Introduction Suppliers and Buyers Terms & Conditions Credit The Bunker Enquiry Distribution of the Enquiry Price Negotiation Responsibilities of the Broker Nomination & Confirmation The Agent Surveys and Sampling Cancellation The Delivery Barge Operators After The Delivery Disputes and Arbitration Acknowledgement The International Bunker Industry Association would like to thank all Members who have assisted in producing & updating this publication 2 3, 4 4 5 6 8 11 13 14 16 18 19 19 21 21 22, 23


This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission



INTRODUCTION IBIA’s Guide to Good Commercial Practice is intended to show all parties in the industry a reasonable and commercially acceptable way of buying and selling bunker fuel. Many of IBIA’s members will be familiar with what is written here but IBIA’s intention in producing these guidelines is that in time they will become more generally accepted as an arbiter of what is, and what is not, Good Commercial Practice. Together with IBIA’s How to Resolve Bunker Disputes and the other books also published by IBIA this guide will go further towards forming a complete manual covering every aspect of the bunkering industry. THE BUNKER MARKET Buying or selling bunkers is not so different to any other commercial transaction but there are some aspects which are peculiar to the industry. These are: The large amount of unsecured credit involved  The International spread of the market  The speed with which deals can be put together in case of need and the degree of trust between parties involved which follows on from this  The speed at which prices can change and the degree of transparency in the market  The high proportion of cost to the Operator In order to establish what constitutes Good Commercial Practice we need to see how the business works and the role of the participants within it. These are primarily:Suppliers Buyers Traders Brokers We will take each of the above in turn and examine their roles and responsibilities.
IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 2

they remain dominant Suppliers together with their marketing of marine lubricants. B Independent Suppliers Independents cover a range of Suppliers from local refiners to state oil companies. The better independents give competitive pricing. however. Today modern refineries have become more efficient in breaking down fuel into more valuable products and fuel oil has become less in volume terms and of poorer quality. the majors are still strong players in the market although at a more restricted range of ports now. reliable quality. C Traders IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 3 . independent Suppliers and traders all in the market place there are many different ways in which Buyers can work their bunker enquiry and ensure they get the best price and terms for their bunker purchase. surveyors and sampling and testing agencies will also be dealt with. Generally. quoting quality of product and delivery operations as a basis for a higher price. barge operators. a good service and attention to local details which help to make trouble free supply. We will then examine their roles in the following stages of a bunkering:      Generating and distributing an enquiry Working an enquiry Placing an order Physical delivery Post delivery THE SUPPLIERS With majors. Majors tend to be at the more expensive end of the market. or contracted barges. However. terminal operators. With recent mergers and acquisitions the number of majors left in the market has diminished. The following is a brief description of the Suppliers: A Majors Traditionally the majors held the largest part of the bunkering business because of a production surplus of refinery fuel oil.The role of agents. Some majors now increasingly replenish their supply terminals with cargoes bought in from outside of their own refining systems and act as traders using independent Suppliers to deliver on their behalf in ports where they have no physical presence of their own. they are local Suppliers. often using major oil company refinery products which they buy locally and supply with their own.

Traders are not generally physical Suppliers but take the supply and credit risk for their own account. B Ship Owners The Owners buying bunkers for their own fleet. They don’t take the credit risk for the Buyer or the supply risk for the Seller. INTERMEDIARIES A Brokers As the name implies they are between Buyer and Seller. To save time and resources. Their stock in trade is market information and contacts. helping to bring the two sides together. many Buyers will entrust a broker with their bunker negotiations. C Traders The Trader can also be a Buyer in the market. Traders are also very useful in difficult areas like a state oil company monopoly ports and will often have credit arrangements here where business is normally done on cash before delivery basis. Sellers will sometimes prefer to quote for a Trader’s account rather than an unfamiliar owner’s account as they can be more confident in getting paid on time. B Traders They can also be considered as intermediaries. based on a close and detailed knowledge of their customers. THE BUYERS A Ship Operators This sector of the business includes ship managers and charterers buying bunkers for vessels they manage or time charter. Traders often have a more flexible credit policy. The broker helps the Seller to sell and the Buyer to buy. See definition above TERMS AND CONDITIONS (T & C’s) IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 4 . Brokers get a commission from the Seller. The traders take title and risk to the oil that they resell to the end user.

particularly from the Buyers’ side. uniform set of Terms acceptable to all parties.Also referred to as General Terms & Conditions of Sale (GTC). together with the large potential liabilities in the shipping business. All reputable Sellers should have Terms. For existing customers wanting an increase in their line of credit. Meanwhile. Further references to T & C’s relating to the bunkering procedure will be made later. together with payment reputation. and increasing good reputation. This situation can be avoided by both parties ensuring that a reasonable line of credit is established to cover the potential needs of the Buyer. Some ship owners will have their own terms where it is a matter of negotiation between Buyer and Seller to agree exactly which terms apply. or prospective Buyers. the bunker industry. Suppliers will normally request acknowledgement and acceptance of terms on the opening of an account. including credit agencies. and establish a line of credit based on their findings. Most importantly. or favorable financial accounts to increase credit limit. Terms can vary significantly from one supplier to another and it is therefore in the interest of the Buyer to negotiate any clause found to be unacceptable. IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 5 . is why the Seller normally insists on Buyers’ agreement of terms prior to the sale. credit reports. In any event. Frustrations arise when an enquiry is turned down due to insufficient or no credit. the best method of influencing line of credit with Suppliers. is to pay the invoice on time. Almost all bunker sales are made on the basis of unsecured credit and this. CREDIT Normal credit sales rely on the Buyer having a line of credit sufficient to cover the value of the enquiry. IBIA and BIMCO continue to work on standardising T & C’s. It is prudent for both parties to be covered by terms. to investigate credit worthiness of Buyers. Suppliers will quote and confirm a sale with a clause relating to sale being made under Supplier’s Terms. would prefer a single. will be taken into account. and previous trading history. If a Buyer finds an established line of credit insufficient for their business needs it is in their interest to provide the Supplier with evidence of financial assets. Suppliers will employ various sources.

The enquiry should be timed correctly Seven to ten days in advance of anticipated bunker requirement gives the Supplier ample time to plan deliveries. Some ships need a specialised fuel quality. 4) The time of delivery Sellers can usually accept a range of 2 to 3 days at the enquiry stage but there are exceptions. A wide spread is normally acceptable to the Seller at the enquiry stage. so always ask if unsure. Since the 19 May 2005 MARPOL Annex VI entered into force and this should be considered when specifying fuel to be purchased. IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 6 . A requirement for bunkers may come in from the ship as it runs low on fuel or may arise as a result of the next employment of the vessel. Many Suppliers will be reluctant to quote further out due to possible market changes. but there are often variations on this. Requests for prompt quotes can often carry a price premium. They forecast what they expect they will need over the next one or two months and then watch the market to see when and where the best buying opportunity is. The specifications required should be stated clearly at the time of the enquiry for both fuel and distillate if required. Less time could result in no quote due to barge congestion or lack of fuel availability. Most owners keep a close watch on the bunker situation of their fleet. Overnight validity must be confirmed by the Seller where time zones require quotation on day following enquiry. Bunker enquiries should comprise the following information. and any subsequent revisions. 2) The quantity of bunkers to be supplied The Buyer often gives this as a range. 3) The delivery port Buyer should also provide specific terminal or wharf within the port if appropriate. which should be provided by the Buyer:1) The quality or grade of bunkers to be supplied Most Buyers use the ISO standard specifications ISO 8217 2005.THE BUNKER ENQUIRY Bunker enquires originate from the buying side.

7) Other important information If relevant to the delivery. The vessel may want to maximize cargo and bunker after loading in deeper water outside port limits. A change in quantity or date may affect the price. Complete information is not always known at this stage of the enquiry. Good Commercial Practice dictates that the above is what the Buyer should include in his bunker enquiry IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 7 . should be passed to Sellers. change the Supplier is made aware before any order is placed.5) The name of the vessel + IMO Number This is important for the Seller to know to avoid double quoting on the same enquiry received through different channels. Or the vessel may not be able to bunker until some of the cargo has been discharged. Whenever information becomes available to either side it should be passed to each of the parties. during the process of negotiations any of the original parameters. 6) The name of the Buyer or responsible account This is required for Seller to check credit status. which can affect the cost and physical delivery of the bunker oil. It is particularly important that if. include: a) b) c) d) e) f) g) h) Whether the delivery will be outside port limits? What are the prospects for simultaneous loading/discharge? Is the vessel at a wharf where there is a pipeline for bunkering? Especially for tankers – who are the cargo Suppliers/receivers? Does the wharf owner allow a bunkering barge alongside? Is the vessel carrying a dangerous cargo? Is there a draft restriction at the berth? Is there safe access for Road Tank Wagons (RTW) alongside the vessel. like quantities or dates. All this important information. The Buyer may well pass on the name of the agents with the enquiry so that the Sellers can check on the physical side of the delivery.

4) Buyer places enquiry directly to major oil companies but also gives enquiry to a broker to cover the independents. This is favoured by some owners as the best option of seeing a good spread of prices to achieve the lowest price. the owner may not be well known for credit. 3) Buyer places enquiry with one trader to cover the whole market. This is particularly suitable in certain “difficult” ports where there may be a monopoly state supplier who will not give credit on the open market. There is a danger of not getting the lowest price or the best delivery option on this basis. The relationship with the broker may go back over several years and the owner trusts the broker to cover the market for them and get a good deal. The Buyer’s aim should be to cover the market in an orderly way. credit facilities via a revolving letter of credit with the local supplier. These are the ways a Buyer can put their enquiry on the market:1) Buyer places enquiry with one or more majors only and ignores the possibility of quotations from independent Suppliers In this case the Buyer may not be fully covering the market.DISTRIBUTION OF THE ENQUIRY THE BUYER The various options are outlined below. In such circumstances a broker who has been handling the owner’s business exclusively for some time may have influence with the Suppliers on making credit available. 2) Buyer places enquiry with one broker to cover the whole of the market Some owners. The trader can resolve this situation by having a credit account. especially smaller Buyers who are not regularly in the bunker market. 5) Buyer gives enquiry out to more than one broker IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 8 . find this the best way to work their requirements. because of the limited number of requirements. Prepayment can lead to difficulties in getting the cash there in the first place and refund of the unused balance should the ship takes less than nominated quantity. Provided there are independent Suppliers operating in the port they should be covered. In some cases. or more usually. The major oil companies have a good reputation but an owner should always look around to see what else is on offer.

US or Imperial gallons. Broker A should cover certain Suppliers and Broker B others. For example. However. it must be made clear whether the price includes the broker’s commission. uncontrolled distribution can carry a negative perception and Suppliers may not quote at all. delivery charges must be clearly specified.This in itself is not a bad thing. such as:    Port Authorities Customs Authorities Terminal Owners State Authorities These charges are made against the bunker supplier or barging company in the port who then passes them onto the Buyer. GOOD COMMERCIAL PRACTICE MAY BE ACHIEVED BY ANY OF THE ABOVE METHODS BUT THE IMPORTANT THING IS TO CONTROL THE CIRCULATION OF THE ENQUIRY DISTRIBUTION OF THE ENQUIRY THE SELLER On receipt of an enquiry. cubic metres. This system could even be extended to three or four brokers if there are enough Suppliers to go round. 2) Method of Supply. provided the Buyer lays down some ground rules. When the Supplier does offer they should always respond on time and make it clear exactly what is being offered: 1) Price of the Bunkers. the Supplier should accurately record all of the relevant information. including the time of receipt of the enquiry and the time a quotation is required. For unprepared Buyers these IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 9 . In many ports additional charges are levied on bunker supplies by local authorities. 3) Additional Charges. When there are more intermediaries working the enquiry than there are physical Suppliers or Sellers in the market. The unit cost is usually quoted in US dollars per metric ton although price can also in barrels. Should the Buyer send the enquiry to an intermediary then Broker or Trader has the dual responsibility of accurately passing information in both directions. if there is no control. If price is quoted to a Broker. Supplier must state method of delivery and if not a delivered price. Suppliers are likely to receive the enquiry from several different channels. These charges are not made by the Suppliers but by third parties.

In a rising market. (See above) 6) Time Limit Time validity deadline will normally accompany the quote. Seller has right to withdraw offer once time validity has expired. Under normal conditions. Delivery limitation. Suppliers do not want to leave their offer out for too long and find that their replenishment cost has increased since they offered. This is normal commercial practice in any market. Suppliers will consider The following factors when placing time validity:Price movements in the market. Please refer to IBIA Guide to Avoiding and Resolving Bunker Disputes. Suppliers should inform Buyers of any additional charges they are aware of. The responsibility for informing Buyers of the possible extra charges can be a matter of dispute between Suppliers. Agreed terms of payment should be strictly adhered to. thirty minutes to one channel and then withdraw and offer to another channel. Suppliers want to turn their stock over rapidly. Any offer a Supplier makes is subject to their Terms and Conditions of Sale. 5) Terms and Conditions. In these circumstances. GOOD COMMERCIAL PRACTICE WILL BE THE PROVISION OF CLEAR. 4) Payment Terms. Stock limitation. PRECISE OFFERS WITH EXCEPTIONS AND QUALIFICATIONS CLEARLY SPECIFIED IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 10 . Limited stock can lead shorter time validity since Seller will be looking for rapid decisions from Buyer. in a falling market. If Suppliers have received the enquiry from more than one channel they may offer for. They are then committed to a level that is too low. Therefore they will want to have a reply within a certain time limit. Conversely. The Supplier may have a busy programme or know that there is barge congestion. Seller may also offer “subject to availability”. say. Supplier’s time limitations will be more flexible.charges can be a source of friction and dispute. Owners and Port Agents.

Buyers should be prepared to advise Suppliers that their decision is delayed which will release Suppliers to offer on other business. A counter offer is a binding commitment to buy at the countered price. The ship is sailing soon. THE MARKET IS MOVING UP IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 11 . In this instance. If the market is moving down Suppliers may well be willing to take a counter offer. If he is working through a Broker he should also get advice from them about the market and suggestions as to what the next step should be.PRICE NEGOTIATION The Buyer now has a range of options. In practice. The market is moving down but the Buyer can’t afford to wait. Hopefully they will have received a number of offers from Suppliers at a range of levels which gives him an idea of what the market level is. his options will be defined by the market situation at the time and the circumstances of the enquiry as follows: THE MARKET IS MOVING DOWN 1. The Buyer should also be aware that a counter offer. It is clear that the Buyer will prefer to wait. The market is moving down and the Buyer is in no hurry. running low on bunkers or will be moved off the cargo berth to outside port limits – or other operational problems which mean the bunkering has to be fixed now. 2. if refused. Depending on the vessel’s programme the Buyer may decide to bunker at another port later in the voyage and take advantage of the continuing downward trend. making a counter offer to a Supplier is the Buyer’s best option. Maybe they should not have asked for prices so soon. allows the Supplier to amend or withdraw his offer.

it is their responsibility to raise this with the Seller and get the Sellers agreement before the deal is concluded. Buyer can wait Assuming they have this option as discussed above they can either withdraw the enquiry from the market or just leave it there indicating they are not interested to buy at such a high price. 3. The Buyer must abide with agreed credit terms and make timely payment. 3. A track record of problem-free supplies gives the Buyer confidence. Buyers have two options:1.The Supplier will offer with a short validity and the Buyer has to take a decision as to whether they feel the market will continue to firm up or that this is just a “spike” and prices will be back again tomorrow. Reliability and past performance. Most Suppliers state that a counter offer constitutes a rejection of the original offer and that the original offer is no longer valid. This position is not unusual. Many Buyers will consider this is worth money. If Buyer requires additional or original documentation in order to effect timely payment. They may take the risk of a counter offer but Buyer should make sure what the position of the Supplier is on this. But it is worthwhile for the Buyer to check and be aware of the time limitations for complaints to be IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 12 2. Buyer and Seller should consider the service of a joint independent surveyor with costs shared 50/50. these other points should be taken into consideration:1. Payment terms. 2. This is discussed further below. The Sellers GTC usually specify that payment is due solely on the production of an invoice sent by fax or e-mail. Buyers should be aware that Sellers’ T&C’s are notorious for being biased in favour of the Seller. Buyer must go with the prices in hand. neither is it unethical. Supplier’s Terms and Conditions. This of course is designed to leave the Suppliers thinking that they have lost the business to another port and the vessel will bunker later in the voyage unless the pricing is much more favourable than at present OTHER TERMS At the same time as the price negotiation the Buyer needs also to consider the other items on offer. Some Sellers do not have written T&C’s. Assuming that the quality and price are the same. (These paragraphs are taken from IBIA’s Avoiding and Resolving Bunker Disputes) 4. . The intermediary should be in a position to make a contribution here but the truth is that nobody can call the markets with any degree of accuracy. The regular supplier may not be the cheapest but they may well get the business based upon past performance. Quote “It is usually impractical for all Sellers’ terms and conditions (T&C’s) to have been read before contract to supply is agreed.

2. the opportunity to compete. THE RESPONSIBILITIES OF THE BROKER The broker has responsibilities to both parties during the negotiations. an explanation should be sought. It is a debatable point whether brokers should be obliged to declare their commission to Buyers. The broker helps the Buyer to formulate the enquiry if asked to do so. If the terms are totally unreasonable. 3. If possible. the Buyer should express his disapproval and attempt to place the order with an alternative supplier on more reasonable terms.” Unquote Good Commercial Practice. IBIA .g. The broker then follows the instructions of the Buyer regarding the distribution of the enquiry. for the Buyer. Even if the sample is sent immediately to the laboratory there is frequently little time to register any complaint especially when full details of the problem have to be supplied. Also if Buyers think that they are being taken advantage of then they will find another channel to use for their enquiries. where applicable.registered as these are frequently very short and of varying lengths for different types of complaint. If so. will ensure that Suppliers are given fair and accurate feedback and. The broker has to liaise with the Suppliers and pass on accurately and quickly the quotations and any associated information regarding the negotiation.  restrictions on value of claims to cost of bunkers supplied  blanket disclaimers on quality of bunkers supplied  attempts to shift all responsibility for oil spills and clean up onto the Buyer transferring responsibility to the Buyer at the terminal rather than at the vessel’s flange. Buyers have a duty not to mislead the Sellers. 1. The broker should also assist the Supplier with payment collection if required. In present competitive market conditions brokers’ opportunities for increasing commission beyond the normal level are limited. the Buyers should ascertain (via his bunker broker) whether the intended Seller has any unusually onerous conditions e. 5. In their quest for the best commercial deal. better terms negotiated and reference made to any changes agreed in the order confirmation. This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 13 4.

The place and time of delivery Within the range given by the Buyer this is a matter for vessel agent and Seller to co-ordinate. A Buyer may well agree to exceptions and this should be stated in the confirmation. at the discretion of their T & C’s. 10% more or less is frequently used as a guideline. Suppliers. A Trader acting as a Buyer may state a maximum quantity. The quantity of bunkers to be supplied a. c. 3. It is important that both parties review all the details of the nomination and then produce a confirmation which they send to each other. This confirmation should include the following items. NOMINATION AND CONFIRMATIONS If the Buyer finds the Seller’s price acceptable. A Buyer may state master’s requirements (MR) and give a range. 2. In such case the ship can be supplied with any quantity within the range. 4.6. 1. It should be clear to both parties whether the figure is guaranteed or as is often the case. Sellers should take care in such a case. frequently specify 5 or 10% more or less. the deal is concluded by means of a nomination. The quality of bunkers to be supplied The quality will have been stated in the original enquiry but there may be some variations which have been negotiated. Sellers must take care not to exceed this quantity. b. Good Commercial Practice dictates that the broker should act in a trustworthy way towards both parties. “typical”. without referring back to the Trader. The broker should assist in the resolution of any dispute which may arise following delivery. even if requested by the vessel. The Buyer and the Seller IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 14 . The headings are taken from IBIA’s Avoiding and Resolving Bunker Disputes. The Buyer may say “up to” such a quantity. as the Buyer is committed to pay only for the quantity ordered or the amount actually received/delivered. There is now a contract between the two parties. This is often used when it is a re-delivery quantity of bunkers required at the end of a time charter period.

Matters which will affect the Delivery Any matters which will affect the delivery e. ‘First-come-first served’ is the norm for ‘bunkers only’ calls. Any local regulations such as bunkering procedures or pollution control requirements 17.There can be confusion on both sides with Sellers acting through sales agents but the more usual complication comes from the buying side where the company buying the bunkers is only acting as an agent for the principal.g. cargo barges alongside. 16. pollution. The name of the agent The Buyer must give to the Seller the name of his port agent. This is essential for the Seller so that he can have a contact for all procedures connected with the bunkering operation. controls/booms. Both sides should be clear as to who is responsible for payment. etc should have been mentioned and agreed upon before nomination 7.g. Who will determine the quality and quantity of bunkers to be supplied? Will Buyer appoint own surveyor etc 14. wharfage. 6. The cost of any local extras e. and contact details.g. 13. Special requirements by Buyer or Seller IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 15 . Whose Terms and Conditions to apply. The Supplier will normally arrange delivery ‘on the spot’ in consultation with the Buyer’s port agent . ‘hot work’. barge) 15. and agreed. 5. The price of bunkers 8. Abnormal high or low pumping rates should have been requested. The price basis 9. high freeboard. The cost of any essential extras 10. taxes 11. The Speed of Supply & Duration of Supply Buyers always assume supply is ‘on arrival’ but if that is required then it should have been specified and agreed by the Supplier before nomination. before nomination. How/who will determine these extra costs 12. Where and how will the quality and quantity of bunkers supplied be ascertained if not on Supplier’s equipment (e.

Buyers should send confirmation of the deal from their side. Sellers should forward confirmation to Buyer as soon as the deal is agreed. The Seller should. the agent. It is better to have fulsome confirmations rather than have some details unconfirmed and discovered after the event. This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 16 .The Seller cannot always be relied on to list all these details. the ship operator. the accounts dept. list out the additional terms agreed. what their liabilities are regarding any possible additional charges. should these be incurred REMEMBER Seller’s sales confirmation is the only one which has legal standing. The Supplier needs to be informed by the Agent exact details of the ships intended bunkering programme and any restrictions or special needs which are to be taken into account. The standard Sellers confirmation forms the basis of the contract document. It is good practice for this confirmation to also be sent to other interested parties connected with the Buyer. The agent is appointed by the Buyer and acts on their behalf. This procedure helps to cut out errors of communication. Good Commercial Practice means that Buyer and Seller should each have a clear understanding of the terms of the contract including. The supplier will need to know:      IBIA Where the vessel is or where/when will it berth? How long will the vessel be in port? What is the vessel discharging? Is it dangerous cargo? Is there a discharge operation into lighters or cranes working alongside? Is there any restriction by berth owner on bunkering operation? Draft restrictions alongside the berth. however. this being normal commercial practice applicable not only to the bunkering business. THE AGENT The agent has a significant role and important responsibilities in any bunker delivery. These can include the ship. The Buyer should instruct the Agent when placing a bunker nomination. etc.

It is in the Buyer’s interest as much as the Supplier’s to co-operate closely with the supply contractors and the agent to facilitate bunkering. From the Suppliers’ side they should also appreciate that in the majority of cases bunkering is not the first priority for the ship in port. It is important that the Buyer appreciates that for the delivery to take place the ship and the agent have to extend a degree of co-operation to the Supplier. Good Commercial Practice means that the common aim should be for a quick. Once the barge is loaded there is usually no margin of flexibility. It may be that the barge loading is controlled by customs authorities. It is also the responsibility of the Buyer to fulfill their side of the deal. The Supplier has to deliver the oil to the ship. Suppliers will be justified in charging Buyers for the cost of an abortive bunkering trip or barge demurrage due to failure to provide vital information in good time. This is also vital information as in the majority of cases bunkering barges are loaded with specific quantities and not necessarily for one delivery only. Good Commercial Practice means that the agent acting on behalf of the Buyer should have clear instructions from their principals and co-operate to the best of their ability with the bunker supplier THE IDEAL – FULFILLING THE CONTRACT The performance of the contract is not only the responsibility of the Supplier. trouble free delivery. Where is the vessels bunker manifold?  What quantity is required by the ship? This is not a complete list but shows the type of information the agent needs to provide in order to achieve a smooth and trouble free delivery. The Seller will usually ask the agent for the exact quantity to be supplied to the vessel. which relies upon the co-operation of all parties concerned IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 17 .

Especially with large quantities. Buyers should seriously consider using an independent surveyor to measure the quantity delivered. such as bunker barges fitted with secret tanks or ships which have accumulated a surplus of oil on board from the massaging of delivery and consumption figures. owners. Complicated claims can and do arise from a rash of premature decisions having been taken on the face of a single test result without understanding the inherent limitations of the fuel testing and sampling procedures. These fuels are generally traded using several readily available product quality specifications. often without knowledge of the complexities which are involved in the manufacture of bunker fuels. If there are some variations from the specification the ship can then be made aware and adjust their handling of the fuel in line with guidelines given by the testing organisation in order to minimize potential problems. then more serious action will be required. Once the sample has been obtained it should then be sent to a laboratory for testing. The use of a surveyor is a deterrent to malpractice. Every day Suppliers. the most widely used are ISO 8217:1996 & CIMAC No 21 2003 These specifications are often used without proper knowledge of their interpretation. SAMPLING Because of the varying quality of fuel supplied.SURVEYS Bunkers represent a major proportion of ship operating costs. Survey costs can be minimal when compared to the overall cost of the bunkers. IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 18 . Quantity disputes are one of the most frequent causes of dispute. The service is provided by specialist companies and means that the ship can have the test results before they need to start burning the fuel. These occurrences could be reduced with the help of proper tools for interpretation. charterers. many owners now take a fuel sample for testing on deliveries. There are stories of malpractice on both sides. Taking samples of the oil delivered through an approved type of sampler is essential. If the fuel is seriously off spec. Among these specifications. traders and others engage in transactions involving large quantities of bunkers at locations throughout the world. An IBIA survey on Bunker Fuel Sampling Equipment looks at the range of equipment available.

one of the samples provided must be designated the “MARPOL sample” and be kept on board the ship for one year.CANCELLATIONS It is quite reasonable that on occasions. IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 19 . THE DELIVERY The confirmed deal is now a contract between the two parties and has to be translated into physical details in the port. There is usually an interval of a few days between the time of placing the order and the physical supply. Should this occur. Moreover. The following check list is a guide to the delivery procedure: Enough tankage available on the ship for the quantities ordered  Correct grades/qualities ordered and arranged to be supplied  Order of products to be supplied  Pumping rates required by ship/offered by Suppliers’ barge  Control signals at time of bunkering  Anti-spill/pollution procedures  Witnessing the sampling collection position and procedure  Witnessing the opening and closing barge tank gauges  Preparation. Cancellation with plenty of notice will normally be dealt with reasonably by Suppliers. the Buyer must inform the Supplier at the earliest opportunity in order for them to cancel the delivery and rearrange their schedule. a ships voyage can alter after a nomination at a certain port has been made. Suppliers can charge cancellation fees and probably will if cancellation is left to the last minute and bunker barge has been loaded with nominated fuel. sealing and identification of at least three representatives samples  Compliancy with Annex VI of MARPOL 73/78 If Suppliers have agreed to be MARPOL compliant. they must provide a BDN that complies with Appendix V of Annex VI.

These points are covered more completely in IBIA’s Avoiding and Resolving Bunker Disputes guide. Difficulties can also arise if the ship signs with any qualifications such as “a/c charterers” and “with no lien on the vessel”.The BDN is required to contain the following:  Name & IMO number of the receiving ship  Port  Date of commencement of delivery  Name. however. If there is a complaint from the vessel then it is not sufficient for the signatory to endorse the receipt. In some countries. address & telephone number of marine fuel oil supplier  Product name(s)  Quantity (metric tonnes)  Density at 15°C (kg/m3)  Sulphur content (%m/m)  A declaration signed and certified by the fuel oil Suppliers representative that the fuel oil supplied is in conformity with the regulations Moreover. It is Good Commercial Practice to follow all the points in the above check list thereby greatly reducing the chances of problems arising. in order to comply with local regulations regarding pollution. the above information has to be formalised into a bunkering plan which is submitted via the agent to the authorities. IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 20 . one of the samples provided must be designated as the “MARPOL” sample & be kept on board the ship for one year. Suppliers will not usually accept such qualifications. If problems do arise. notably the USA. both sides should try to solve these in a reasonable way and try to understand each other’s viewpoint and the circumstances behind any extra costs More details of the best ways to handle disputes are contained in the Disputes Guide referred to above. It is essential to make a letter of protest to the barge. After the delivery is completed and the quantities have been agreed then an authorised signatory from the ship must sign for the bunkers. The Suppliers will usually give instructions to the barge crew that they should not unmoor from the receiving vessel until the receipt is signed.

AFTER THE DELIVERY Suppliers must produce a signed delivery document stating the exact delivered quantity. IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 21 . Suppliers generally contract their barge operators which have to produce operating requirements and controls conforming to high environmental and safety standards. Suppliers have a responsibility to supply the quality as agreed with the Buyer. usually at a punitive rate. Once the Buyer has taken title of the bunkers. At the same time there are on record cases where Buyers’ vessels have been found to falsely claim short delivery. Suppliers. There are also recorded cases where the Supplier has tried to short deliver the Buyer on the supply quantity. If it was agreed that the Seller would provide supporting documents prior to payment they should be legible for the Buyer to verify the invoice. particularly the majors. Payment of the invoice should be arranged in good time and in such a way that the Seller can get good value with period agreed. they must make preparation to pay the invoice according to the contract terms. This is evident in the increasing emphasis now being placed on the standard and suitability of bunker delivery barges. BARGE OPERATORS The oil and shipping industries are at the forefront of issues relating to health. The Seller has a responsibility to present to the Buyer the agreed documentation in a reasonable time and in a form that can be read without difficulty. on outstanding invoices. Bulk shore tanks and bunker pipe lines fall into the same category with owners of these facilities having to keep them in good order and to a standard acceptable to Suppliers who may wish to hire them. and port authorities in an increasing number of ports are setting minimum vetting standards for quality of the barge and high standards for operating procedures. Many ship owners endorse and encourage this practice and see it as a general improvement in standards across the industry. Sellers can charge interest. Suppliers will become aware of vessels which consistently offend with this bad practice. safety and good environmental practice.Additional points on quality and quantity problems There are recorded cases where Suppliers have been shown to have added water or other non-combustible materials to bunker deliveries.

A negotiated commercial settlement is often used as a method of resolving a dispute without leaving either party aggrieved. A reasonable approach by both parties should lead to satisfactory resolution. The list is not exhaustive but is designed to indicate the type of behaviour to be avoided. Local investigation into the complaint will then follow with a timely response as to the findings. extra charges can be incurred. BOTH SIDES SHOULD TRY TO UNDERSTAND EACH OTHER’S VIEWPOINT ON THE QUESTION OF SUCH UNFORESEEN CHARGES IN ORDER TO ARRIVE AT A FAIR AND REASONABLE SETTLEMENT Listed below are some examples of what can be considered to be poor or bad commercial practice. to both Buyers and Sellers. Quality claims should be resolved by the analysis of retained sample by an independent testing agency.The invoice should represent the result of the negotiations and should not contain surprises. Suppliers should deal with disputes fairly and promptly. the Supplier should act promptly and acknowledge receipt immediately. On quantity claims. to extend credit periods  Asking for offers based on a larger quantity than required  Withdrawing of price on a rising market without notice  Bunkers being used as a method of disposing of waste products  Cancellation of nomination on falling market DISPUTE RESOLUTION On official receipt of a claim or complaint from the Buyer. barge or shore tank ullage reports should be provided together with fuel temperature and density. However.  Misreporting of the fuel density on the delivery receipt to affect volume/weight calculations  The non disclosure by intermediaries. IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 22 . as to their exact role within the deal  Late reporting of quality or quantity claims. Sellers should fully explain how such charges occurred if this has not been agreed before the delivery.

IBIA operates an arbitration and mediation scheme which is open to both members and non-members alike. arbitration or mediation can be sought. when paying for goods and services received and by satisfactory resolution of complaints. IBIA This report is copyright of The International Bunker Industry Association Ltd and may not be reproduced in any form without the publisher’s written permission 23 .ARBITRATION OR MEDIATION On the rare occasions where a dispute cannot be resolved by mutual agreement or commercial settlement. CONCLUSION By adhering to Good Commercial Practice at the time of negotiation and delivery. The result of arbitration will be binding and will be judged under the laws of the country or state covering the Supplier. the reputation of all parties will be enhanced within the bunker market leading to a mutually satisfying future business.

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