Building transparency in bunker procurement: Why it matters now more than ever
Digital tools and fresh perspectives can reshape how the shipping industry approaches fuel negotiations
Introduction
The shipping industry stands at a crossroads. With decarbonisation targets looming and the rising costs of future fuels creating new challenges, procurement professionals must rethink their approach. But what if the solution isn’t just about investing in new technologies, but also changing how fuel is bought in the first place?
Transparency and efficiency in bunker fuel procurement aren’t just buzzwords—they’re the keys to navigating a sustainable future for shipping.
Why transparency is the bedrock of bunker procurement
Imagine the early days of steamships, where engineers would scrutinize coal quality, uncertain about its promised performance. While modern fuel standards have advanced exponentially, the same principle applies today: trust and transparency are essential.
In a market where future fuels may cost three to five times more than conventional options, transparent procurement practices will ensure every dollar spent is maximized. Buyers and suppliers who foster open communication benefit from improved trust and stronger partnerships, especially when navigating the complexities of high-value transactions.
“Transparency is not just about seeing the numbers—it’s about creating confidence in every interaction.”
— Per Funch-Nielsen, Director at AuctionConnect
The problem with traditional negotiations
Traditional bunker procurement often involves protracted negotiations, endless emails, and countless back-and-forths with suppliers. While this approach has been the industry norm for decades, it’s inefficient and opaque.
Suppliers protect pricing strategies, while buyers negotiate hard for lower costs. The result? Delays, frustration, and higher transaction costs. As the industry transitions to costly renewable fuels, these inefficiencies become even more unsustainable.
Digital solutions: Cutting costs at the source
Online reverse auctions, like those offered by AuctionConnect, are transforming how the industry approaches procurement. These platforms invite pre-approved suppliers to bid for fuel contracts in real-time, creating a competitive, transparent marketplace.
Here’s how it works:
- Auctions last no more than 20 minutes, with suppliers submitting progressively lower bids.
- If a supplier is outbid, they have a brief window to counter with a new offer.
- Buyers can focus on strategic decisions while the platform automates bidding.
The impact of digital auctions:
Timeframe: January 2023–June 2024
1.3 million
tonnes
Fuel transacted
$7 per tonne
Average savings
Preparing for a low-carbon future
With the International Maritime Organization targeting net-zero emissions by 2050, the industry faces decades of investment in clean technology and sustainable fuels. For shipowners, managing fuel costs “at source” will be a critical part of financing this transition.
Investments in clean technology are vital, but they take time to scale and require significant capital. In contrast, adopting online procurement platforms offers immediate savings with zero upfront investment—allowing companies to allocate more resources toward decarbonisation efforts.
“Reducing costs at source is the foundation of a sustainable transition.”
— Per Funch-Nielsen, Director at AuctionConnect
Embracing a new mindset
For procurement teams, adopting digital tools means rethinking long-standing practices. While traditional elements of bunker procurement—like supplier relationships—remain important, separating price negotiations from broader operational considerations is essential.
Transparency and digitalisation don’t replace relationships; they enhance them by fostering trust and simplifying processes. As the shipping industry moves toward a greener future, these efficiencies will be indispensable.
Discover how online auctions can revolutionize your fuel procurement process. Explore AuctionConnect to see how transparency and competition can drive down costs and simplify your operations today.
