Chief Shipping Analyst at BIMCO, Peter Sand on Tuesday (6 October) discussed some key dynamics and trends that he feels will emerge in the bunker industry moving forward, considering how Covid-19 related problems have changed the economic landscape, while providing advice on how to stay competitive in such an environment.
A new business dynamic: trustworthy relationships and hassle-free bunker procurement:
“I think that many of the new dynamics in the marine fuel sector will be led by the hubs and supported by local authorities,” shared Sand.
Sand added that while Singapore is the world’s largest bunkering hub and is a leader in its own way, it also faces many of its own issues and thus “in the bunkering and shipping industry, it isn’t always hassle free to go buy bunkers anywhere in the world”.
Moving forward, Sand sees the element of trust as a key value proposition that bunkering businesses can embrace if entities were to integrate it into their existing system.
He adds that trust is such an inherent part of the new business dynamic that shipowners and operators could see more returns shifting away from chasing that extra dollar of discounted price to investing in a solid relationship with the bunker supplier instead.
If a mutual trustworthy relationship is built into the system, shipowners can then avoid the hassles that come with bunker procurement because they can trust the counterparties.
What is the potential consolidation among suppliers and traders?
Looking at how the industry is composed today, large independent distributors take up the lion’s share, the majors second, and then the small independent ones, believes Sand.
Bearing in mind the fuel quality issues with low sulphur fuel, everyone is seeking: a competitive price, high quality and ensure availability on a global scale; this is something not always available from small independent distributors.
Moving forward, Sand observes that any consolidation trends will be a diminishing of small independent distributors, and an effect of this trend is to develop higher reliability in the industry.
Peter Sand’s top three tips on how to stay competitive are:
- Be worthy of the business as a supplier to the industry as bunker fuel supply is the biggest cost for all in the business.
- Reduce the hassle and increase efficiency surrounding all bunkering procedures on a global scale.
- Get the right services across and avoid selling complicated financial structures, claiming them to be risk management tools, because they are not.
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Photo credit: SIBCON 2020
Published: 7 October, 2020
