INTERVIEW: New KPI OceanConnect CEO Sets Out 'Hazier' Outlook for 2022

Grønborg took over from Søren Høll as CEO in September. Image Credit: KPI OceanConnect

KPI OceanConnect CEO Anders Grønborg, who took on the role three months ago, sees an uncertain outlook for the bunker industry in 2023 after this year's record profits as a shakier economy lowers demand.

Grønborg took over from Søren Høll as CEO in September, with Høll shifting to become head of global operations at parent company Bunker Holding. At the same time, it was announced that Bunker One Global Accounts -- the key account management unit of Bunker Holding -- would be shifted under the KPI umbrella as KPI OceanConnect Global Accounts.

Grønborg inherited the business at a time of strong profits for the firm, he said in an interview with Ship & Bunker.

"We've got a good thing going for us right now," Grønborg said.

"I wouldn't say business is booming, but it's certainly very good.

"We've definitely been flying past our budgets, for lack of a better word."

'Hazier' 2022 Outlook

But what comes next is less certain. The energy-markets surge earlier this year over supply concerns has been followed by a sharp decline as the prospect of a global recession takes over as the main market driver.

"I think the outlook is a little hazier; we are probably looking at demand falling off a bit right now," Grønborg said.

"It's just a natural thing, with it coming up to Christmas and everybody having bought what they needed to buy, we are looking into less of a crazy market.

"People are starting to see the container market falling back to lower levels of rates; tankers are doing well, and dry bulk is very volatile at the moment.

"We're seeing customers being fairly keen on locking in as well, in terms of looking to the future, because we're not quite sure exactly where it's going to end up.

"Six months out, I think we're ok; 12 months out is going to be a little bit more into a difficult-to-predict period.

"We're just coming off such a high, and we need to get used to the fact that things are falling back to more of a natural level."

Demand from the container segment may be down by more than 20% in some regions, with Asia particularly affected by the current downturn, he said.

But the company does not have any immediate plans to take advantage of the declining market to seek acquisitions among struggling smaller marine fuel firms, Grønborg said.

"We're not really seeing anything at the moment that says that would really be for us," he said.

"But we're constantly receiving enquiries and contacts around it, so if the right deal comes along, we'll absolutely look at it."

KPI OceanConnect's Prospects

Over the summer KPI OceanConnect reported it had seen pre-tax earnings of $15.4 million in the year to April 30, from $15.1 million the previous year. Revenues were $2.94 billion, up from $2 billion a year earlier. In terms of bunker volumes, the company reported it had 'maintained its market share', without revealing outright numbers or the global percentage change.

The firm does not expect an increase in profits next calendar year, Grønborg said.

"Our expectations are not as high, let's put it that way."

But he expects a more stable picture for the firm's volumes, despite expectations of a decline in the overall market.

"I think we're going to see volumes stay consistent, maybe even a little bit up as we have some strategic moves we're making," he said.

"From a pure volume perspective, we're actually doing very well, but margins might come under pressure with a decrease in volatility."

The firm expects volumes for both KPI OceanConnect Global Accounts and the rest of the company to either stay consistent or grow next year.

Global Accounts Merger

Taking on the Global Accounts team earlier this year represented a significant expansion for the company. The team had 24 employees in London, Houston and Singapore, all of which have joined KPI OceanConnect.

"There's been a lot of learning from one to the other, because Global Accounts do not just do contracts business, they also do spot business," Grønborg said.

"There's a lot of things that interact and add up to a bigger picture.

"KPI OceanConnect was already doing a lot of this, but more on a quiet note.

"Bringing the Global Accounts team together with our trading and auction platform is lifting not just their business, but our business as well.

"It's really important for me to say this is a merger and unification of resources, because we see so many synergies in terms of business and how it's being worked."

The Global Accounts team has traditionally handled a higher ratio of contract business in its portfolio than KPI OceanConnect was previously.

"From a Global Accounts point of view, we probably do about 60% on contract and 40% on spot," Grønborg said.

"And overall, in KPI OceanConnect we are probably at about 30% contract."