SIBCON 2018: A Tale of Two Bunker Industries

Monday October 8, 2018

At the end of last week Singapore wrapped up its 20th SIBCON, an event rightly dominated by the upcoming IMO 2020 rule.

From the stage we heard about an industry that, despite considerable uncertainty, is largely ready to meet the challenge of the new sulfur cap. But on the sidelines, there was a sense of real worry among some as to what lies ahead.

Over the course of the week, A-list speakers delivered a thorough examination of the current and future state of the industry, with delegates left in no doubt as to why SIBCON is the world's premier bunker event.

Particularly welcome were the numerous interactive panel sessions that, compared to a more prescriptive agenda, made the event feel more interactive and treated delegates to a wider range of opinion and expertise.

There were few surprises as to the key 2020 take-homes, that included:

  • we will have enough bunkers to go around and thanks to announcements by ExxonMobil and Shell we now know more about where buyers will be able to lift their IMO 2020 VLSFOs;
  • we expect to see more quality and compatibility problems, but thanks to last summer's "bad bunker" episode the industry is both mindful of this and better positioned to deal with it;
  • credit managers are going to be busy as the cost of compliance will be high, but many owners / operators expect to recover this cost through BAFs;
  • there is no single IMO 2020 compliance strategy that makes the most sense for everyone or every vessel;
  • technology and alternative fuels have an important role to play in the future of the industry, and both are ready for wider adoption;
  • and as for Singapore, it is the world's leading bunker destination for a reason and its differentiators such as transparent standards, upcoming E-BDNs, and mandatory MFMs, along with a commitment to future fuels will all help it stay that way for 2020 and beyond.

Industry confidence felt lower away from the stage, and the road ahead is expected to be tough for many.

Not only are there new regulations to contend with, but what were once razor thin margins in many of the major supply locations have now dwindled to nearly nothing and it is putting a lot of pressure on the market. 

Although several people told me they felt the very largest players, and the smaller niche players, will be fine, further restructuring and consolidation should be expected.

Indeed, this is something we are already starting to witness, with Aegean's upheaval this year well documented, and in recent weeks Bomin taking the "commercially responsible" decision to reduce its office footprint to just two locations.

On the SIBCON sidelines there was chatter about another global supplier that was now struggling and thinking about selling up.

"The reality is that this is impacting all players within the market, and companies will have to respond," Jan Christensen, Managing Director of Bomin Group recently told Ship & Bunker.