DBS, partners complete 1st live bunker delivery financing transaction

Singapore’s financial service group DBS Bank has completed its first live bunker delivery financing pilot transaction through a digital bunker delivery note (BDN).

Illustration; Image courtesy: ONE

The pilot transaction was finished in collaboration with bunker supplier TFG Marie and shipping company Ocean Network Express (ONE) as well as the maritime digital company Ascenz and Maritime and Port Authority of Singapore (MPA).

Currently, banks rely on physical copies of the BDN and other supporting documents to offer bunker financing to clients. However, the process can sometimes take days to a week to be completed. What is more, the physical documentation increases the risk of fraud and exploitation.

With the digitalisation of the BDN, this risk is mitigated as parties are now able to determine the trade data at the source. This is done by leveraging the mass flow meter (MFM) system for bunkering electronically.

This pilot transaction demonstrated that clients will now be able to receive financing for their underlying trade in less than two hours, the company claims.

The digital BDN will also help in eliminating the risk of fraud in the bunker sector.

“The objective is to co-create an end-to-end digital workflow that enhances efficiency and transparency for bunker trades, while building trust with banks and shipowners which are fundamental to the long-term growth and development of Singapore’s bunker ecosystem,” said DBS Group’s Trade Product Management Head Sriram Muthukrishnan.

“The adoption of digital documentations will help stakeholders across the value chain move towards more efficient and transparent operations that are aided by data-driven decision making,” Kenneth Lim, Assistant Chief Executive (Industry) of MPA, added.

The live pilot transaction comes as a result of a joint agreement signed between DBS and MPA in 2020, to accelerate the digitalisation and innovation of financial services and payments across Singapore’s maritime industry.

The next phase of development would be to integrate the use of digital BDNs with SGTraDex once the digital utility is operational in 2022.

In a new report published by the Baltic Exchange and Xinhua, Singapore has been ranked as the top global shipping center.

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