DBS, MPA complete live bunker delivery financing pilot with digital bunker delivery note

This successful pilot is a first for Singapore, and demonstrates the viability of digitalised bunker financing.

DBS, with the support of the Maritime and Port Authority of Singapore (MPA) and in partnership with Trafigura Group’s TFG Marine, has completed Singapore’s first live bunker delivery financing transaction by way of electronic bunker delivery note (eBDN).

“The digitalisation of bunker delivery notes is one of many pivotal steps necessary to transition Singapore’s bunkering sector into the digital era and to ensure our port and shipping industry is future-ready. 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 in a statement.

Currently, banks rely on physical BDN copies before a trade finance application can be submitted, a process that can take a few days to a week.

The eBDN would allow future clients to obtain financing for their underlying trade-in under two hours, enabling them to obtain working capital faster.

DBS noted that physical BDNs also have a higher risk of being manipulated than their electronic counterpart, as counterparties would be able to ascertain the trade data at source.

The live pilot transaction is a part of a joint agreement between DBS and MPA, signed 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.