The current storms hitting the bunker market may provide opportunities to grow further down the line. File Image / Pixabay
Marine fuels supplier Minerva Bunkering may take current instability in the bunker market as an opportunity to buy up smaller players to fuel its expansion, according to CEO Tyler Baron.
"We're opportunistic; we're always looking to expand both organically and inorganically where it makes sense, whether that's the acquisition of assets or the acquisition of an operation," Baron said in an interview with Ship & Bunker last month.
"Just in the last six months, I think we have demonstrated a willingness to do both."
Minerva plans to start its new physical supply operation in Singapore early this month; as part of it, the company will be using two barges bought at auction late last year as Brightoil Petroleum sold off parts of its bunkering infrastructure.
Minerva also stepped in to buy up CEPSA's bunker business in Panama in December to add another physical supply location to its network.
Baron expects the economic shock delivered by the COVID-19 pandemic to bring more consolidation to the bunker industry.
Periods of industry stress usually accelerate consolidation when there were already secular winds pushing that direction.
"Periods of industry stress usually accelerate consolidation when there were already secular winds pushing that direction to begin with; I would expect the current climate to do just that," he said.
"Pre-coronavirus we were believers in consolidation.
"We operate in a highly fragmented industry where we think the benefits of scale are only increasing."
While he acknowledged the level of instability in the current market, Baron said his company has not significantly changed its view of the credit environment for marine fuel sellers and buyers.
"We're in a heightened risk environment, and credit markets across many sectors, not just shipping, are undergoing a period of stress," he said.
We have been conservative from a credit perspective coming into this, and mitigate our risk with credit insurance and banking products.
"We have been conservative from a credit perspective coming into this, and mitigate our risk with credit insurance and banking products -- so we haven't needed to make a significant adjustment."
That said, Minerva's view of the creditworthiness of some companies has changed over the past two months.
"In some cases, we're expanding with certain customers where we've been increasing the amount of business we do with them, and in other instances we're having to pull back because of the deteriorating credit quality of counterparties," he said.
"But on a net basis we're not retrenching in any way."
This is the second part of Ship & Bunker's interview with Minerva Bunkering CEO Tyler Baron. For the first part, click here: https://shipandbunker.com/news/world/694303-minerva-bunkering-ceo-sees-sales-volumes-grow-in-shrinking-market.