CHEAP bunker fuel in Malaysia has been blamed for the recent drop in demand for marine fuel in Singapore.
A number of container shipping lines, which are now reported to be spending up to 50 per cent of their vessel operating costs on fuel, have opted to bypass Singapore in favour of its northern neighbour when purchasing bunker fuel.
"We did experience a slight drop in volumes all because prices of the fuel are cheaper in Malaysia", a source close to the Singapore Ship Owners Association (SSA) confirmed to Hong Kong Shipping Gazette in a recent interview...
According to an earlier statement issued by the Maritime Port Authority of Singapore on its website, the Republic's sales of ship fuel or bunker fuel fell to 3.38 million tons in January from 3.63 million tons in December.
The regulatory body has since removed the announcement claiming that some of the information had not taken into consideration other variables.
Still the fall was enough to cause worries but not anxiety as the city-state's much touted better quality bunker fuel has always been sought after by owners for fear of not hurting ship engines or engine parts that feed on it.
The emphasis on quality that Singapore has always maintained is what has given it an edge over the rest of the world's bunkering ports.
Yet most of the cheaper bunker retailed in the neighbouring state of Johor where the giant transshipment port of Tanjung Pelepas lies and where a bunkering port on the island of Tanjung Bin was once envisaged, cannot be overlooked, particularly in today's high cost environment.
Interestingly, the drop in the bunker volume sales in Singapore was also mentioned by the nation's Transport Minister Lui Tuck Yew in a public address to the shipping community as recently as last year.
The fall in bunker volumes for the world's largest bunkering port adds a new dimension to how ship operators have sought ways to arrest the twin problems of falling freight rates and the collapse in revenue and profits, which has dogged the industry ever since ships began rolling out in huge numbers worsening an already overstretched, saturated market of box ships.
Singapore transacted some 42 million tones of bunker fuel last year, making it the most sought after jurisdiction for one of the shipping industry's essential commodities.
Even so, shipping officials in the city-state have been quick to warn against the temptation to jump to "hasty conclusions".
It has traditionally been a given that whenever bunker prices rise, ships begin to slow steam; a deliberate act of cruising at speed levels below the nominally accepted 25 knots.
Yet there is little to deny the attraction of cheaper fuel even if the quality does not match that found in Singapore.
Prices for IFO380 fell US$1.00 to $652.50 on February 20, according to reports from Ship and Bunker.
The question of high priced marine fuel became acutely distressing to ship owners when oil prices began rising in reaction to the standoff between the West and Iran over the latter's nuclear program, which the United States has claimed, among others, to be a front for the development of nuclear weapons.
Though the quality of bunker in foreign jurisdictions has sometimes come into question, Hong Kong Shipping Gazette understands steep bunker prices in the city-state have been a "challenge" in these troubling times.