Here are some more results from my survey of marine operators to gauge their thoughts relative to marine fuel management (MFM). If you’ve not taken the survey, it’s still up (see link below) and I will continue to collect additional responses and update the results if anything significant changes over time.
First, lets update information on fuel prices – it’s enough to make you sick! When I made my last post the Houston MDO price for the previous day was $846.50. Yesterday, March 1st, $963.50! That’s an increase of $117 in a month. We all know that the price is high because of events in the Middle East – and it will probably continue to increase until things settle down a bit. Then, we all pray, it come back down – but to what levels and how soon?
In the meantime, depending on how your company operates, the situation may cause significant hardship. If you have fuel management in place today - assuming you picked the right solution - you are ahead of your competition when it comes to knowing what you can do to reduce consumption!
Enough of that. Let me share with you some additional results from the Marine Fuel Management Survey.
When asked about the impact of environmental issues on their companies, survey respondents gave the following answers;
•37% said that they have felt no impact but expected things to change over time
•25% were either unsure of the impact or felt there would be little impact to their business
•25% said that environmental issues would force them to make some costly changes to equipment and/or operations
•AND, 62.5% said that these issues are important to them and they are open to looking at ways to reduce their environmental footprint
What I found interesting was the one question that got 0% response!
•0% said “we already have programs in place to help us operate green”
Now I know that some folks are addressing this issue but obviously, not anyone that has completed the survey so far. However, it may be safe to assume that, as with fuel management, companies are waiting... until... they are forced to do something. And, as with fuel management, waiting until the last minute may be a costly decision. In addition to providing an accurate and beneficial way to monitor and report fuel consumption, MFM is also a tool that can be used to help monitor and report a vessel’s environmental footprint. (For more information on ways MFM can help from an environmental standpoint read my blog post from September 9th)
If you haven’t done so – please add your voice - take the Marine Fuel Management survey – click on the link under “Participate In A Survey” below right.
Remember …
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Wednesday, March 2, 2011
Thursday, January 27, 2011
Over the last few months I’ve done a survey of marine operators to gauge their thoughts relative to marine fuel management. If you’ve not taken the survey yet it’s still up on my blog and I will continue to collect additional responses and update the results if anything significant changes over time.
In my previous blogs I’ve pointed out the current trend in fuel prices so let me continue that practice. My last blog post was in December and at the time Houston MDO was $807.50. Yesterday, January 26th, it was $846.50…. that’s up $39.00. It was $651.50 when I first started reporting fuel prices in July of last year. That’s an increase of $195.00 in only 7 months! It may come down again, and I’m sure many hope it will, but it appears that there are more things percolating in the world economy that would continue to force it upward over time than things that will let if come back down.
So let me share with you some of the results from the Marine Fuel Management Survey to date;
When asked how rising fuel costs would impact their operation survey respondents gave the following answers;
•50% said that their customers paid for the fuel so they were not worried!
•BUT, when asked if their customers were starting to require more accurate accounting and reporting of fuel consumption 75% said yes!
•Over 85% said that rising fuel costs would have a NEGATIVE impact on their business!
•AND, over 85% said it would FORCE them to purchase newer more efficient engines!
•75% said it would force them to re-examine some of their contracts and pricing!
It’s obvious that with fuel prices rising in ways that appear to mark some permanent increases (do you really expect it to go back to $650/ton?), fuel will continue to be one of the biggest expenses facing marine operators and will top many a board room agenda as heads are scratched to find ways to offset these costs and remain competitive.
So again I ask,
Is reducing fuel consumption important to your company? If the answer is yes, how will you address the issue?
If you haven’t done so – please add your voice - take the Marine Fuel Management survey – click on the link under “Participate In A Survey” below right.
Remember …
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
In my previous blogs I’ve pointed out the current trend in fuel prices so let me continue that practice. My last blog post was in December and at the time Houston MDO was $807.50. Yesterday, January 26th, it was $846.50…. that’s up $39.00. It was $651.50 when I first started reporting fuel prices in July of last year. That’s an increase of $195.00 in only 7 months! It may come down again, and I’m sure many hope it will, but it appears that there are more things percolating in the world economy that would continue to force it upward over time than things that will let if come back down.
So let me share with you some of the results from the Marine Fuel Management Survey to date;
When asked how rising fuel costs would impact their operation survey respondents gave the following answers;
•50% said that their customers paid for the fuel so they were not worried!
•BUT, when asked if their customers were starting to require more accurate accounting and reporting of fuel consumption 75% said yes!
•Over 85% said that rising fuel costs would have a NEGATIVE impact on their business!
•AND, over 85% said it would FORCE them to purchase newer more efficient engines!
•75% said it would force them to re-examine some of their contracts and pricing!
It’s obvious that with fuel prices rising in ways that appear to mark some permanent increases (do you really expect it to go back to $650/ton?), fuel will continue to be one of the biggest expenses facing marine operators and will top many a board room agenda as heads are scratched to find ways to offset these costs and remain competitive.
So again I ask,
Is reducing fuel consumption important to your company? If the answer is yes, how will you address the issue?
If you haven’t done so – please add your voice - take the Marine Fuel Management survey – click on the link under “Participate In A Survey” below right.
Remember …
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Wednesday, December 8, 2010
Did you attend the WBS?
The Workboat Show proved once again to be one of the best places to go to see the latest in technology and products targeted to the commercial marine industry. There were some cool new and innovative products as well as a lot of familiar faces with updated versions of products we’ve seen before.
What was evident, however, was that many products and offerings that were targeted to vessel systems associated with engines or propulsion equipment listed fuel savings as a key reason to purchase their technology.
With fuel prices continuing to rise (up another $34/ton from my last post) there is little doubt that fuel economy will once again become a very significant issue. Operators will once again start actively looking for ways to reduce fuel consumption to cut costs; and once again, the industry comes to this point with less than 10% of all vessels afloat today equipped with the tools necessary to measure and monitor fuel use.
So two things;
1)Ask yourself one question – “Is reducing fuel consumption important to my company?” If the answer is yes, how will you address the issue?
2)If you haven’t done so – please take the Marine Fuel Management survey – click on the link under “Participate In A Survey” below right.
Remember …
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
What was evident, however, was that many products and offerings that were targeted to vessel systems associated with engines or propulsion equipment listed fuel savings as a key reason to purchase their technology.
With fuel prices continuing to rise (up another $34/ton from my last post) there is little doubt that fuel economy will once again become a very significant issue. Operators will once again start actively looking for ways to reduce fuel consumption to cut costs; and once again, the industry comes to this point with less than 10% of all vessels afloat today equipped with the tools necessary to measure and monitor fuel use.
So two things;
1)Ask yourself one question – “Is reducing fuel consumption important to my company?” If the answer is yes, how will you address the issue?
2)If you haven’t done so – please take the Marine Fuel Management survey – click on the link under “Participate In A Survey” below right.
Remember …
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Monday, November 29, 2010
Effiiciency Measures To Be Showcased at WBS
The WorkBoat Show starts on Wednesday and this year there will be more vendors than ever promoting efficiency measures, services, products and technology.
Last post I indicated that fuel prices were on the rise - right after I said that they fell from $782.50 on 11/15 to $740.00 on 11/24. However, today they were back at $772.50. It's still any one's guess how high they will rise, but one thing for sure, the trend continues to be upward and there will be a lot of emphasis on ways to reduce fuel consumption.... Not just to save on fuel costs but also to reduce emissions.
As you wander around the show this year looking at the various efficiency offerings ask yourself one basic question. If I'm not measuring fuel consumption accurately, how will I know if any of this stuff delivers the benefits?
Marine Fuel Management systems are not only designed to help operators analyze and adjust how the vessel is being operated but to accurately measure fuel consumption to prove other technologies or strategies. The best way to do this is to generate an accurate baseline fuel consumption measurement before application of efficiency technologies or strategies and then again after the measure are in place.
One of the reasons that operators are skeptical of various efficiency measures is that in the past they have used measurements that lacked the accuracy necessary to effectively prove the benefit. A 2%-3% benefit can represent a substantial savings but without MFM it is nearly impossible to measure.
So remember -
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Last post I indicated that fuel prices were on the rise - right after I said that they fell from $782.50 on 11/15 to $740.00 on 11/24. However, today they were back at $772.50. It's still any one's guess how high they will rise, but one thing for sure, the trend continues to be upward and there will be a lot of emphasis on ways to reduce fuel consumption.... Not just to save on fuel costs but also to reduce emissions.
As you wander around the show this year looking at the various efficiency offerings ask yourself one basic question. If I'm not measuring fuel consumption accurately, how will I know if any of this stuff delivers the benefits?
Marine Fuel Management systems are not only designed to help operators analyze and adjust how the vessel is being operated but to accurately measure fuel consumption to prove other technologies or strategies. The best way to do this is to generate an accurate baseline fuel consumption measurement before application of efficiency technologies or strategies and then again after the measure are in place.
One of the reasons that operators are skeptical of various efficiency measures is that in the past they have used measurements that lacked the accuracy necessary to effectively prove the benefit. A 2%-3% benefit can represent a substantial savings but without MFM it is nearly impossible to measure.
So remember -
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Friday, November 12, 2010
Wake Up Call! Fuel up ~20% since July!
We continue to see indications that even more significant increases in the price of marine fuel are just around the corner. I reported on Oct 13th that the price of MDO in Houston was $740/ton – which was significantly up from Sept 20th which was up from July 19th. Houston MDO on July 19, 2010 was $650.50 - today its $771.50. So, we’re looking at an increase of $121/ton in only 4 months. On November 4th, Energy and Capital published an article highlighting 6 events they believe will drive oil to $130/barrel by spring of next year. Among these are; the falling dollar, fear of inflation, and increased demands.
There is general consensus that these forecasts are on target which means that once again, as fuel prices begin to rise, companies will start looking for ways to reduce consumption or change their contracts to mitigate the impact of higher prices.
I’ve come to believe that nearly all mariners are from Missouri! The “Show Me” attitude and high concentrations of “the skepticism gene” seem to have slowed the recognition of the obvious; MFM is the best and most cost effective way to find, quantify, institutionalize, and sustain measurable reductions in fuel consumption.
There are more systems and vendors to choose from now than in 2007 when we had a similar run up in prices. Most marine operators waited too long last time to pick a system and MFM is not a “one-size-fits-all” solution. It is essential that the operator understands the success criteria and selects the right vendor.
So here is your wake up call! Without the capability to accurately measure and monitor fuel consumption and key performance indicators that contribute to efficiency, actions to manage fuel use are much less effective and predictable and may leave you without the ability to implement the "right" strategy.
If you haven't done so already,
1)Outline your fuel reduction strategies
2)Determine by vessel type how you will achieve these results
3)List the KPI's you need to measure to prove the results
4)Prepare a short list of MFM vendors that can meet your needs
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
There is general consensus that these forecasts are on target which means that once again, as fuel prices begin to rise, companies will start looking for ways to reduce consumption or change their contracts to mitigate the impact of higher prices.
I’ve come to believe that nearly all mariners are from Missouri! The “Show Me” attitude and high concentrations of “the skepticism gene” seem to have slowed the recognition of the obvious; MFM is the best and most cost effective way to find, quantify, institutionalize, and sustain measurable reductions in fuel consumption.
There are more systems and vendors to choose from now than in 2007 when we had a similar run up in prices. Most marine operators waited too long last time to pick a system and MFM is not a “one-size-fits-all” solution. It is essential that the operator understands the success criteria and selects the right vendor.
So here is your wake up call! Without the capability to accurately measure and monitor fuel consumption and key performance indicators that contribute to efficiency, actions to manage fuel use are much less effective and predictable and may leave you without the ability to implement the "right" strategy.
If you haven't done so already,
1)Outline your fuel reduction strategies
2)Determine by vessel type how you will achieve these results
3)List the KPI's you need to measure to prove the results
4)Prepare a short list of MFM vendors that can meet your needs
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Friday, October 29, 2010
Is Slow Steaming the Way?
Some of you are members of the Linked-In community, a business oriented social network site. If you are, you undoubtedly follow some of the Groups that are targeted to the Marine Industry, such as; Maritime Executive or Maritime Network (there are over 25 Marine Industry groups). Recently there was a discussion within the Maritime Executive Group on the Current Trends in Reducing Operating Costs.
There were many suggestions – slow steaming – low friction coatings – optimized routing - optimizing the engines – and others – all, however, attributed the savings to the one area that nearly everyone agreed offered the most opportunity for meaningful savings – a reduction in the amount of fuel being consumed. So, if there is near unanimous agreement that reducing fuel consumption is the most obvious place to look for meaningful savings, why is there not more intense interest in MFM solutions that offer the best and most accurate way to measure and prove these savings?
Take, for example, slow steaming. If you are going to reduce speed to save fuel, why not use technology to help you find the best way to do that. Everyone knows that the relationship between fuel consumption and speed is non-linear. Peak efficiency, therefore, is not just a matter of guessing at a setting; it is finding the most optimal setting. That is something that cannot be done if the way you measure fuel consumption is by sounding the tanks once per day or calculating fuel consumption at the end of the trip.
If you’re going to be serious about efficiency, then you must be serious about measuring the things that contribute to efficiency. Whether you are operating an existing fleet, planning for a retrofit, or building new vessels; MFM should be a serious consideration.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
There were many suggestions – slow steaming – low friction coatings – optimized routing - optimizing the engines – and others – all, however, attributed the savings to the one area that nearly everyone agreed offered the most opportunity for meaningful savings – a reduction in the amount of fuel being consumed. So, if there is near unanimous agreement that reducing fuel consumption is the most obvious place to look for meaningful savings, why is there not more intense interest in MFM solutions that offer the best and most accurate way to measure and prove these savings?
Take, for example, slow steaming. If you are going to reduce speed to save fuel, why not use technology to help you find the best way to do that. Everyone knows that the relationship between fuel consumption and speed is non-linear. Peak efficiency, therefore, is not just a matter of guessing at a setting; it is finding the most optimal setting. That is something that cannot be done if the way you measure fuel consumption is by sounding the tanks once per day or calculating fuel consumption at the end of the trip.
If you’re going to be serious about efficiency, then you must be serious about measuring the things that contribute to efficiency. Whether you are operating an existing fleet, planning for a retrofit, or building new vessels; MFM should be a serious consideration.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
Wednesday, October 13, 2010
Fuel Prices Continue To Climb
On September 20th I reported that the Houston MDO price, according to BunkerWorld, was $691.50 which was a $40/ton increase over July 19th. Today Houston MDO is $740.00/ton. That’s nearly a $50/ton increase over September 20th. That comes out to approximately $0.30/gallon increase in fuel costs from July 19th to today, which is starting to be noticeable.
For one client that I’ve worked with, that increases the cost for their regularly scheduled trips (approx 600 miles) by over $3,200. They make this trip twice per week, 52 weeks per year. So extending this, if fuel prices remain at their current levels his cost of operation for the year could easily increase by over $330,000!
Fuel prices will not stay at these levels but the jury is out on whether they will increase or decrease. Once we get past the November elections and with the deep water drilling moratorium lifted, there should be more certainty. One certainty is that it will cost more to get a barrel of oil out of the Gulf of Mexico. If the economy starts to rebound and transportation demands start to increase there will likely be additional pressure on supply and demand economics that could further drive the price of fuel upwards.
An operator, similar to the one mentioned above, that is consuming in the area of 1 million gallons of fuel per year – per vessel can expect to pay between $2.1 and $2.5 million for fuel. With even a modest savings of 2% the savings would range from $42,000 to $50,000 per vessel. Most MFM scenarios can identify from 2% to 5% in savings potential, or more. But, as I’ve stated before, savings in this range are nearly impossible to identify and monitor without an MFM solution in place.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
For one client that I’ve worked with, that increases the cost for their regularly scheduled trips (approx 600 miles) by over $3,200. They make this trip twice per week, 52 weeks per year. So extending this, if fuel prices remain at their current levels his cost of operation for the year could easily increase by over $330,000!
Fuel prices will not stay at these levels but the jury is out on whether they will increase or decrease. Once we get past the November elections and with the deep water drilling moratorium lifted, there should be more certainty. One certainty is that it will cost more to get a barrel of oil out of the Gulf of Mexico. If the economy starts to rebound and transportation demands start to increase there will likely be additional pressure on supply and demand economics that could further drive the price of fuel upwards.
An operator, similar to the one mentioned above, that is consuming in the area of 1 million gallons of fuel per year – per vessel can expect to pay between $2.1 and $2.5 million for fuel. With even a modest savings of 2% the savings would range from $42,000 to $50,000 per vessel. Most MFM scenarios can identify from 2% to 5% in savings potential, or more. But, as I’ve stated before, savings in this range are nearly impossible to identify and monitor without an MFM solution in place.
Having good information is key to making good business decisions and MFM solutions are key to having good information about your vessels fuel consumption and operating habits.
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