What is the price of milk in Oslo today?

What is the price of milk in Oslo today?

In discussions with our customers, we are often asked why BunkerPlanner relies on bunker price indexes instead of the ‘actual’ fuel price at each port. In this blog we answer this question and explain the complexities of marine fuel pricing using a commodity most of us are very familiar with: milk.

So, what is the price of milk in Oslo today? The surprising fact is that there is no uniquely correct answer to this simple question! Are you buying one liter or half a liter? Skim, 2%, whole? Will you shop at a convenience store or at the supermarket? Are you fine to buy a carton of milk with a tight expiration date (at 50% off the sticker price)? Are you buying on a Sunday (many stores are closed, therefore you can expect to pay a slight premium)? Do you have a discount coupon? Are you purchasing large volumes as a retailer?

The bottom line: there is no such thing as ‘the’ price of milk in Oslo. That is despite the fact that tens of thousands of milk purchases are completed daily; that many retailers print their prices in leaflets and newspapers; and that the dairy industry is a well-regulated industry, prominently in politicians’ radar screens, and observed daily by hundreds of thousands of consumers.

Now let’s turn our attention to bunkers. By contrast with the milk market, this is an opaque segment where only a few dozen transactions will be completed each day at a given port. There are many additional technical complications that would affect availability and pricing, such as credit terms, weather, barge availability, minimum volumes, quality, ISO specs, energy density, long-term contracts, and berth location, to name a few. Furthermore, the segment is of little interest to the general public, and hence pricing irregularities are unlikely to generate much political blowback.

If we can’t get an unambiguous price point for milk at a particular city, how can we expect to get the same for bunkers, given the very relevant additional complexities listed above? The fact is that we can’t — the price will be revealed only in the context of a specific negotiation, when all parameters of the transaction are laid out in detail. Anecdotally, we have witnessed conference calls where one party would state that “the price of VLSFO in Las Palmas was $420 yesterday”. Another would say, “no, the price of VLSFO in Las Palmas yesterday was in fact $430”. Who was correct? Both! The different nature of their transactions means that both completed purchases for VLSFO at different prices.

When planning future purchases, it is not feasible to establish a detailed negotiation at every port where we could consider lifting fuels. If nothing else, we might find that the suppliers would stop taking our calls once they realize that we are regularly probing the market and not in fact conducting a bona fide purchase inquiry.

BunkerPlanner relies on market indexes to address the opacity of bunker prices. With these, we generate bunker procurement plans that frequently identify superior opportunities to our users. Additionally, using our APIs, users can import price lists from their preferred suppliers to supplement our extensive price feed. Last, but not least, BunkerPlanner functionality allows users to manually enter specific price points to supplement our indexes, in cases where they have fresh market information from a recent transaction.

Unlike a milk purchase, where you might overpay a few cents on a poor deal, your fleet has tens of thousands of dollars at stake on each bunkering decision. BunkerPlanner leverages a carefully curated price index library and state-of-the-art algorithms to give your fleet a competitive edge in an opaque and complex market.