DBS partners maritime players and MPA to complete Singapore’s first live bunker delivery financing pilot with digital bunker delivery note
To up the ante on the digitalisation of Singapore’s bunkering sector, DBS, in partnership with Trafigura Group’s marine fuels supply and procurement joint venture TFG Marine, leading maritime players Ocean Network Express (ONE) and Ascenz, and supported by the Maritime and Port Authority of Singapore (MPA), have successfully completed Singapore’s first live bunker delivery financing pilot transaction. The transaction was done by way of an electronic bunker delivery note(BDN), according to DBS's release.
Singapore is the world’s leading bunkering hub in terms of volume, with close to 50 million tonnes of marine fuel sold in 2020[3]. However, banks currently rely on physical copies of the BDN and other supporting documents to avail bunker financing to clients. This is a cumbersome process that typically takes a few days to a week as clients have to manually deliver the physical BDN back to shore for compilation with other paper documents, before a trade finance application can be submitted. The newly digitalised process demonstrated that in future clients will be able to obtain financing for their underlying trade in under two hours, enabling them to obtain working capital faster and better manage their cashflows.
Another pain-point the digital BDN mitigates against is the risk of fraud in the bunker industry. In the traditional bunker trade world, the physical BDN has a higher risk of being manipulated as it can be used to request for financing for underlying deliveries which may not be genuine or which could have already been financed by another bank. With the digitalisation of the BDN, this risk is mitigated as counterparties are now able to ascertain the trade data at source. This is done by leveraging the Mass Flow Meter (MFM) system for bunkering electronically. This helps to provide greater transparency and certainty to participants in the bunker trade supply chain ecosystem.
The live pilot transaction comes on the back 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 collaborative areas which MPA and DBS have identified include streamlining and enabling payment transactions between the users of maritime services to expedite end-to-end payment life cycles, as well as digitalising supporting documents for financing. MPA and DBS will also facilitate innovation and creation of potential new financial solutions with the startups ecosystem for the maritime sector.
For the next phase of development, there are plans to integrate the use of digital BDNs with SGTraDex once the digital utility is operational in 2022. Developed by public and private sector partners led by the Alliance for Action (AfA) on Supply Chain Digitalisation, SGTraDex is a common data infrastructure launched in July 2021 to facilitate trusted and secure data sharing across supply chains. In addition, added transactional data points such as the receiving of vessel and barge location and the timing of delivery can help to enhance visibility to the underlying physical trade, further improving risk mitigation in the bunker industry and elevating Singapore’s position as a world-class digital and bunkering hub.
DBS played a crucial role in the conceptualisation of SGTraDex as the Technology Lead on the Alliance for Action (AfA) on Supply Chain Digitalisation where the common data infrastructure prototype was developed and tested through three defined use cases, and trialled through a series of business simulations with participants across the trade ecosystem, of which DBS played a leading role in two use cases.
DBS was the sole financial institution that laid the cornerstone for the use case aimed at digitalising and optimising bunker delivery as well as working capital leveraging digital data. In collaboration with MPA, IMDA and other key stakeholders, the bank participated in industry workshops to identify the various stakeholders’ pain points and defining required data exchanges to provide greater certainty on the genuineness of trade, reduce manual data entry and enhance risk management.
DBS was also a key player in a second use case focused on enabling the digital-physical twinning of supply chains, leveraging digital data at source to detect trade fraud and reduce risk of duplicate trade financing. This is where the bank’s leading role in Singapore’s Trade Finance Registry (TFR) proof-of-concept contributed valuable insights in the development journey of SGTraDex, to create a solution that enables trade flows be screened more efficiently and thoroughly to enhance the security of trade financing transactions.
About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's "AA-" and "Aa1" credit ratings are among the highest in the world.
Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 12 consecutive years from 2009 to 2020.
DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.
With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities.
