What Is the Role of the Bunker Broker in the Internet Age?

Danny Soos, CEO and founder, OilFront

Up until the 1980's the bunker trade was dominated by majors. The 1980's then saw the rise of the independent suppliers, brokers and traders. Brokers used to have the little black book, tightly held information of which suppliers were in which port and how you might get hold of them. Shipping companies struggled to know where to start and brokers provided a lot of value by helping shipping companies navigate the market.

The original role of the bunker broker was to cover the market because they had more information than the shipping companies, but when the Internet made much of this information freely available the role of the broker changed. Unfortunately, having access to so much information today has not made doing a good job of bunker buying any easier as having too much information makes it difficult to know what to pay attention to.

The challenge today is no longer a lack of information but rather sorting the signal from the noise. The role of the broker today is to do this and use all the information available to help the shipping company get the best possible deal.

No-one knows exactly how the market will adjust to meet the IMO 2020 regulations, but there will need to be sweeping changes and it is likely there will be a transition period where there is a lot of uncertainty. During this period I believe there will be a lot of opportunity for savvy buyers. Buying the 'safe option' will be increasingly expensive. Not everyone will be paying the same price. Today, sophisticated buyers may buy on average up to 3% cheaper than their unsophisticated competitors, and as the number of unknowns increase that could be 5%+ cheaper. Working with a honest broker is a good way for companies to get themselves up this curve.

The bunker broker should answer questions like, where shall we bunker this vessel? Durban, Port Elizabeth, Port Louis or Colombo? What are avails like? How much are the calling costs?, Is there any congestion or delays? Is now a good time to go to the market? Which suppliers are reliable in this port? What is the best deal we can get today?

These are hard questions and to answer them properly we need to take a data driven approach. Imagine if we could evaluate every option based on realistic indications, deviation and calling costs. Today's broker should process all these data points, keep the buyer informed and help them navigate the market. In short, to make getting the best deal simple and easy. 

Data is already starting to change the way we make decisions every day. 200 years ago if you fell ill you would pray to a god; 50 years ago you would put your faith in a professional doctor; today you are likely to ask your doctor for data (tests, scans, vitals etc). Isn't it about time we start asking for the data to back up that bunker purchase decision?

OilFront uses technology to show the companies we work with exactly how we work. We answer the hard questions today and are constantly working on ways to answer these questions better using data.