Know Your Counter Party: Monjasa

Monjasa Group COO Svend Stenberg Mølholt. Image Credit: Monjasa

In the latest of its Know Your Counter Party series, Ship & Bunker talks to Monjasa Group COO Svend Stenberg Mølholt.

S&B: Tell us about the origins of Monjasa

Monjasa's journey in the maritime industry began in 2002 when founders Anders Østergaard and Jan Jacobsen set up a small office in Kolding, Denmark. After obtaining their first bank credit, Monjasa's very first international bunkering operation took place in Dubai. This true entrepreneurial approach, an outspoken ambition to build on strong personal relations and plenty of hard work laid the foundation for the coming years' rapid growth.

In 2005, Monjasa acquired its first small but fully owned supply tanker in South Africa named 'Monjasa Pioneer', and the company moved to a new office location in the city of Fredericia, Denmark. During these years, Monjasa also expanded internationally by opening offices in Singapore and Dubai, while bunkering operations experienced rapid growth with markets in West Africa and the Arabian Gulf leading the way.

In 2008, Monjasa saw a new maritime market opportunity. As industry pioneer C-bed Floating Hotels was established with the purpose of adding value to offshore wind farm operators during the construction phase. By offering high quality on-site staff accommodation and project services, C-bed instantly gains success.

Monjasa is now covering growing activities across several maritime sectors, and decides to construct new headquarter facilities in Fredericia. The inauguration in spring 2011 marks a company milestone and provides a solid platform for future development. In addition, a third international office opens in Stamford, USA that same year and Monjasa is now globally present across all major time zones.

In 2012, Monjasa A/S received Ernst & Young's 'Entrepreneur of the Year Award' in Denmark.

To extend cooperation with business partners and offer new opportunities to customers and employees, Monjasa also establishes office locations in Copenhagen (2013), Panama City (2015), and in Limassol, Cyprus (2017).

Another important historical milestone was set in 2014, when Monjasa received its first quality environment, working environment, and energy ISO certifications audited by Bureau Veritas. In 2016, The Dubai Multi Commodities Centre (DMCC) awarded Monjasa DMCC "Best Maritime Company", highlighting the commitment to compliance and risk management.

S&B: Where is Monjasa Today

Having started with just two people 15 years ago, today Monjasa has a total workforce on land and at sea that counts more than 600 skilled bunker traders and maritime specialists, and the global fleet counts 25 ships.

Where we are today is built on the same things that made us successful in the past - doing things right, going the extra mile for the customer, challenging the status quo, finding and building new markets based on the relationships we're engaged in, and so on. What has fundamentally changed is the way we did that 10 years ago and the way we do that today is completely different.

In the past when we said at Monjasa we offer a safe port everywhere in the world, the way we did that was more by covering the relationships, making sure we had the right engagement. Today when we offer a safe port for customers we believe it has to be done on the back of how we mange controls and quality, with ISO standards and by embracing technology, that's a safe port.

When we do make a supply, be it back-to-back or based on our physical setup, our customers need to be certain we've checked all counter parties, we've looked at the supply chain of the delivery and ensured there are no sanctioned entities, we've made sure the cargoes are sourced from the right place, and we have made sure that we have the full document trail in place etc. Because in the world of today if you do not have those checks and balances in place you can not offer a safe port, and that is something that is ultimately going to expose your customer or suppliers.

And unless you have your technology up to date, and your workflow, and quality, quantity, sanctions, and regulations policies etc all in place and have everything combined in the right way for you to operate the company, you are not going to be successful.

So in this way, today the DNA of Monjasa remains the same, the culture remains the same, but the way we deliver is just completely different.

S&B: Monjasa recently held a summit in Cyprus as part of the opening of its new office in Limassol. Tell us a little about that.

We think the industry is changing, and as a company the way that we can challenge the status quo is by making sure we talk to shipowners, to captains, to ops managers, bunker purchasers, suppliers, and all stakeholders we make sure that we start discussions around where we are going as an industry and how we need to adjust to that. So that's what we did at that event.

Monjasa Group COO Svend Stenberg Mølholt speaking during the company's recent event in Limassol, Cyprus. Image Credit: Monjasa

Among the things we talked about was the upcoming 0.50% global sulfur cap in 2020. We are going to see prices go up, and when that happens, there's going to be more at stake for everybody in the bunkering industry and you just need to be very sure of how you do your controls, and checks and balances.

And when there's more at stake, compliance and regulation efforts are going to step up. And we certainly see a future that is going to be more regulated, and a future where there is going to be more compliance. So we talked about from Monjasa's side how we operate today, how we see compliance and sanctions, and how you need to make sure you have an operational model in your company that takes care of global sanctions and regulations.

S&B: Compliance is not something we currently see many bunker companies talking about, but Monjasa seems to have put a lot of effort into developing and highlighting the compliance systems it now has in place today. Why is that?

Monjasa believes that you need to make sure today that your model accommodates what is going to happen in the future, otherwise you cannot adjust fast enough to the truth that's just out there: It's only going to be a few years before we start seeing the impact from increased regulation and compliance requirements.

We think that your operational model and your culture have to converge in a way where they support each other. It is going to be more regulated in the future, and if you don't have a system that's both agile and can accommodate these regulations and compliance issues, then we don't think you're going to survive.

So what we've set up in our company today is going to accommodate what's happening in the future.

S&B: Can you tell us more about what Monjasa has put in place for this.

You need to make sure you have an operational model in your company that takes care of global sanctions and regulations, and one way we've done that is to bring in highly skilled colleagues with the right backgrounds and experience and set up road blocks in our system. For example, we now look at the trading patterns of a vessel through an integration with Lloyd's List Intelligence. If the ship we are looking to supply, within its recent movements, has called at a port that's been sanctioned, then this integration instantly captures it, and we know right away if we can do business or not.

At the moment, there are different standards here, and some of our competitors are doing business immediately after having called a sanctioned port. But what we can say is we've talked to policy makers, we've talked to lawyers and banks, and for Monjasa 30 days is where we draw the line in the sand to qualify for our supply of bunkers.

Our opinion is that in the long run the playing field will be levelled and the regulations will be the same for all companies, but today we let business go to competitors with more risk appetite than we have.

We need a workflow to support our operating model, and technology is a very important part of this. Let's say a trader gets an inquiry in an airport, works it, closes it, and then sends the details to a relatively junior trainee that has to do the data input. If the deal has already been struck you are going to get in trouble if you have to go back to your customer after the fact and say, "hey we have an issue here." So as part of the workflow today the trader can input the IMO number of the vessel right on his phone and in a second he'll know if we can do the deal or not.

We also need to make sure that we in the management team foster a culture that embraces this approach. I say this because you can have a sanctions policy in place, or a compliance, or a sourcing policy in place, but if you simply expect the organisation to adhere to those policies by reading through them I think you're going to fail. You have to accept what a trader is and what DNA they have, and what kind of people they are.

If we have a trader that our customers love, who is very attentive and curious about their customers' needs, if we think he's also going to do counter party analysis into lets say five levels of ownership of the company, and if we expect him to do that while also being a good guy that's outgoing and builds relations, that's just unreasonable! It's just not going to happen, and you're naive about what you're trying to accomplish.

So you need not just policies and procedures, you have to build systems and a workflow that does these checks and balances for them, and a culture that supports it. Otherwise, you're not going to be successful.

S&B: How long has it taken to put these systems and procedures in place?

It's taken about a year and a half to get to where we are today. Getting the documentation and policies in place took us one or two weeks, that's extremely easy to get done. The challenge is getting it ingrained in the system, but because The Monjasa Group also own an ERP company that can help us we managed to do it fairly quickly. Getting everything into a workflow took six to eight months before it was completely up and running along with the integrations with Lloyds List Intelligence.

The remaining 10 months of that has been on training and impacting the culture of how you operate in Monjasa, to say, "guys, things have changed." So the way we operate today and the way we view things has changed and the whole culture had to be adjusted to fit the new norms of today's market. And it's super important because the way that we finance all transactions is scrutinized, and we need to make sure that we have a full document trail and are in control of everything. Our traders need to live up to these new standards and know there are consequences if they do not.

S&B: Other than the desire to have systems in place to meet future requirements, has there been a need to implement these changes to satisfy certain requirements of your customers or other counter parties?

While the way we operate today is going to bring confidence to all our stakeholders, the most important thing for us are the customers we serve. What we have done is to reflect what they want. It's about making sure they see us as a safe port - they did that in the past, they have to do that in the future. When they do, they honour it by placing their business with us, and the consequence is it positively impacts our financials. This then gives the banks and all our counter parties further comfort in how we operate and manage our business.

The changes we've made are also a continuation of the products and services we've always wanted to deliver and this particular area of focus is something we've had for several years starting with the ISO implementation in 2014. The efforts are also in-line with what the industry requires today.

S&B: It's no secret that market conditions have continued to be very difficult, and Monjasa recently posted what it called a "very unsatisfying" result for 2016. Even though we saw industry-wide restructuring at the end of last year, this year there's still been plenty of talk about contracting volumes and too many traders. How does Monjasa see this picture, and what changes have, and still need to be made for there to be an improvement in 2017?

Most of what we did was already done in 2016 including stepping up the compliance efforts, and in that we took a fresh look at our organisation as to who can actually work in these new market norms. There were of course some staff that were not able to do that, and that has resulted in a bit of restructuring, but it has very much been the case that we need our resources to be in sync with what the market demands.

As for there being too many traders; in a setup like ours where we have some 600 people, 200 of which are white collar, letting go of 20% of our staff will not really impact our bottom line too much. If we let go of 20% of our workforce, that's about the same as letting go of one of our TC ships. So if you consider those proportions, we don't think the way forward is to let people go. It's more about having a team in place that fits the new norms and then we feel pretty sure we'll be winning business on the back of that.

Then of course we do adjust our operating model here and there, where we operate our ships, what businesses are we in. We take a look at that all the time but we're pretty agile so we can make moves quickly.

So for 2017, if we look at where we are today we feel we have the right staff, we have the right trading platforms, and we have a business model that so far this year has yielded very good results actually. It's been a big turnaround from last year, and when we say we expect to make $5 million to $10 million for the full year, then I can definitely tell you that the first 6 months of 2017 gives us a lot of confidence in reaching those numbers.

S&B: Have you made any changes to staff in order get better access to new markets?

At the moment, we are making sure that whoever we get onboard they are completely in sync with what we want to do as a company, and we think that right now with the markets and physical setups that we have, we have a lot to do already. So you will not see us opening up a lot of new offices or going into new areas. For 2017 you'll see us doing a lot more of what we're really good at, because we think sticking to what we know while adjusting our operating model to meet the norms of today yields very positive results.

So we have a lot to do on the back of our existing physical supply setups and the customer relationships we already have. So even if we do get new people onboard, we won't be putting a lot of new pins in the global map. We expect to do more of what we do today in the markets we're in, and our customers are showing they appreciate that by giving us more business. So we stick to our core business and we see where that takes us.

S&B: Beyond 2017, the significant change that 2020 will bring is not too far away. Is there anything that Monjasa is already planning to put in place for this?

With what we have in place today and the discussions we are entertaining in the market we feel we are pretty well bolstered for the future. Of course should any changes come up we are pretty agile and can take feedback quickly into how we operate. But if we look where we are today and how we operate our business today, we do not expect significant changes to our business model or markets in the near future.

Of course we always look for good opportunities, but we don't have anything else lined up at the moment. We will now explore with the market what kind of further changes are needed, but we don't know enough about the impacts today to make any changes tomorrow.