World Bunkering Autumn 2010 41 been given any real development on the exchanges so there is great potential," says James. " We expect to see steady development on the NR- X platform." Unusually, contracts on the platform are available priced not only in dollars, but in World Currency Units ( wocus). Bunkers are the first physical commodity in the world to be priced in wocus. A statement from the company behind the wocu, UK- based WDX Organisation says: " As bunker oil drives the majority of sea- going trade, it is a com-modity of primary importance. Trading bunker oil in wocus rather than dollars is anticipated to allow companies to achieve maximum benefit from the wocu's particular advantages, namely reduced exchange rate volatility and an effective partial hedging mechanism, reducing spot and forward inconsistencies in bunker oil pricing." Tom James commented: " We are very excited to have finalised the terms of the agreement with WDX regarding the wocu and look forward to launching wocu pricing for a range of physical com-modities on our NR- X platform. We have no doubt this will give our platform a leading edge over those who do not offer the advantages of pricing in the wocu, especially given the large US$ currency concentration risk most companies in the commodity and energy sectors currently have to manage." According to the WDX website: " Conceived in 1996, formulated and calculated since 1 January 2000, the wocu was officially launched on 1 January 2010. The wocu is based on a basket of currencies that are qualified by the success of their economies - and not on politics, history or geography; its major claim, that it exhibits lower volatility than its components, has already been proven. Michael King, ceo of WDX Organisation, said: " We believe this early adoption of the wocu basket is a key signal from the markets. The agreement reflects the requirement of market participants for currency neutrality in some, or all, of their activities. Utilising the wocu in commodity trading will create certainty in forward transac-tions, which in turn will drive down costs. A single currency arrange-ment would be hard pressed to reduce volatility in this manner." Aspect solution takes off A perhaps somewhat more conventional solution to bunker manage-ment was released by one of Navitas' partners, Aspect Enterprise Solutions in March. AspectETRM for Bunkering is a specialised version of its software as a service ( SaaS) trade and risk management solution. According to the company, the programme is both compre-hensive, combining all the core functionality required for bunkering, and very fast to implement, with installation times of typically weeks not months. The solution's scalability makes it cost- effective for small operations right up to the heavyweights that dominate the world's bunkering hubs. " Bunkering operations have a rich choice of contending ETRM solutions so we think it's highly significant that AspectETRM for Bunkering won three major deals, even before we formally launched the product," says AES ceo Steve Hughes. One is a relatively modest sized trader and one is a major global player. " These two customers are at opposite ends of the spectrum in terms of size, yet their rea-sons for going with AspectETRM for Bunkering are the same - speed of implementation and affordability." Three more customers have joined since March, and one of the existing users has expanded the scope of the solution, proving a real market demand.
42 World Bunkering Autumn 2010 Managing fuel costs: a critical challenge W ith 10% of the global fleet reported to have been idle, 2009 will be remembered as the year the shipping industry was overwhelmed by crisis. With declining world trade, plunging freight rates, high bunker fuel prices and eroded profits, survival was the mantra. Industry experts predicted that survival would continue to be the driving force for shippers through 2010. In such an uncertain financial climate, now more than ever, con-sumers and suppliers will constantly seek to lower fuel costs. The high cost of alternative fuels, together with price volatility and the need to maintain product quality, stability and availability, all pose challenges that have a direct impact on the profitability of both shipping and bunkering companies alike. All of this puts the spotlight on bunker trading and supply, and the need for measuring and optimising processes for the best possible margins. To do this, visibility throughout the trade process is crucial. When considering the selection of IT systems to support these requirements, bunkering firms need to ensure that systems can: . Enable traders and management to capture and report profitabil-ity on multi- product spot and term bunker deals, from contract through to settlement. . Allocate cargo purchases, sales, internal movements and outturn adjustments by location. . Report credit risks associated with new and existing customers. . Create reports using access to timely local and global crude prices, bunker prices, port information, . analysis, and news. . Report key performance indicators and metrics. What's in your tank? The value's in the visibility Knowing exactly what stock is held in multiple tanks in ports across the world, together with product value, title and specifications, is critical to the profitability of a bunker supplier. Visibility of what's available for sale or transfer is crucial for credit reporting and for the banks to understand who you're doing business with. In today's uncertain times, any shipper or supplier who made payment six months ago can easily be in trouble today. Energy Trading and Risk Management ( ETRM) systems with strong inventory capabilities provide a real strength and competitive advantage in a market where spreadsheets have long been the norm for managing trades, and have created blind- spots in the supply chain. Leveraging the right ETRM System helps bunker traders man-age trades and understand profits & losses ( P& L) and exposure in real time against changing inventories. But for many bunkering companies, large ETRM systems are often too complex. This can scare companies away from trying to implement a solution, leaving them to continue managing their inventories in the way they been managed for many years - with spreadsheets. But this leaves value on the table. Spreadsheets don't allow collaboration between traders, inventory managers and accounting. Spreadsheets don't give good visibility, let alone provide the capability for what- if analysis. Aspect Enterprise Solutions ( AES) has built a specific energy trad-ing and risk module for the unique trading scenarios of bunker trades. AspectETRM is the fastest- growing next generation solution globally for downstream traders and buyers of oil, products, petrochemicals and other commodities. AspectETRM for Bunkering combines all the required core functionality required for trading together with ultra- fast speed of implementation - typically a few days, not weeks or months - and a scalability that makes it cost- effective for small operations right up to the heavyweights that dominate the world's bunkering hubs. AES's any- to- many scalability results from its Software- as- a- Service ( SaaS) foundation, which means bunkering operations never need to install and maintain software and IT hardware, or the associated costs. Users simply but securely access AspectETRM for Bunkering through a standard desktop or mobile browser. The architecture enables key elements of a fully end- to- end solution, including fuel procurement capture, derivative- based risk hedging, and back office accounting to be in place and delivering savings within a matter of days. Today's bunker trader Most of today's bunker traders are responsible for the entire trade, from receipt of an inquiry for product to collecting payment. Some also have responsibilities for managing other traders and monitoring the day- to- day risk. They need to be able to make arrangements for contracted supply with customers and ensure product is loaded for vessels from the right supplier. They also manage spot deals, and so having real- time market data for crude oil, bunker prices and analysis is necessary. Many of our customers access real- time and historical market data, charting tools and other news and exchange feeds through our market data portal AspectDSC. It's on the same platform as their energy trading and risk bunker module, and provides a tre-mendous advantage in the market, and cost savings on the solution. The focus on price given today's shipping conditions is very competitive. But traders are more than buyers and sellers. Clients are looking for advice for the best product and timely supply, so