Mustafa Muhtaroglu, Chief Executive, Energy Petrol - Image Credit: Mustafa Muhtaroglu
I was invited to the Platts Mediterranean Fuel Conference in Athens last week, where there was a large number of delegates including leaders in the shipping, bunkering and refining industries. I observed especially shipowners and refiners are more involved and concerned about the latest market developments and regulation changes. They try to understand more about bunker markets. In fact this is the first time I see such a large number of shipowners are joining such venues, which is very good news for our industry; finally we get closer to our clients, and it gives us the opportunity to understand each other better.
I also observe oil majors are visiting large shipowners and trying to present new products and LNG bunkering solutions. I see shipowners are trying to understand how the market will be after 2020 and their decisions seem to be bringing them much closer to physical suppliers. This might be another signal as to changes ahead for traders and brokers.
Where does the bunker industry stand in this new world, and who will be our representatives and leaders of change?
It seems the world is changing very rapidly: Shipping is changing radically; regulations are changing; and markets are changing. It raises many questions: Where does the bunker industry stand in this new world, and who will be our representatives and leaders of change? Who lives who dies in this new world? Where does our only international association, IBIA, stand in this new world? What it is doing, who is governing it, and do we have right representation there?
For a bright future for the bunker industry we have to all think about all above points and shape our future. Will we remain a simple commercial part of this game or makers of new markets?
The World Ahead
Regarding the Majors who are trying to make a come back, I think we all have to remember why we, the independent suppliers and traders/brokers were born and now cover a very large part of the industry. It is because the Majors did not work hard enough to match Shipping's need from the 1990's until 2020.
So today, can they make the come back and bring us what we really need? Can they serve Shipping that requires really very hard work and 24/7 involvement? As far as I observe they are mostly active at more profitable segments like land retail, airline supplies etc.. except a very few unique locations like Singapore. Remember why one major left a main bunker supply location in Mediterranean?
I read many things on who has the best opportunity in this new world. But who is it really? Large suppliers; large trade houses; majors; integrated oil companies; smaller local suppliers? Who has the best possibility to be in the market after 2020? I say all of them have advantages and disadvantages, but as far as I can see:
Supermarket style bunker sellers, salesman type people cannot survive. I know hundreds of bunker sellers who do not have a basic knowledge of shipping, operations and its dynamics. Unfortunately, a large number of people in today's market have the education about their job limited to how much you buy and how much you sell. They don't even know where the ship they bunker is going and burning how many tons of what. These people have no chance in future markets.
Shipowners are going to be main drivers for defining who will live and who will not. Bunkering will get much more important and of a higher priority for them and they will define what type of service, what type of people they require. There are already very quick changes at their side and they already employe good names in their bunker departments who know markets, and who is who when it comes to suppliers. They will define the new model of the supply chain.
Refiners are key. Are they going to produce new types of products required by regulation changes and if so, how? Are they going to invest for such products or blend etc. They try to understand and decide which will very much define which product will be the main one for the bunker industry. We all have to feed them with more information and developments and try to get best possible results for our industry. Otherwise, there is no reason for them to invest billions for (marine) markets which represent only 5% of the world's oil consumption.
At the conference I asked delegates a question: What is most important for you in bunkering? Is it price, quality, regulations, quantity, supplier, trader, barges etc... My answer is people .... yes people. Good, knowledgeable, ethical people. These are going to make the future for the industry. You can put mass flow meters (MFM) on barges but if people are not good they will change pipes and keep cheating you. You can put regulations in place but if people are not good they will not comply. You can be a big buyer or supplier but if your people are not good and ethical you cannot survive. We have seen such people in other areas as well as our markets. They will not be respected because of their companies and will not be there long.
I wish all colleagues a very happy end of year and a great 2018.