The Bunker Industry: Are We Really That Bad?

Paul Hardy, NSI

The bunker industry has had a spate of bad publicity in recent weeks and months. We have also seen our Industry body calling for a look at ethical practice within the bunker industry.

I ask the question……. as an industry are we really that bad?

In order to judge this rationally we must look and compare the bunker industry with other large turnover small margin industries. The most striking example I could find was that of financial services which, is arguably the most highly regulated industry.

The world is slowly recovering from a narrowly escaped financial collapse in 2008. This was caused by the reckless behaviour of many financial institutions peddling 'snake oil' investments to unwitting clients. Compare this to the bunker industry where by and large the products we sell are legitimate and they do exactly what they are supposed to do.

If we look at the regulatory authorities reaction to bad practice there is also a stark contrast. Whereas, the financial regulators in the major markets targeted scapegoats whilst governments offered more money to offending companies to keep them afloat. In bunkering we have seen the opposite. There has been very decisive action in recent months revoking licences and sending a message that bad practice will not be tolerated. Where there have been issues regarding supply quantities legislators have adopted decisive solutions with MFM's.

To become a financial institution requires a myriad of compliance work to be done and supposed continuous scrutiny over how companies operate. To set up a bunker company you need only two things - cash and experience (to set up a bunker company without this you can make a small fortune but you need to start with a large fortune and work your way down).  We can see numerous examples though of bunker companies voluntarily adopting strict internal procedures and adhering to them very closely.  This is because collectively we want to do a good job for our clients. We do it not because we are being told to do so but for our own longevity and peace of mind.

The other factor which keeps standards in place is we are all interdependent. At some point in our careers most of us will come into contact with each other and hopefully do business together. We are not conducting faceless transactions through financial institutions. We are delivering real products in challenging environments. This alters things completely, if we know the person we will go the extra mile for them.

The issue we have as an industry is for all buyers to recognise the difference in quality procedures between suppliers and be prepared to pay accordingly. That is part of the brokers job to evaluate on behalf of the owner the matrix of price, service and quality, not just to find the lowest price on the market. As the industry moves towards recognising more quality and service standards we will naturally improve overall ethical standards. In any business if you buy solely on price you will be disappointed. Ask those buyers of cheap 'prime beef' lasagne in the UK who discovered for years they had been eating horse meat.

Lastly, I would like to look at our industries reaction when things do go wrong. In most industries a small breach of contract results in almost instant litigation and months of haranguing. In bunkering we have the collective understanding that the 'show must go on' and the ships must sail! We find practical and rapid solutions to what could be very tricky problems. Although 'my word is my bond' is somewhat of a cliché I have seen over the years numerous examples of this in action. Not because we have to due to a regulator forcing us but because it is the right thing to do. Not many global industries can say the same.

So my gut feeling is we are not that bad. We have room for improvement but I believe there are pretty uniform ethical standards across the industry. What we need to consider is that ethical standards are not absolute but dependent upon the culture you live/work in. We have light touch regulation compared with other industries but we voluntarily follow standards and procedures which is commendable. As an industry we need to ensure that there is significant margin between the cargo buying price and the selling price to customers. If this does not happen we will see companies either exiting the market or we will see a rise in unethical behaviour.  I believe this is our biggest challenge.