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Dalian Area of China (Liaoning) Pilot Free Trade Zone First Launches Two New Oversight Model of Bonded Ship Oil Supply in China

        On November 12, Dalian Area of China (Liaoning) PilotFree Trade Zone hosted a press conference announcing that the AdministrationCommittee of DFTZ together with the Customs of Beiliang Port, first in China,launched two new oversight model of bonded ship oil supply, namely"concentrated delivery and distributed supply" and "transferbetween two bonded warehouses". These two initiatives means a lot to thefurther optimization of the business environment of Dalian Port, theimprovement of the competitiveness of the bonded vessel oil supply industry ofDalian, and the development of the bonded ship oil supply center in Bohai BayRim and the international shipping and logistics center of Dalian.

        Bonded ship oil supply refers to the bonded fuel oilsupplied to ships on international routes. It is a crucial part of theinternational maritime services. According to the International Convention forthe Prevention of Pollution from Ships (MARPOL),  the global cap on sulphur content for generalshipping will be reduced from 3.50%wt to 0.50%wt from 1st January 2020. Chinais the second largest ship bunker oil market only next to Singapore in Asia.Therefore, in order to get adapted to the international community, innovatecustoms oversight model, improve bonded ship oil supply efficiency, andaccelerate the introduction of domestic low-sulfur oil to international market,it is critical to expedite the development of our domestic bonded ship oilsuppliers.

        Against this backdrop, the Administration Committeetogether with the Customs of Beiliang Port took a demand-oriented and pain-point-solvingapproach and launched the two new oversight model.

        The "concentrated delivery and distributedsupply" model is the process that suppliers apply for concentrateddelivery and make oil supply according to specific orders. The customs carryout warehouse and bunkering tanker supervision, and make cancellation afterverification based on actual oil supply records. With integrated applicationprocedures and concentrated business handling, the oil suppliers can operatemore flexibly and the stay of bunkering tankers and the storage times have beentremendously slashed. Oil consumption reduced, OPEX lowered, oil suppliers canprovide more efficient and convenient service and become more competitive inthe market. Statistics show that the oil supply of 1000 tankers within thecurrent oversight framework can be handled just by 143 tankers with the newmodel,down by 85.7%.

        The "transfer between two bonded warehouses"model is devised based on the spirit of the Circular of the GeneralAdministration of Customs on Printing and Issuing the Several Measures forSupporting and Promoting the Development of the China (Liaoning) Pilot FreeTrade Zone. In order to facilitate oil suppliers to dynamically adjust thevolume of bonded warehouse and export supervised warehouse and realize combinedpolicies and functions of the two warehouses, the authorities have optimizedand integrated the two warehouses. Under the new model, companies will havemore flexible storage, better availability of storage tanks, and smallervacancy rate. With adjusted storage capacity, oil suppliers will need no actualwarehouse transfer of domestically-produced bunker oil. It is estimated to save4.2 million yuan of storage rental and warehouse-transfer cost for oilsuppliers.

        The two new models are new innovations made in thecustoms supervision of bulk commodity after "bonded mixed ore" and "whole process supervision of quarantine of importedgrains". The two new models are going to bring tangible reform dividendsto the companies and enhance their satisfaction and sense of gains.