Singapore completes its first live bunker delivery financing transaction with digital bunker delivery note

DBS D05 : D05 0% has completed Singapore's first live bunker delivery financing pilot transaction, through an electronic bunker delivery note (BDN) between TFG Marine and Ocean Network Express, the bank said in a statement on Wednesday.

The transaction, supported by the Maritime and Port Authority of Singapore (MPA), was in partnership with TFG Marine - the marine fuel supply and procurement joint venture of Swiss commodities trading giant Trafigura, Ocean Network Express and Ascenz.

Ocean Network Express and Ascenz provided the underlying technology to digitalise the BDN in this pilot, the bank said.

DBS said the digital BDN was part of efforts to "up the ante on the digitalisation of Singapore's bunkering sector", and it follows a joint agreement between DBS and the MPA in 2020 to accelerate the digitalisation and innovation of financial services and payments across Singapore's maritime industry.

Adopting digital documentations will help move stakeholders across the value chain towards more efficient and transparent operations that are aided by data-driven decision making, said Kenneth Lim, the assistant chief executive (industry) of MPA.

"We welcome more of such private-public collaborations facilitated by our regulatory sandbox, that will help Singapore remain the world's leading bunkering port," he added. The city-state's busy bunkering hub saw close to 50 million tonnes of marine fuel sold in 2020.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The digitalised process will allow clients to obtain financing for their underlying trade in under two hours, compared to previous practices that typically took a few days to a week, since clients had to manually deliver the physical BDN back to shore for compilation with other paper documents, before a trade finance application can be submitted, the bank said.

It added that the digital BDN reduces fraud risks as it can ascertain the trade data at source through the mass flow meter (MFM) system.

Previously, physical BDNs could be manipulated to request financing of underlying deliveries that have already been financed by another bank, DBS said.

TFG Marine's global head of bunkering Kenneth Dam noted that the MFM increases transparency for customers in terms of the quantity of fuel received, and can also be adapted to provide real-time information as digital BDNs.

Group head of trade product management at DBS Sriram Muthukrishnan added: "The digitalisation of bunker delivery notes is one of many pivotal steps necessary to transition Singapore's bunkering sector into the digital era and to ensure our port and shipping industry is future-ready."

DBS said it also has plans to integrate the digital BDN to be used on the Singapore Trade Data Exchange (SGTraDex), once the data exchange system is operational in 2022.

The SGTraDex, conceptualised by public and private sector partners led by the Alliance for Action (AfA) on Supply Chain Digitalisation, is expected to unlock over S$200 million in value annually when fully developed.

DBS was the technology lead for the AfA on Supply Chain Digitalisation, and it had participated in two of three business simulation cases used in developing and testing the common data infrastructure prototype.

Read more: Singapore's new trade-data platform aims to be game changer in digitalisation