Bunkers

Bunkers and fuel grades

Published 23 August 2026 · updated 17 October 2026

Fuel for ships is called bunkers. It is usually the largest single cost on a voyage, and it is the one input nobody guarantees. Speed and consumption come from the ship's description, port charges from the agent's cost account, and commissions are a percentage. The bunker price is different. It is a market price that will change before the ship takes on fuel, and it is multiplied by a quantity that depends on the weather. So what is in the tanks is not just an engineering detail. It decides much of what the voyage earns.

The grades, and what the names mean

Marine fuels come in two families. Residual fuels are the heavy part of the oil. They are thick and must be heated before they can be pumped or burned. They are cheap. Distillates are lighter and cleaner, work when cold, and cost more. A ship's main engine runs on residual fuel. Its auxiliary engines (which make electricity) and its boiler usually run on distillate. In some waters the whole ship must run on distillate.

These are the names a broker meets.

• VLSFO, very low sulphur fuel oil, with 0.50% sulphur or less. Most bulk carriers have burned it at sea since 2020. The name sets a sulphur limit, not a type of fuel. Under the IMO's definitions, a VLSFO can be a residual or a distillate. So two lots sold under the same name can be very different products.
• HSFO, high sulphur fuel oil, the heavy grade used before 2020. It is still sold and burned, but only by ships fitted with exhaust gas cleaning. So many ships now have scrubbers that this is not a small trade. At some hubs, more high sulphur fuel is sold than the low sulphur kind.
• LSMGO and MGO, low sulphur marine gas oil and marine gas oil. These are distillates. The low sulphur form has 0.10% sulphur or less. The auxiliary engines burn it, and the whole ship burns it inside an emission control area. ULSFO meets the same 0.10% limit with a heavy grade. It suits a ship that spends a lot of time in those areas.

Behind the trade names is a specification. Residual grades carry a number that shows their viscosity (how thick they are). It has nothing to do with sulphur or price. A grade quoted as 380 is a residual fuel of up to 380 centistokes at 50 degrees. That tells you how much heating it needs, not how clean it is. Two fuels can share that number and still be very different.

What a ship burns doing what

A ship does not burn one fuel at a time. An estimate that assumes it does gets the normal case wrong. At sea, the main engine burns the heavy grade. At the same time, the auxiliary engines and the boiler burn a distillate, often a small amount, perhaps a couple of tonnes a day. At the berth or at anchor, the main engine is stopped. The distillate is then most of what the ship burns, to run the cargo cranes and generators.

So a real ship description has two numbers on every line. A broker copies it straight from an owner's e-mail, in this form:

ABT 12.5 KTS LADEN ON ABT 26.0 MT VLSFO + 0.2 MT LSMGO
ABT 12.5 KTS BALLAST ON ABT 24.0 MT VLSFO + 0.2 MT LSMGO
IN PORT WORKING ABT 3.5 MT LSMGO
IN PORT IDLE ABT 2.0 MT LSMGO

Do not blend the two into one price. If you do, the cost of each grade is hidden inside the average, and you cannot see which line changed. Two tonnes a day of distillate over a month adds up to a five figure sum. An estimate with one fuel price has nowhere to put it.

The rule that produced the current shape

Since 1 January 2020, MARPOL Annex VI has limited the sulphur in fuel oil used on board to 0.50% by mass, worldwide. Inside an emission control area the limit is 0.10%, and has been since 2015. Soon after the global limit came a carriage ban. A ship without exhaust gas cleaning may not even carry fuel above the limit for burning. That stopped ships from avoiding the rule in this simple way.

The rule does allow an alternative, which it calls an equivalent arrangement. In practice this means an exhaust gas cleaning system, called a scrubber, which removes sulphur oxides from the exhaust so the ship can keep burning cheap high sulphur fuel. The rule never actually names scrubbers; they are an accepted reading of a general equivalence provision. That is why no international rule ever settled what a scrubber may discharge, and each state and port decides for itself.

There are three kinds of scrubber: open loop scrubbers take in seawater and pump it back out, closed loop scrubbers use an alkaline liquid and keep the waste on board, and hybrid scrubbers can do either. Many places ban open loop discharge, and the list keeps growing: Singapore, the Panama Canal, the Suez Canal, Turkish waters, and within twelve miles of Denmark, Sweden and Finland. California reaches the same result in another way. It requires distillate and does not accept a scrubber at all. The North-East Atlantic states have agreed to ban scrubber discharge from their ports and inner waters in two steps before the end of the decade: open loop first, then every type. So the ship's trading pattern decides whether a scrubber pays.

The scrubber argument, and why it is a chartering argument

A scrubber pays for itself from the price gap between high sulphur fuel and the compliant grade. That gap is a market spread, and it moves. At times it has been wide enough to pay back the equipment quickly. At other times it has been too narrow.

It is a broking question, not only an engineering one, because of who stands on each side. Under a time charter, the owner fits the scrubber and the charterer buys the fuel. The owner pays for the equipment and loses earnings while the ship is off-hire (out of service) for the work. The charterer gets the saving. That split is not fair by itself, so the parties negotiate it openly. A ship with a scrubber earns a higher hire, or the parties agree to share the spread. The fixture must say how. If it is wrong, one side has paid for equipment that the other side earns from. The industry bodies thought about a standard scrubber clause and chose not to write one. Their view was that splitting the cost and the benefit is a business negotiation, not something a printed form should decide. Under a voyage charter, the question looks different. The owner buys the fuel and keeps the saving. The charterer just sees a freight rate from an owner with lower costs.

Why it dominates the estimate

The bunker cost is consumption times days times price. All three are uncertain, and they usually go wrong in the same direction. The consumption figure is only guaranteed in weather this voyage may not have. The number of days depends on the port working as fast as someone assumed. The price is whatever the market is on the day the ship takes fuel. This changes what a broker should argue about. On a normal dry cargo voyage, a change of a hundred dollars a tonne in the bunker price is worth about the same as most of one dollar a tonne on the freight rate. A broker who argues hard over the rate but accepts a hopeful loading rate without comment has spent the negotiation on the smaller number.

How bunker disputes actually start

Almost no bunker disputes are about price. They are about quantity and quality, and they usually start in one of a few ways.

• Quantity. Fuel is delivered by volume but paid for by weight. Between the two there is a correction for temperature and density, so honest people can disagree. One kind of cheating has a name: air is blown into the fuel to increase the measured volume, and the ship pays for foam instead of fuel. A careful chief engineer will notice. Usually nobody else does.
• Quality. Every delivery comes with a bunker delivery note and a sealed sample. That sample is the only evidence that will matter later. A ship that burns the fuel first and tests it afterwards has usually lost the argument.
• The test margin, which is not what most people think it is. Every test method has a stated precision. For fuel already in use or on board, the rules allow a small margin above the limit before a result counts as a failure. The delivered sample has no such margin. For that sample, the limit is the limit. So the same fuel can be acceptable to the buyer and still fail a port state inspection. That is why a careful supplier blends to a target below the limit, not exactly at it.
• Catalytic fines. These are hard particles of aluminium and silicon left over from refining. The fuel specification sets a limit for them. But they collect in the ship's settling and service tanks. What damages an engine is the level at the engine inlet, not the level on the delivery note. This quality problem destroys machinery. It does not just cause an argument.
• Stability and compatibility. These are two different things, and the difference decides who pays. Stability is whether one lot of fuel holds together. That is the supplier's job at delivery. Compatibility is whether two lots can share a tank. That is the ship's problem. Compliant heavy fuels are blends. Blends from different sources may not mix. Putting two good lots in one tank can create sludge and block filters. The answer is to keep them in separate tanks. That uses tank space and must be planned in advance.

Where and when a ship lifts, and who owns what

Most bunkering happens at a few hubs, and they are on the main trade routes. Singapore is by far the largest, followed by the Amsterdam to Antwerp range, Fujairah, Zhoushan, the Gibraltar strait and Panama. A port call only for fuel is therefore a normal part of a voyage plan, and the terms should say so, because a detour to take fuel is a deviation. Whether it is allowed, and whose time it uses, is a question that the charterparty answers.

Who owns the fuel depends on the charter type. Under a voyage charter, the owner buys the bunkers and the cost is inside the freight. Under a time charter, the charterer buys them. That is why the fixture records the quantities and prices on board at delivery, and again at redelivery (when the ship is handed back). On a large ship, that is a seven figure sum changing hands twice.

Do not assume there is one rule for the price, because the printed forms do not agree. Options include the current price at each port, a fixed price written into a blank, the same quantity returned with the difference paid at the invoice price, or the price really paid, first in, first out. These give different answers as soon as the market moves. So the recap must fix the quantity basis, the price basis, and whether the cost of the barge is included.

The problem nobody prices

Heavy fuel used to be easy to store, but compliant heavy fuel is not. The blend components that lower the sulphur contain more paraffin, and paraffin makes wax. Wax starts to form at a temperature well above the pour point on the specification sheet, often twenty degrees or more above it. So a fuel well above its stated pour point can already be forming wax. Wax also conducts heat badly. Once enough wax settles over the heating coils, not enough heat may get through to melt it again. Fixing that means people digging solid wax out of a tank.

None of this breaks any rule. The specification allows a pour point of thirty degrees on the heavier grades, in summer and winter alike, and only notes that the buyer should make sure the fuel suits the trade. That note matters a great deal. It is the clearest case of a fuel fully within specification and completely wrong for where the ship is going.

The one honest thing to say about the price

An estimate based on last month's bunker price is not on the safe side. It is wrong in a direction you cannot know. Fuel is the biggest cost, so it is wrong by more than any other input could make it. A small habit helps. Record which price you used, for which port, quoted on which day. Then an old figure is easy to spot and does not hide inside a total. A number with a date next to it can be questioned. A number without a date is often trusted without question.

References

• International Maritime Organization, IMO 2020, cutting sulphur oxide emissions. imo.org
• International Maritime Organization, Implementation of sulphur 2020 limit, carriage ban adopted, 2018. imo.org
• BIMCO, List of local restrictions on the discharge of scrubber wash water. bimco.org
• Gard, IMO 2020: a review of the transition to VLSFOs, 2020. gard.no
• Gard, Are you 95% confident that your very low sulphur fuel is on spec and MARPOL compliant?, 2020. gard.no
• Skuld, Bunker disputes and shipboard fuel treatment, 2021. skuld.com

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