bunker buyer will take the benefit of doubt and get the lowest priced fuel in the market. He again is a loser in the long run if he tries to reduce costs and takes advantage of the ignorance of the ship owner. What if the ship chartered by him is held up in port for weeks at a time to change parts damaged by usage of the wrong fuel? Is he not the ultimate loser if the owner’s schedule is fouled up, and he fails in his contract of affreightment.

The Engine Manufacturer

The engine manufacturer is perhaps the only party that benefits from an ‘off spec’ fuel oil. Engine manufacturers are like printer manufacturers in that the actual hardware is subsidised by the cost of the consumables. Damage to an engine will require expensive spare parts and often the services of a specialist engineer.

The Bunker Supplier

And then there is bunker supplier, whose main task is to supply a fuel which will not qualitatively be one tiny bit more than the requirements of the specification, and he needs to do this at the lowest price which will ensure his securing this contract. In other words, there should be no quality give away in the supply. Of course, there should not be a quantity "give away" either. Having a supply of good quality fuel is not a particularly profit making situation, until he gets poor quality fuel oil which can be obtained at lower prices and then added to the good fuel. The end product is then of lower price and the quality is within the standards of ISO8217. The problem arises when the two fuels are supplied to the vessel incorrectly blended or incompatible……but that is another story..