The Same Old Bunker Contracts

bunker ship
A Gl?sing bunker ship passes by Otto Wulf tugboats in Cuxhaven, Germany.

Published Nov 26, 2017 1:38 AM by Erik Kravets

A couple years ago, I wrote a review of the BIMCO Standard Bunker Agreement.

The fact is, this contract has not been widely adopted in maritime practice. Bunker companies typically prefer to operate on a handshake, or they have their own terms and conditions, and shipowners rarely take the initiative in proposing their own contracts. Alternatively, the middle men present in every port, i.e. shipbrokers or agents, have no incentive to make bunkering more complicated. The result is: "same old, same old" in the world of bunker.

The advantages of going into more detail in bunker contracts, especially those involving a high matter value (i.e. a lot of money), are evident. But the coordination required between the bridge officers and engineering in terms of checking the bunker, working out the specifications, fixing the minimum pumping output, etc., means that often the matter is not addressed by the captain or first officer. The engineering crew, on the other hand, just want to get the bunker on board and have even less tolerance than the bridge officers for law.

My most recent lecture at the State Maritime College in Cuxhaven, Germany, had good attendance by both nautical and engineering candidates. The topic was bunker, and for the first time, I felt like the two groups were not only making a connection to each other, but also to the material being taught. We discussed a serious bunker mishap from 2010, in which sludgy and low quality fuel had been purchased in East Asia. Instead of testing the bunker being pumped on board at regular intervals and taking samples to provide to a shoreside lab, the crew of the ship uncritically accepted the closed bunker samples provided by the seller. 

Of course, ultimately, the fuel pumped on board was worse than the samples. The ship in question had to limp to the nearest port; damage to the engines was extensive. The students appreciated the cringe-worthiness of this situation and realized that if this even happened once in their careers, they would regret not having taken more care in the bunkering process.

The legal aspects are one part of it, but the evidentiary and precautionary aspects are important too. How to capture photos in a way that means they are valid in court, how to write logbook entries and notes of protest so they cannot be falsified, etc. 

Any weakness in the process as a whole means that there is a risk of a blow-up, either prior to or after the bunkering. The ability of the owner to make claims or obtain compensation through insurance is going to be impacted by errors in judgment and execution by the crew.

While the Standard Bunker Agreement from BIMCO has not met expectations of industry acceptance, I urged the engineering and nautical officers to work together to actively propose bunker contracts when going to foreign ports. Even thinking about the terms and conditions of such a purchase can sharpen the mind and help avoid mistakes or fraud. It's not just about having the legal document for its own sake, it's also about the discipline that is required to actively think about and fill out all the different elements of the contract. If this is done, bunkering becomes less of a crapshoot and more of a conscious step-by-step process.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.