BLOC announces industry-led demonstrator consortium for blockchain use in bunkering with Lloyd’s Register, BIMCO, Precious Shipping, Bostomar, IBIA, and GoodFuels

Consortium will demonstrate the application of blockchain as a means of facilitating an increase in transparency and traceability in marine fuel supply chain as part of the maritime-focused Maritime Blockchain Labs (MBL) initiative.

Singapore, July 26: Blockchain technology and governance experts Blockchain Labs for Open Collaboration (BLOC) today announced, through its subsidiary Maritime Blockchain Labs (MBL), the establishment of a consortium to address traceability and transparency in the marine fuel supply chain, bringing together industry actors Lloyd’s Register, Precious Shipping, Bostomar, BIMCO, International Bunker Industry Association (IBIA), and GoodFuels.

Following extensive research, MBL has identified the bunker industry, with its multiple, complex transactions as an ideal use case where blockchain technology can increase transparency, create better compliance and stronger governance.

The consortium will evaluate how blockchain technologies could help to provide an efficient, tamper-resistant and auditable chain of custody on quality and quantity recording activities, together with a reputation system of the compliance of fuels prior to purchase, benefitting both buyers and regulatory bodies. Such characteristics help to provide greater confidence in the fuel being purchased, ultimately resulting in reduced safety risk and creating a more trustworthy framework for accurately monitoring emissions from shipping such as sulphur, and carbon.

The project represents the initial stage of the Lloyd’s Register Foundation-funded MBL initiative, the first true industry collaboration for the creation of blockchain technology in the maritime space.

Deanna MacDonald, CEO and co-founder of BLOC, said: “MBL takes an industry-led approach – meaning that the solutions will be identified, designed, and tested by the industry itself, with MBL facilitating governance and developing the technology to ensure these solutions are relevant and used. A consortium approach is essential due to the need to cross regulatory boundaries and work within different organisational bodies and systems.”

Khalid Hashim, Managing Director at Precious Shipping commented: “As an off-taker of marine fuels, it’s vital for us to ensure that the fuel we use is compliant – particularly when we think about the market post-2020, and the need to ensure the quality of blended products coming in to meet the 0.5% Sulphur limit. Blockchain is ideally placed to create the reliable chain of custody we need to do this.”

Grant Hunter, Head of Contracts & Clauses at BIMCO added: “We are delighted to be involved with a consortium that could play an important role in realising the transformative potential of blockchain within shipping, beginning with a timely and relevant first use case in the bunker industry. As the global leaders in the development of standard contracts and clauses used in shipping, we feel we have an essential role to play in investigating the use of new technologies that may help evolve the way contracts are used. Bunker purchase contracts are one part of a complex chain of activities in the bunker industry. Blockchain “Smart Contracts” based on harmonised terms and conditions like the BIMCO Bunker Terms 2018 could be a stepping stone for the industry to achieve greater transparency and efficiency.”

About the members of the consortium

Each member of the consortium represents a different actor in the marine fuels value chain or wider shipping industry, and contributes their expertise and insight accordingly as the consortium builds and validates this blockchain use case. The members and their roles are:

Lloyd’s Register FOBAS, Lloyd’s Register’s fuel testing services team. LR FOBAS will share knowledge and information about the fuel supply and quality testing process as well as provide bunker quality test data for the building and piloting phase. LR FOBAS will provide an environment for piloting and input to dispute resolution.

BIMCO, the world’s largest international shipping association, with around 2,000 members in more than 120 countries. BIMCO is an advisor on contractual aspects of this demonstrator, having recently published a standard set of terms and conditions for the purchase of marine fuels which it hopes will be widely adopted by bunker traders and suppliers.

Precious Shipping, is a pure dry cargo ship-owner operating in the Handysize, Supramax and Ultramax sectors of the tramp freight market. Precious Shipping is an off-taker of marine fuel oils in the port of Singapore, and as such plays a key role in the demonstration of the fuels quality traceability and accountability programme as a buyer.

Bostomar Shipping, operates dry bulk ships worldwide and also facilitates ship and structured commodity finance services primarily to the dry bulk sector, with a chartered fleet of 4-5 vessels. Bostomar will participate in the demonstration as a buyer and off-taker of marine fuel oils in Singapore.

IBIA, the International Bunker Industry Association (IBIA), who represents the global bunker industry. IBIA will be an advisor to BLOC and the affiliated industry consortia for the demonstration of the fuels quality traceability/accountability program.

GoodFuels, the world’s leading supplier of commercial and sustainable marine biofuels for the shipping industry. With a strong market presence in the ARA, it will play a key role in the demonstration of the fuels quality traceability/accountability program.