FEATURE: Bunker Industry Shows Cautious Optimism at IE Week Gatherings

Peninsula were among the many industry players to host events during IE Week. Image Credit: Ship & Bunker

It wouldn't be surprising to see the bunker industry looking out to the rest of 2023 with a degree of trepidation.

Its biggest customer, the container segment, appears to be in the grips of a significant downturn, expectations are high of a wider recession and dip in global trade, and the geopolitical circumstances mean price volatility and an uncertain outlook for credit are not going away any time soon.

But that attitude was not much in evidence at industry gatherings for IE Week in London last week.

For now, the industry still appears to be celebrating its record performance in 2022. IE Week bunker events showed large amounts were still available for spending on hospitality, and industry body IBIA was able to restore its annual dinner capacity to more than 1,000 guests for the first time since 2020.

Supply concerns in the aftermath of the Russian invasion of Ukraine in February of last year drove bunker prices to record highs last summer, and kept price volatility high throughout the year. 

World Fuel Services, the world's second-largest marine fuels firm by sales volume, saw income from its marine segment surge by 651.2% on the year to $155.5 million in 2022. Other bunker firms -- some of the Bunker Holding brands, Monjasa and Peninsula -- are set to report results within the next few months, and are likely to report similar successes.

"Over the years we have all seen good years and bad years. 2022 was a good year. 2023 should be a normal year," one longstanding bunker trader told Ship & Bunker at an IE Week event last week.

Bunker Job Market

Further evidence of the industry's current resilience can be found in the buoyant job market for bunker traders, which remains firmly a candidate's market, recruitment sources told Ship & Bunker.

Candidates with strong experience and a transferable client portfolio can still afford to be picky in choosing their employer.

This tight market for strong candidates, combined with last year's record profits, is leaving a conundrum for some bunker companies over to what extent to share the profits among their staff. 

It could be argued that a trader achieving a strong profit in last year's lucrative market was less down to individual performance than in a more normal year -- but in an environment where it's hard to replace a departing employee, it may be worth paying more to keep staff happy.

Rumours reach Ship & Bunker of large bonuses being handed out in some parts of the industry -- seven-figure sums in some cases -- but this is by no means universal.

"I think any company that isn't sharing a slice of the cake with its employees right now may be going to lose some of them," a bunker trading firm CEO told Ship & Bunker last week.

"But that doesn't mean they're all handing out big piles of gold."

2023 Outlook

When it comes to outlooks for 2023, market sources speaking to Ship & Bunker at IE Week events were generally sanguine about the risks ahead.

Most took seriously the prospect of a significant downturn in volumes this year, as well as a drop in margins with prices lower overall, but most equally did not expect the downturn to be prolonged.

Traders were generally still hopeful of a recovery in Chinese consumption delivering higher dry bulk freight demand, as well as sanctions on Russia keeping the tanker market strong. 

Sources also said last year's profits in both the bunker industry and parts of the shipping industry would provide enough of a cushion to help these sectors though a downturn in 2023.

"I always tell my guys, when it's a good year, you have no champagne and caviar in the boardroom," a tanker company executive told Ship & Bunker last week.

"Then when it's a bad year, you don't all open the windows and jump out.

"Sometimes there are circumstances outside of your control. But I think there may be good times around the corner."